Is the market slowing down?
When we hear about a slowdown in the real estate market, it is frequently associated with bad news, but in our case a little slowdown is a welcome event. We are experiencing a strong recovery that began in 2011 and has featured multiple years of double digit increases in median property values. The problem is that recoveries like this are rarely sustainable in the long term and can create affordability issues in the marketplace.
Lets take a look at our backyard in Northeast Broward County (East of US-1) including the coastal communities of Fort Lauderdale, Lauderdale-by-the-Sea, Pompano Beach, Lighthouse Point and Deerfield Beach. These are popular communities with a large number of single family waterfront homes and beachfront condominiums. Buyers purchase these properties for primary residences, second homes and as real estate investments, so demand is almost always high. Inventory has been tight in recent years promoting a strong seller’s market, so a little slowdown is just what we need to stay affordable and achieve a more stable long term recovery.
Looking at the first 4 months of 2016 median prices are still on the rise, but there are indications that a slowdown is in the works. Sales volume is down and the “days on market” is up over last year. Both of these indicators typically lead to increased inventory and a more comfortable equilibrium between buyers and sellers. Buyers are already sensing the change in the market and are being more deliberate about their purchases. Most sellers are still trying to get top dollar, but we are seeing more price reductions than we did last year, indicating that sellers are starting to sense the change as well.
Of course, these “slowdown” indicators could be related to stagnant wages, uneasiness with the world economy or perhaps election mania, but we’ll be keeping an eye on things and hoping for more stability in our real estate market recovery.