Florida Market Trends

Florida's Housing Market: Higher Prices and More Sales in June

Florida's housing market had more closed sales, higher median prices and more new listings in June, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide totaled 28,205 last month, up 4.3 percent compared to June 2016.

"More homeowners decided it was time to sell in June, resulting in an increase of new listings in Florida by 4.2 percent," says 2017 Florida Realtors President Maria Wells, broker-owner with Lifestyle Realty Group in Stuart. "However, this slight increase in June is not easing the market and inventory remains tight. Homes continue to sell quickly, which resulted in an increase of pending sales, which rose 2.2 percent.

"Buyers must continue to be prepared to act quickly," Wells adds. "They need to find a Realtor to assist them to navigate the choppy waters of today's market. This will allow them to be ready to make an offer when the right property is available."

The statewide median sales price for single-family existing homes last month was $245,000, up 8.9 percent from the previous year, according to data from Florida Realtors Research department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in June was $176,820, up 7.2 percent over the year-ago figure. June was the 67th consecutive month that statewide median prices for both sectors rose year-over-year. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in May 2017 was $254,600, up 6 percent from the previous year; the national median existing condo price was $238,700. In California, the statewide median sales price for single-family existing homes in May was $550,200; in Massachusetts, it was $385,000; in Maryland, it was $295,694; and in New York, it was $239,000.

Looking at Florida's townhouse-condo market, statewide closed sales totaled 10,996 last month, up 4.9 percent compared to June 2016. Closed sales data reflected fewer short sales and foreclosures last month: Short sales for townhouse-condo properties declined 30.0 percent and foreclosures fell 47.3 percent year-to-year; short sales for single-family homes dropped 31.5 percent and foreclosures fell 43.4 percent year-to-year. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

"The median sale price among Florida single-family home sales in June was up 8.9 percent compared to last year; and the median sale price of condos and townhouses was up slightly less, increasing by 7.2 percent," said Florida Realtors Chief Economist Dr. Brad O'Connor.

"With sales and prices continuing to rise, it should come as no surprise that the dollar volume of sales throughout the state increased significantly this June compared to June of last year," O'Connor added. "Statewide, closed sales of single-family homes totaled about $9.3 billion, a year-over-year increase of nearly 12 percent. Closed sales of townhouses and condos rose by a little over 11 percent to about $2.8 billion."

Inventory remained tight in June with a 3.9-months' supply for single-family homes and a 5.8-months' supply for townhouse-condo properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.90 percent in June 2017; it averaged 3.57 percent during the same month a year earlier.

Lumber Tariff to hit Housing Industry

The Trump administration moved Monday to impose a 20 percent tariff on softwood lumber entering the United States from Canada, escalating an intensifying trade dispute between the two countries.

The president announced the decision during a gathering with conservative media outlets at the White House Monday evening. Trump's initial comments were relayed by four people who were in the room and confirmed by an administration official.

On Twitter, Breitbart News White House correspondent Charlie Spiering quoted Trump as saying, "We're going to be putting a 20 percent tax on softwood lumber coming in – tariff on softwood coming into the United States from Canada."

The Commerce Department later announced it had reached a preliminary determination and would impose countervailing duties ranging from 3 percent to 24 percent on imported softwood lumber, with an average of about 20 percent.

One person in the room said Trump threatened that dairy could be next.

The U.S. and Canada typically enjoy a friendly trading relationship, but things have soured in recent months. Trump has been railing against Canada's decision to change its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for products, including ultra-filtered milk. Trump has called the move "a disgrace" that's hurting U.S. producers in dairy states like Wisconsin.

"It has been a bad week for U.S.-Canada trade relations," said Commerce Secretary Wilbur Ross in a statement. "This is not our idea of a properly functioning Free Trade Agreement."

The Canadian government, meanwhile, rejected the assessment, calling the duty "unfair and punitive."

"The Government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty," said Jim Carr, Canada's Minister of Natural Resources, and Chrystia Freeland, Canada's Minister of Foreign Affairs, in a joint statement. "The accusations are baseless and unfounded."

They warned the action would have a negative impact on American families who will have to pay more to build or renovate homes. And they said they would sue, if necessary.

Florida is No. 1, When it comes to Mortgage Rejections

Florida stood out in the study for mortgage failures: Almost 1 in 5 mortgage applications (17.1 percent) get turned down, making it the top state in the study for frustrated mortgage applicants. West Virginia ranked second with 15.7 percent of mortgage applicants failing to get a loan.

On the flipside, Minnesota had the lowest rate of mortgage rejection at 7.7 percent, followed by Alaska with 8.2 percent.

Buying a home – and finding the right mortgage – is a journey that can test your grit and resolve. If you haven’t done the proper research and you don’t know what to expect from the process, it can be even more stressful. Your credit history, income, assets and savings will be under scrutiny, and what you don’t know about mortgages can hurt you.

Nationwide, 6 percent of survey respondents said they were denied a loan: 50 percent on their first try and 25 percent more than once:

  • 79% were told why their mortgage was denied
  • 41% thought the denial unfair
  • 33% thought it was embarrassing
  • 35% said it pushed them to improve their financial situation
  • 52% denied to a high debt-to-income ratio; 39% credit history/score and 25% insufficient income

“Borrowers who don’t understand the mortgage process or don’t know enough about their own credit history tend to hit obstacles or be rejected when applying for mortgages,” says Tim Manni, mortgage expert at NerdWallet. “They also tend to feel regret after their deal is done, even if they succeeded in buying a home. That tells me borrowers aren’t doing enough research – on themselves or the mortgage process – before applying for a home loan.”

New Home Buyers: Act now before Cost of Construction Goes Up

The cost of building materials jumped 25 percent year-to-year, according to the National Association of Home Builders' NAHB/Wells Fargo Housing Market Index, and builders are increasingly concerned about how this will affect homebuyers in the new-construction market.

In 2016, builders ranked building material costs low on their list of concerns – but now it's one of their top five issues.

The increased cost of lumber is a chief catalyst.

"Negotiations on a new softwood lumber agreement between the United States and Canada ground to a halt at the end of 2016 and likely are stalled pending the results of an investigation into unfair import practices requested by the U.S. Lumber Coalition," NAHB reports.

Because of the lumber problem, homebuyers will likely face price hikes.

According to the NAHB/Wells Fargo Housing Market Index, builders cited the following as the 10 most significant problems they expect to face in 2017:

  1. Cost/availability of labor: 82%
  2. Cost/availability of developed lots: 67%
  3. Impact/hook-up/inspection or other fees: 61%
  4. Building material prices: 60%
  5. Federal environmental regulations and policies: 52%
  6. Local/state environmental regulations and policies: 52%
  7. Regulation of banking/financial institutions: 48%
  8. Development standards (parking, setbacks, etc.): 47%
  9. Inaccurate appraisals: 46%
  10. Health insurance: 40%

U.S. Foreclosures Drop to 9-Year Low

In 2016, distressed sales hit a nine-year low, according to ATTOM Data Solutions latest report. In the U.S., 16.2 percent of single-family home and condo sales were distressed sales – bank-owned sales, short sales or foreclosure auctions sold to third-party buyers – down from 18.8 percent of all sales in 2015.

  • Bank-owned (REO) sales hit a 10-year low, accounting for 8.0 percent of all sales in 2016, down from 10.0 percent in 2015.
  • Short sales – homes that sold for less than the combined amount of loans secured by the property – hit an eight-year low, and accounted for 5.5 percent of all 2016 home sales, down from 6.0 percent in 2015.
  • Foreclosure auction sales (trustee's sales or sheriff's sales) sold to third-party investors (not including those going back to the foreclosing lender) hit a nine-year low, and accounted for 2.8 percent of all home sales in 2016, down from 2.9 percent in 2015.

"The housing market hit several important milestones in 2016, with distressed sales at a nine-year low and home prices at a 10-year high – just barely below the pre-recession peak in 2006," says Daren Blomquist, senior vice president at ATTOM Data Solutions.

"This was all good news for home sellers, who realized their biggest average profits since purchase nationwide in 2016," Blomquist adds. "Even distressed property sellers are benefitting from this hot seller's market, with a record-high share of homes at foreclosure auction being purchased by third-party buyers rather than reverting back to the foreclosing bank."

While foreclosures were generally down, the share sold to third-party investors hit a record high, however: Third-party foreclosure-auction buyers accounted for 28.5 percent of all completed auctions in 2016, with the rest (71.5 percent) going back to the foreclosing lender. That's an increase from 23.5 percent in 2015 and the highest share since ATTOM first recording the numbers in 2000.

Florida Has 4 of the Top 5 Hottest Single Family Markets

Among the 50 largest U.S. markets, the top five (in order) were Orlando, Palm Beach County, Fort Lauderdale, Tampa and Dallas, according to Ten-X, an online marketplace. Each metro area had "a vigorous combination of consistently strong demand, home price appreciation, and economic and demographic growth."

While Florida metros again dominated the rankings, Ten-X said there was movement within the top five slots: Orlando jumped from fourth to first to overtake Fort Lauderdale; Fort Lauderdale dropped to third; Palm Beach County remained unchanged in second; and Tampa slipped from third place to fourth.

Healthy economic and demographic trends are fueling demand throughout much of the Sunshine State, keeping sales elevated and enabling significant price growth. Dallas, for its part, is benefiting from a more diversified economy than most other Texas metros, allowing it to withstand pressures from low oil prices. Las Vegas, still a leader in terms of housing demand, sales and job growth, now ranks ninth.