Is the "protracted slowdown" heading our way?
The Fed has spoken; Janet Yellen has appeared in front of the United States Congress and told them the recent housing slowdown "could prove more protracted" than expected. Seems the national concern is fewer households forming and actually the numbers are quite shocking. I always take government numbers with a grain of salt but these figures are certainly disturbing to the real estate world. According to the Census Bureau new household formation for the 12 month period ending on March 31st was 423,000. Compare that to the average formations of 1,300,000 for the period between 2002 and 2006. Less than a third of the households we had been creating back in the good old days.
The blame they say is the fact that more and more young adults are living at home with their parents to cut expenses while struggling with record levels of student debt. No doubt this generation is going to have to learn how to cut expenses rather dramatically. After all, we already have them strangled with 17.5 trillion dollars in debt and never showed any concern for doing anything but spending more. And more. And more.
We have been very fortunate here in southern Florida as we play by a special set of rules. We are certainly not 100% isolated from macro economic news. We do however enjoy far higher levels of real estate activity from baby boomers, investors and international buyers which provides a boost most markets do not enjoy.
Over the past month we have published information showing the rise in single family home prices leveling off after a steep 5 month climb. Condo prices in the region were the opposite showing nice gains over the past month after a 6 month period of price erosion. Prices are typically determined by the interaction of supply and demand and one metric of incredible importance to future price movements is inventory levels. We know these numbers are so incredibly important that we publish them twice monthly and keep our current clients updated even more often.
As this months chart shows we have seen inventory levels in Tequesta and the neighboring communities fall for the 3rd straight month. Great news which is the supply side of the price equation and should help boost prices even higher in the days ahead. As of May 15th the number of properties available for sale in the northern Palm Beach County region are 3% lower than where we stood 30 days ago. Inventory levels are still about 5% higher than they were one year ago but we are heading in the right direction.
Another one of our mid month updates will be heading your way so watch for our next article where we see what has happened to the number of homes under contract since April 15th. Always interesting, always fun.
Paradise Sharks Real Estate