Florida Home Prices Just Decreased for the 1st Time in Over a Decade

Home prices are decreasing in Florida finally. So for example, this August marked the first time in at least the past 12 years in which the meat and sale price decreased compared to the previous year. Also, what really stood out to me based on this new report is that close home sales are decreasing despite the fact that housing inventory is increasing big time in the state of Florida. Therefore, supplies far outpacing demand right now. So in today's video, I'm going to take a deep dive into what's happening right now in the Florida housing market regarding home sales, housing inventory, home prices, price reductions, and much, much more looking at what happened this August compared to the previous years, especially looking back at pre COVID levels. If you guys get any value out of today's video, then please hit the like button. Also consider subscribing as well. I post frequent housing market updates so you guys can be more informed. With that said, I have a lot to share in today's video. Thank you so much for joining me and let's begin. So let's first talk about close home sales. And by the way, today's video is only looking at single family houses in Florida, excluding brand new home construction, and also excluding multifamily units as well, such as a condos, for example. So looking at close transactions for August, there was just over 22,000 close home sales. That was a decrease of 1.1%. Despite the fact there's a giant increase over 50% more houses for sale compared to 12 months ago. Also based on my nerdy analysis, looking at their data, going back to January of 2016 for the month of August, this is the fewest amount of home sales for the month since at least August of 2016. So lack of transaction transactions occurring in Florida, especially compared to the past several years. Also around 25,000 is actually a more normal number when looking at pre-COVID levels, looking at August 16 through August of 2019, we should have around 25,000 this August, just under 23,000. All right, let's now have a look at the percent of cash sales right now for this last August. So this August there was a 25.9% came from a cash buyer. So around a quarter of all close transactions came from a cash buyer in which they did not even use a loan to buy a house. That was a giant decrease down by 11.6% from August of 2023. Also looking at pre-COVID levels back in 2016 through 2019, the share of cash sales is around 23 to about 27%. So at 25.9%, this is more or less in par looking at a pre-pandemic era. Something that I also found to be interesting as well is that this is actually the lowest share since going back to the year of 2020 when mortgage rates were in the 3% range. And of course right now rates are in the low 6% range. To me, this is not a big surprise. The share of cash sales decrease in August because mortgage rates actually decrease in July. So think of it this way. You are looking for a house to buy. You place an offer on a house in July, your offer gets accepted more often than not. If you buy a house in, let's say early July through mid July, that house will close escrow or the house will become yours in August. So looking at close home sales or cash sales for the month of August, this is really what the market was like approximately one month ago when mortgage rates were in July when rates were basically in July when rates were decreasing in fact. So in general, cash sales normally fall when rates decrease as buyers are more inclined to finance their home rather than buying a house with all cash. Let me give you guys an example. When I bought my home about what, six years ago or so, I actually took on a larger loan amount because the rate was at around 3%. So because of that, I really want to have more cash on hand to do a remodel. And it was less inclined to get a smaller loan balance because rates were so low. Borrowing money was so cheap back then. So therefore I got a larger loan balance in order to have more cash available to do a remodel that we did about two years ago. So in any case, looking at this data here, a giant decrease of 11.6%, one of the biggest declines we've seen in quite some time. Again, I think this is due to the fact that mortgage rates fell in July compared to the previous months. That's why the share of cash sales actually decreased for the month of August. All right. As I mentioned at the very beginning of this video, and this is not talked about in the mainstream media, actually did a Google search for the Florida housing market. I didn't see a single article that is reporting this, that home prices based on the median sale price for the state actually decreased the first time since at least December of 2012. So one year ago, we're at 415,000 now decreased to just under 412,000. That is a decrease of 0.8%. So it's now negative for the first time since at least 2012, as far back as their data goes that I could see. In other words, it has been higher compared to the previous year or flat every single month since at least January of 2012, not December, January of 2012. And I know that based on this video that I found on the Florida Realtors website, by the way, this article or this report is based on the Florida Realtors report for the month of August. Anyways, they have a video here and they talk about how this is the first time in quite some time in which prices fell year over year. The black line is this year and we have 2023 right here. So there basically was in April, May and June, for example, in last year that prices were flat, but there hasn't been any single month since at least January of 2000, December, excuse me, December of 2012 in which home prices decreased compared to the previous year. Every single month in 2012, 13, 14, 15, 16, et cetera. Going through 2023, we had an increase in prices compared to the previous year. By the way, this is quite significant because of the decrease in home prices from one year ago in Florida is much different compared to most parts of the country. Most parts of the country have an increase in home prices from 12 months ago. So for example, in California where I live and work as an agent here in Sacramento, we're up by about 3.4% this August. And of course in Florida, we're down by 0.8%. However, the runup in prices in Florida is quite astounding to see at least over the past several years. So for example, the meeting sale price was only $300,000 in August of 2019. Therefore prices have increased a staggering 37% ever since then. So I don't think that buyers are going to be rejoicing to see that a, you know, prices fell by 0.8% given the giant run up in prices. And of course, you know, giant increase of home insurance rates HOA dues, et cetera. Going back to 2020. What else I found to be quite remarkable as well over the past 12 months is that we're seeing gains of less than a 5.1% or less than 5.2% to be exact which is more or less in line with long-term historical averages. But for context, I actually look at this. I look at their previous reports going back to January of 2016. So for context, prices rose year over year by more than 15% from January, 2021 through August of 2022. And of course, over the past 12 months, relatively subdued compared to the giant increases we saw back then. Let's also have a look at the percent of sale price to a original list price received for August. That was at 96.1%, a decrease of 1.4% year over year. So at 96.1%, this means on average for houses that did close or the sale was finalized, they sold for 3.9 percentage points less than the seller's original asking price, which is more or less in par with pre-COVID levels. Let me give you an example to share what this number means. So let's say your original list price was $400,000. This means for the month of August on average, homes sold for about $384,000, a decrease of what 3.9 percentage points based on the original asking price. Now I'm going to talk about inventory levels here in a little bit, but we're up by about 50 plus percent year over year. And part of the reason is to do the fact we're seeing a lack of transactions, a lack of sales, but also do this as right as well, excuse me, houses taking longer sale compared to a year's pass. So days in the market, this is a timeframe when you list your home for sale until you accept an offer from a home buyer that was at 39 days. One year ago, it was at 27 days. This means that homes on average are taking about 12 days longer to sell compared to August of 2023. Even though this is a big increase compared to one year ago at 39 days, this is more or less on par with what we saw back in August of 2019 at around 37 days, but this is way higher compared to the record low that was set around August of 2022 when days in the market was only eight days, taking about one week to sell a house on average. Now it's at 39 days. So now it's taking about five times longer to sell a house this August compared to August of 2022, quite the difference to say the least. Now let's talk about the demand side. Then we're going to talk about the supply side, some very interesting dynamics happening right now. So new pending home sale, a measure of buyers getting their offers accepted decreased by 5.5%. There was around 21,000 new pending home sales. Like I mentioned right there, this is a reason why the meeting sale price is down year over year. Sales are down despite a huge increase in the number of houses for sale or single family houses for sale. Also at just over 21,000 new pending home sales. Something to keep in mind here is that these figures are not seasonally adjusted. In other words, we tend to see a decrease or a low level of contracts being signed between buyers and sellers in the winter months in a high amount during the spring home buying season. In fact, looking at the chart below here, which goes back to January of 2020 back then, let's just actually exclude that because we had some COVID related issues there. Back in 21 though, new pending home sales peaked in March, just like it did in 2022 and 2023. They also peaked around March and April this year as well. In contrast, looking at August sales in 21, which is right here, here's 2022, 23. And then of course this year, you can see here that sales decrease from the spring home buying season in 21 in 2022, as well as 2023. And we're seeing exactly the same scenario this year as well. I mentioned that because these figures are, it's kind of hard to compare month to month changes given the seasonality of our housing market. Therefore what I like to do is look at the same month looking at years past. So for example, this is the fewest amount of pending home sales for the month of August since at least August of 2016. And again, this is wild given the fact there's a lot more houses for sale this August compared to 12 months ago. So that's the demand side. Let's have a look at a measure of new properties being listed for sale or new listings that rose by 3.8%. So again, in balance between supply and demand, because we have 3.8% more new listings from one year ago, but pending home sales fell by 5.5%. So this August there was just over 30,000 new listings that hit the market, which is on par with a pre COVID levels. There should be around 30,000 in the month of August looking at 2016, 17 and 2018 and 2019. Now here's where it gets really wild though, because look at this, a measure of active listings or the amount of houses for sale just increased by 50.3% year over year. There was just over 96,000 single family houses in Florida for sale. And again, this is quite remarkable that pending home sales fell by 5.5% despite this increase of the amount of houses for sale up by 50% in Florida. Also at 96,187 homes for sale this August, that's the highest amount for any month since March of 2019. In other words, housing inventory in Florida just increased to a five and a half year high. Also looking at data from altosresearch.com, there was 84,000 homes for sale in Florida for the week ended August 4th. The highest amount since at least 2019 at 77,000 back then also at 84,000. This is way higher compared to one year ago. We were at 55,000. What really stands out to me, you know, please leave a comment below regarding what stands out to you. But to me is this giant run up ever since last year, inventory increasing virtually every single week since then, which is much different compared to what happened last year where inventory levels were more or less flat. And because of this run up of housing supply in Florida, we're seeing a big increase in the number of reduced price listings. For the week ended October 4th, according to Altos, we're at 44%. So nearly one half of all the houses for sale in the state have already reduced their asking prices at 44% right now. This is higher than last year this time at 41%, but a little bit below 2022 at 45%. However, though at 44% right now, this is way higher compared to 21 at 28% 2020 at 26%. And looking at pre COVID levels back in mid October of 2019, the share was only 35%. Now we're up to 44%. So quite a bit higher compared to the past several years with the exception of the same timeframe in 2022. Another measure of inventory is the month supply. So right now the month supply is at 4.5 months. This means at the current sales pace for the month of August, if there's no new supply in market, if new listings were to stop altogether, then all the houses will be sold in 4.5 months. That is increase of 50% from 12 months ago when the month supply was only at three months. Even also at 4.5 months, this August, this is a new all time record high for public data that goes back to January of 2016. What else I really love about their data from the Florida realtor's association is a breakdown. The amount of houses for sale by price range and virtually all price segments here are up greatly compared to 12 months ago up by more than 20% to be exact, except for less than 50,000 the $50,000 asking price. But the vast majority of houses for sale in Florida are in the range of 200,000 to just under $300,000 an increase of around 74 to about 77% year over year. Interesting enough, the share of houses that are for sale for over $1 million are only up by 31.7% so about half the share in the more affordable range in the range of 200 to about $300,000. Here's something that's also mind blowing as well. Let's talk about foreclosures or distressed home sales, which are defined by a foreclosure or a short sale, which are basically non-existent in Florida for the month of August because they represent less than 1% of all home sales for the month. So traditional home sales, which is defined by not a distressed home sale, therefore it's not a foreclosure and not a short sale. There was over 22,000 regular home sales this August, but only 152 foreclosures and only 32 short sales. So again, distressed home sales represent less than 1% of all home sales, but 99% are a regular home sale this month. And with that said, please comment below with your biggest takeaways from today's video. Also, if you guys got any value out of today's video, then please hit the like button. This video takes me hours to make because I have to analyze and look at multiple reports. But of course I would do this anyways, because I enjoy it. But if you guys are still watching today's video, then please like and subscribe. I preach you guys so much. See you on the next video. Have an amazing day. Thank you so much.