The South Florida luxury real estate market is showing signs of weakness since my mid-year update.
(If you want to follow along, have a look at what I wrote back on July 3rd)
To begin, I look to Delray’s luxury real estate market and the 33483 zip code. This is all real estate east of the train tracks extending to the beach. In the area there were 74 sales since last report. According to the chart above, the median sales price is $870k vs. $1.1 million in the first half of the year.
As for Days on Market (DOM), its up from 43 to 82 days. That’s almost double the time to sell luxury property in the last 90 days. Although it’s not significant, the Months of Inventory (MOI) is almost 7 (above 6 is a buyers market) – you can see that in the orange bar below.
Here’s where the data really hits home. I pulled a report in the MLS of all SOLD properties since July 3rd. Of the 74 sales, the average sold price came in at 10.2% below the list price. That translated to a $235k reduction. If you compare the July 3rd report to the chart above, the difference between those numbers pencils out.
That’s significant price erosion to pay close attention to. And it holds up to what’s taking place in the South FLorida luxury real estate market.
A South Florida Luxury Real Estate Data Comparison
Like I did in my last report, below I compare other South Florida luxury real estate markets to see if these numbers are one-off’s, or are consistent with other zip codes. Look at this data below. It represents the Average Sold Price Drop since July 4th:
* 33487 Highland Beach: 137 sales down 8.99% or $131k
* 33432 Boca Raton: 114 sales down 7.2% or $265k
* 33062 Hillsboro/Pompano: 175 sales down 7.95% or $86k
* 33480 South Palm Beach: 57 sales down 11.5% or $108k
So, in all 5 sampled markets we’re seeing price erosion as we head into the last quarter of the year. One of the causes of this is the massive increase in inventory that’s finally causing the market to change.
Consider this: at the end of 2019, the mean number of listings in the South Florida real estate market was about 54,000 units. During the pandemic, that number crashed to 14,445, or a 73% beating. As I report in my Supply Update below, today’s supply is 51,313. That’s a surge of 255% in just a couple years.
That’s a ton of supply, which supports why there’s the price erosion above.
The question moving forward is “are we nearing the mean supply in the South Florida luxury real estate market?” If so, and as we near 54k units… price reductions may cool off and the market stablize.
So, we have the supply growing. And as we’re heading into the South Florida real estate market’s strongest selling season, winter, we should see demand rise, too.
What happens next? I’ll be back in early Q1, 2025, with a complete review of what happened in the South Florida luxury real estate market in Q4.
(Main Photo: Lots of beauty when you’re out walking – A Delray Beach luxury home)
P.S. I you are looking in the South Florida luxury real estate market, home sellers have been “shocked” to see how long their listings are lingering on the market. It’s a good time to engage.
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*** This weekend will be a BLAST in downtown Delray. Get your costume on (I am). There will be the Annual Witches of Delray Bike Ride, Trick-or-Treating on the Avenue, 61st Annual Halloween Parade and Kidsfest. Block out this Saturday for all the events
*** If you’ve been waiting for the right time to sell, a flood of humans are coming this way now. And if your one of them preparing to look at some real estate, you’re coming at a terrific time in this market. Call my cell phone for a consultation – my number is below.
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*** South Florida’s Surging Supply Update ***
* This morning’s Inventory is 51,313 *
* Last week supply was 50,668 *
That’s a 645 increase in one week
October Inventory is UP 1321 units
