Housing demand weakened over the second half of last year as the rise in mortgage rates and home prices reduced affordability. Merrill Lynch's Housing Watch suggests another factor weighing on home buying: extremely lean supply. Months' supply of homes, the ratio of inventory to sales, held at low levels through the year. This means that inventory has declined in tandem with the drop in sales.
It is still a seller's market as Merrill Lynch sees it. They expect this to become increasingly evident, resulting in a pickup in inventory this year. Key takeaways are:
- Home price appreciation will slow down this year.
- A 5.2% price increase is projected for 2014.
- Sellers believe that now is a good time to sell as prices increase.
With "season" in full swing, we're seeing lots of activity in the waterfront condo market and across all price points. The severe weather conditions up north have resulted in a surge of seasonal tourists and we expect a number of them to purchase properties. The family home market in South Palm Beach County, however, is experiencing a slowdown as evidenced by greater days-on-the-market for unsold homes. This is consistent with a recent New York Times article indicating that the middle class is steadily eroding. As an example, Capital Grille is booming while Olive Garden is languishing. This also apparent in the demand for high-end luxury goods. There is an economic inequality emerging - and it reflects in our local real estate market as well. Read More about what this means to consumer spending and it's impact on the economy.
As always, please call us if you have any real estate questions.
Dan & Linda Tublitz
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