Today's top story:  The Fed’s housing market ‘reset’ isn’t letting up anytime soon, hoo boy.

Hi everybody, 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, 54 new listings, the new normal, and ranging in price from $394K to $7.6M!  9 homes back on the market, while 64 homes listed took a price decrease, and 3 sellers raised their asking price.  And another bad week,  with just 27 different properties under contract, and 17 going pending, not good! 42 homes were unsuccessful in selling and were taken off the market or the listing expired outright - starting to see that metric on the rise.  And an avg week for sales with 53 homes sold, ranging from $340K to $3.1M!

Next up, Condos and Townhomes:

66 new listings, a little better,  and ranging from $122 Grand to $12 Million.  17 units came back on the market, 64 properties with a price decrease, that's a lot, and 9 sellers with an increase.  And a terrible week with 36 different properties under contract, and 21 going pending,  36 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 66 closed sales this week, that's better, and ranging in price from $111K to $2.2M.

Here's what's making news right now.

The Chairman of the Federal Reserve, Jerome Powell, acknowledges that more pain awaits the U.S. housing market.  As expected, the Fed took another 3/4 of a point rate hike this week, the fourth such move this year.  

In announcing the increase Powell said that failing to tackle inflation, and allowing it to become entrenched, is far riskier than over tightening the money supply.  He said, “We have a ways to go, we have ground to cover with interest rates before we get to that level of interest rates that is sufficiently restrictive…we will stay the course until the job is done.”

That's not exactly welcome news to builders, mortgage brokers and buyers.  Powell acknowledged that continued quantitative tightening means more pain still awaits the U.S. housing market.

“Housing is significantly affected by these higher rates,” he said. “The housing market needs to get back into a balance between supply and demand. We’re well aware of what’s going on there.”  He was quoted earlier this year saying that it was his intention to reset the housing market, and that is exactly what is happening.

So what does this mean for the real estate market going into 2023?  First, from a macro perspective, the US housing market is already experiencing a difficult correction - those are Powell's words.  Locally, we are still in a seller's market, slightly, but that seems to be changing rapidly.

Second, some areas of the country are already seeing prices drops.  In our area, due to the population shift and the net inflow into our state, plus the continued demand from foreign buyers, we have been somewhat insulated from price drops.  But that could soon change.  And when prices go down, they tend to drop rapidly.

Third, the demand boom that spiked due to COVID, has all but dried up.  In the face of soaring mortgage rates and a declining stock market, that demand boom deflated. Second home purchases tanked. Flippers called timeout. And some would-be buyers got called back into the office.  In our area, we're seeing days on market has doubled in the last 60 days, and inventory continues to climb.  

At the worst of the feeding frenzy, we were down to about a 5 week supply of homes in Boca.  We now have about 3 and a half months of supply, with a balanced market being around 5 and a half months.  In just the last 90 days, the time it takes to get a property sold, has increased by 50%!

So with demand slipping and supply increasing, it doesn't take a PHD in Economics to figure out what's coming down the road.  I've always been a glass half full kind of guy.  However, when you look at everything that's going on, you can't help but realize - Winter is Coming!