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Market Stays Hot in June — Plus, Inventory on the Rise

Florida had a record spring buying season this year, and the season ended with a bang, based on the June resale market statistics from the Florida Realtors Research Department.

Closed sales of single-family homes were up close to 24% in June of 2021 compared to June of 2020, when closings began their rebound from the initial shock of the pandemic. And compared to our last normal month of June, back in 2019, single-family closed sales this June were up by over 25%. So all-in-all, a very positive end to Spring for the single-family market in terms of closings.

New pending sales of single-family homes, which are usually the best indicator of future closed sales, continued to revert toward more normal levels in June, however. This has been the trend since new pending sales peaked in March, so we should probably expect closed sales to start following this pattern over the next couple of months. In June, about 6.4% more single-family homes went under contract than during the same month in 2019. Eventually we should start to see closed sales reflect that rate of growth, as well.

Now that’s all in comparison to two years ago, before the pandemic, of course. Compared to one year ago in June 2020, this June there were actually close to 14% fewer new pending sales. That’s not anything to be alarmed about, but it is just something we’ll have to get used to over the remaining months of 2021. The housing market recovery in the second half of 2020 was a market on steroids, fueled by pent-up demand from the postponed spring buying season and falling interest rates, so there’s never been any expectation that we’d come close to that level of performance in the second half of 2021.

The active inventory of single-family homes on the resale market registered its first significant monthly increase in June since March of last year. The number of single-family homes on the market as of the end of June was close to 8% higher than it was at the end of May. It was still over 47% below where it was one year ago at this time, of course, but still, all current signs point to us having reached the peak of the seller’s market. That doesn’t mean we’re going to swing right back into a buyer’s market, though. Remember, we were already in a seller’s market for single-family homes before the pandemic. All this means is that market conditions for today’s prospective buyers have finished worsening.

A big reason for the rise in single-family inventory in June was a significant increase in new listings compared to the levels we usually see this time of year. The number of single-family homes that came onto the market in June 2021 was, in fact, up a whopping 22% year-over-year. That’s not because the number of listings last June was low, either. There were only 2% fewer new listings in June 2020 than in June 2019. In fact, apart from April of 2020, we’ve had fairly typical numbers of new listings throughout the pandemic. They just haven’t been at the level we’ve needed to keep up with the surge in demand we’ve had. As a result, it’s the greater numbers of prospective buyers that have eaten away our inventory, not fewer listings than usual.

With the ratio of buyers to sellers finally starting to fall a little bit, we should eventually see our red-hot rate of home price growth cool down somewhat in the coming months, although that will also depend on whether interest rates start to trend higher again, as well. For now, though, the numbers continue to astound. In June, however, the median sale price for closed single-family home sales in Florida once again checked in at a level well above where it was one year ago, rising 24-and-a-half percent to $351,000.

Over in the condo and townhouse property type category, the median price was up by a similar percentage, rising by over 22% to about $257,000. Closed sales in this category continued to be off the charts in June, increasing by almost 80% compared to a year ago and 60 percent compared to June 2019, before the pandemic.

The condo and townhouse market continues to be so hot, in fact, that unlike over in the single-family market, new pending sales in this category still remained above last year’s level in June by 7-and-a-half percent. And they were 29% above the number we saw in June 2019. As a result, the inventory over in this property type category still fell slightly over the course of the month, despite the fact that new listings were up 10% year-over-year.

One last thing before we go�over the past few months, we’ve noticed that the share of closed sales that are all-cash purchases has been on the rise compared to recent norms. Over in the single-family category, 31% of closed sales were all-cash this June, compared to 19% a year ago and 22.4% the year before that. The last time we had more than 31% single-family cash sales in June was in 2015, when we were still working the last foreclosures from the Great Recession out of the system.

The current rise in cash sales as a percentage of closed sales is tied to two factors. The first one is a bit of a technicality. This year, higher-end sales have made up a greater share of closings than in previous years, and those types of sales are historically much more likely to be all-cash sales. About 56% of single-family sales over a million dollars in June were all cash. That’s actually not much different than last June’s share, which was about 55%. But since luxury sales are a greater share of overall sales this year, that’s pushing up the overall cash share.

The other factor, though, is something real that’s been happening in the marketplace. We are seeing a rise in the percentage of single-family home sales paid in cash in price tiers below $400,000. This is indicative of a rise in investor activity so of course we’ll be watching these numbers closely. The most prevalent price tier where this is occurring depends on your market and its overall price level, though. The trend started emerging first in the state’s major population centers but it’s since expanded to a degree into small- and mid-sized markets, as well.

That’s a pretty good reminder that, as always, the statewide numbers covered here may not reflect the trends for your particular market area or niche. So it’s important for you to monitor your local market stats, too. 

If you would like a FREE comparative market analysis on your home, please call us, CENTURY 21 Alliance Realty at 352-686-0000.

Source: https://www.floridarealtors.org/news-media/video-library/learning/market-stays-hot-june-plus-inventory-rise

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