Pending sales were down in April, oh boy! Does that mean we are seeing the early signs of a real estate market collapse? 

Hi everybody,  It’s Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home, or I’LL buy it! Ok, so every week, I share market data to keep you informed with the local real estate market.  

Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, a  good week with 65 new homes on the market, ranging from $250,000 to  $16 Million. Only 26 homes back on the market, while 18 homes listed took a price decrease, and 10 sellers raised their asking price.  49 different properties went under contract, and 34 went pending, a light week, probably due to the holiday. 
And 31 homes were unsuccessful in selling and were taken off the market or the listing expired outright.   94 homes were sold in the past week, a big week, and those home sales ranged from $240K to $4,283,333 - squeezed every nickel out of that negotiation didn't they, lol?!

Next up, Condos and Townhomes:

64 new listings, on the low side, and ranging from $65 Grand to $3.5 Million.  
19 units came back on the market, 19 properties with a price decrease, and 14 sellers with an increase, in total, not very many.  50 different properties went under contract, and 41 went pending. Only 28 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired, still on the low side.  126 closed sales this week, a huge week, and ranging in price from $58 Grand to $12.1 M!

Here's what's making news right now.

As reposted by Inman, the NAR released new data last week showing that pending sales were down 4.4 percent in April compared to March. In a statement about this data, NAR said April’s numbers took a backward step. So we know that pending sales foreshadow the future of the market, and that April’s numbers were down. Does that spell trouble?  Not necessarily...

The economists who spoke with Inman, at least, don’t really think so.

When there are declining numbers — as happened in April — some people are going to extrapolate that into a market collapse. But a dip in pending sales doesn’t mean there’s a bubble forming.

Don’t conflate that with a collapse.

In reality, the economists who spoke with Inman for this story attributed drops in pending sales numbers to an especially constrained supply. And while that can be frustrating for buyers caught in a cycle of endless bidding wars, it also doesn’t mean the market is headed for a repeat of 2007 and 2008.

We’ve never seen this low of inventory, ever. That is what’s going to hit the pending numbers. It’s not a lack of demand, it’s a lack of supply.

The consensus of the economists interviewed anticipate a less brutal market in the future as interest rates rise and tamp down some of the demand that has been fueling the current inventory shortage.

That should generate a roughly steady pace of home sales ahead.

On the other hand the good news for consumers hoping to buy is that, according to NAR, the market is at least “probably not going to get more competitive than it is now.  The market will probably return to that same status quo that prevailed before the pandemic. Which is to say, a seller’s market, but not one that is perpetually as ultra-competitive as it is amid current conditions.

In a strong seller’s market like we are in right now, homeowners have more power to take an offer that’s going to be really likely for the deal to close. And in fact, that's exactly how I advise my sellers - don't necessarily take the highest price - they're all over asking price already - take the deal with the highest probability of closing.

So what that means is more contracts would go from pending to sold than they would in a buyers market.  In a more normal market, only about 80% of the deals in contract actually close.  But this strong sellers market where the homeowner can choose from multiple offers, it can kind of skew the short term stats somewhat.

By the way, the stats for our immediate area are significantly different than the national numbers.  Pending sales of single family homes in Boca were up 153% in April over a year before, and 2021 is up 56% ytd over 2020. And condos and townhomes were up 315% in April, and up 98% year over year, wow!  Nothing but good news to report... unless you're looking to buy in Boca, sorry!