Space Coast Condo Prices Crashing? How much did interest rates really impact the Real Estate Market?
Discover the ups and downs of the real estate market on Florida’s Space Coast over the past two years in this insightful video. 🏠📈 I dive deep into: ✨ Condo Price Trends: Explore how rising insurance costs and safety regulation changes have impacted condo prices in this popular region. 📉 Interest Rate Impacts: Learn how increasing mortgage rates are not the only thing that have reshaped buyer demand and slowed overall market activity. There is more to the story! 📊 Data Analysis Insights: See why relying solely on monthly year-over-year comparisons can paint an incomplete picture of long-term trends. Whether you’re a buyer, seller, or real estate enthusiast, this comprehensive overview will help you better understand the shifting dynamics of this vibrant coastal market. Don’t miss the chance to make informed decisions in today’s evolving real estate landscape!
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Transcript from Video:
Hi there, this is Darron Burow with Florida Homes Realty and Mortgage. I just wanted to put this quick analytics video together for you. I’ve noticed two trends recently with Space Coast Area real estate transactions. Many of you might get the year-over-year monthly reports that show what’s happening—most of us Realtors like to provide that. But I like to do a deeper dive. I take a couple of years’ worth of raw data and dig through it. I haven’t had a chance to do that recently, but since it’s the end of the year, I thought, “Let’s take a look and see what’s happening.”
I noticed two significant trends I didn’t expect to see: one in condo sales over the last two years and another in the correlation between mortgage rates and home sales. Let me dive in.
First, let me pull up one of those monthly year-over-year reports we receive on a regular basis. I’m looking at April 2024 and comparing it to April 2023. The reason I picked April is that there’s a significant peak in condo prices during that period, compared to the previous year. I think it makes for a good comparison.
The report I’m referring to comes from the Space Coast Association. It provides good year-over-year data, but it doesn’t tell the whole picture. For April 2024, it shows metrics like median sales price, the number of homes sold, average days on market, and monthly supply of inventory. When you look at the condos and townhomes data, you see a 10% increase in median sales prices. If you only look at that snapshot, it seems like condo and townhome values are going up significantly. But what’s really going on?
What I like to do is pull a couple of years’ worth of data—about 25,000 lines of transactions—and analyze the trends over time. When I graph it out, I see the seasonality of property sales, with January being a low point and spring/summer showing higher activity as people prepare to move. I’m analyzing three categories here: condos, townhomes, and single-family homes.
Here’s where it gets interesting: The average closing price for single-family homes has been steadily increasing, going from about $440,000 to $475,000. However, the trend for condos and townhomes is more sporadic due to lower volume. Specifically, condo values have actually decreased. Two years ago, the median price was around $370,000, but now it’s about $362,000—a drop of about 2.5%.
Why have condo prices declined in Florida? Several factors are at play: new safety regulations and legislation after the 2021 Surfside building collapse, rising insurance costs, and increased inventory due to more condo owners wanting to sell. High assessments and costs are also pushing owners to unload their properties.
Another trend is the steady increase in days on market, which signals a shift toward a buyer’s market. This ties into interest rates, which I also analyzed. Over the last two years, the average 30-year mortgage rate has been high, even peaking above 7.5%. However, there isn’t a direct correlation between interest rates and property sales. For example, when rates dropped twice, we saw almost no boost in sales. Despite high rates, buyers with good credit are still getting competitive offers, often below 6%, as mortgage lenders compete for business.
In summary, there are two key trends I want to highlight. First, the condo market has taken a hit, though Brevard County has fared much better than South Florida. Second, interest rates aren’t everything. Buyer sentiment, inflation, and fear of a recession play a much bigger role in sales than just the cost of borrowing money.
Lastly, it’s important to look at long-term trends when making investment decisions. Focusing on short-term snapshots, like a 10% year-over-year increase, can give you a misleading picture. In reality, the condo market has seen a steady decline.
I provide insights like this and much more for my clients. If you’re curious about local market trends or have a theory you’d like me to explore, feel free to contact a real estate expert. Let me know what you’d like to review. Thank you!