“Sales of existing homes in Palm Beach County fell 13 percent from a year ago, while the median price of $366,200 dropped 5 percent from $386,000.”
“Broward sales plummeted 23 percent from a year ago. The median price inched up 2 percent to $368,800 from $362,800 last August but was down from $373,700 in July.”
“Meanwhile, the condominium markets in Palm Beach and Broward counties also took a hit last month.”
“Condo sales in Palm Beach County fell 16 percent, and the median price of $209,000 was off 5 percent from $220,300 a year ago.”
“Broward's condo sales dropped 22 percent, while the median price of $178,800 dropped 12 percent from $204,300 last August.”
While these numbers certainly do not seem rosy, FAR continues to use median sales price as an indicator rather than using median listing price. A previous post on the “Myth of the Median Price” shows how the median sales price is used to distort reality. A much better gauge of market performance is the median listing price, which continues to fall rapidly in South Florida. The year-to-year median listing price drop across South Florida is 11.11%. The month-to-month drop in median listing price is 1.54%.
Here is an updated graph on the median listing price in South Florida (source: Housingtracker.net):
Again, this month’s update graph shows sustained and constant drops. Clearly this chart shows a much different picture than painted by FAR. The inventory of unsold homes also continues to grow. The year-to-year increase in inventory was 25.89% and the month-to-month increase was 1.55%. Here’s the updated graph:
Stumble It!
7 comments:
This is a very timely post.
Two things occur to me when looking at these figures.
1)These are asking prices. We all know that in tough markets, actual sale prices will be considerably lower. If we could get figures on the % drop on actual sales from asking prices, we could estimate a truer "median price".
2)At the current pace 1.54% drop in listing prices for this month, prices could easily be 19-20% LOWER same month next year.
It is interesting, I would also like to find a way to know how many Listings are also listed as rentals, from driving around it seems a much higher percentage of homes for sale also are being offered for rent.
Also, there is lots of mortgage fraud that is distorting prices so much so in miami-dade that the police have raised alarms about how the fraudulent sales are distorting assessments and raising tax bills.
I don't think we'll ever come up with a truly accurate home price index.
Although the "median listing price" seems to be more reflective of the true market, even that is a flawed measure, since it doesn't represent actual selling prices.
Anonymous said...
"I don't think we'll ever come up with a truly accurate home price index."
You're correct; it's nearly impossible to come up with a perfectly accurate index. The Median Listing Price, while certainly more reflective of the real market than Median Sales Price, still has some significant flaws.
First as others have pointed out, most sales lately have closed significantly below selling price. So, if a home sells for 5% below listing price, this measure does not reflect those discounts. And those discounts do not happen uniformly across all price levels. In my anecdotal experience, the percentage of discount off a listing price tends to be much higher among lower-priced homes than on highly-priced homes.
A second, more significant flaw is that market conditions can have a significant impact on the median listing price. In theory, actual home prices could be completely flat but the Median Listing Price could fall significant simply because more lower-priced homeowners decide to sell their homes.
In the end, we, as consumers, are most interested in whether an average home is worth more or less in today’s market. Of all the indices, I think Median Listing Price does the best to reflect the realities of the market despite its flaws. I include the daily “F@cked Buyer” posts because those posts do an even better job of reflecting the realties of the market. Prices are dropping rapidly across the board.
But, FAR continues to tell a very different story. In their most recent press release, FAR told consumers that home prices increased by 2% over the past year in Broward County. We all know this is simply silly – homes, regardless of the price range in Broward County are selling for far less now than they were one year ago. At least the Median Listing Price tells us that prices are down. That’s why I’ll continue to use this index until we have something better.
The bottom line is, no matter what the flawed statistics say, the market will reset to equilibrium one way or another.
Sure, some buyers that have been sitting on the sidelines may decide to take the plunge and buy now because they see what appears to be stabilizing home prices. That may slow the price depreciation down some, but there is no stopping the forces of supply and demand.
Home prices have to align with fundamentals again. Until that happens, prices will decline.
In addition, we may even have an oversupply of homes. We DEFINITELY have a massive oversupply of Miami condos. That will actually cause prices to come down BELOW even the fundamental value, since even if prices come down to affordable numbers again, there won't be enough buyers to absorb all the inventory even at the lower prices.
Like I said, the Realtors can spin the numbers any way they like, but they're only delaying the inevitable.
The problem with the market is one of basic economics, not buyer perception. They think that there's all this money sitting on the sidelines waiting to buy--there isn't.
Although I posted this comment on another article I will repeat it. I spoke to a realtor on Wed. and told him that I was going to wait and watch the market and perhaps buy when prices dropped to a more affordable level. He said, "Prices are not going to fall". I said, "yes they are already falling. Even your own web site, Zip Realty, shows that sellers are reducing prices. He said" Oh, you mean list prices". Geez what did he think I meant, and what is he talking about. He was hostile so I didn't ask him what he meant. I thought later he was referring to median price. Could be, but when I said I was going to wait a year, he could care less about me. I don't care.
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