Status of Melbourne FL – Brevard County Real Estate

Current Status of the Brevard County Real Estate Market

Last updated 1/19/2022 with data through 1/14/2022

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Snapshot of the Current Brevard County Residential Real Estate Market

  • Compared to the first half of January in previous years, the sales volume of single-family homes is 12% lower than in 2021 but 20% higher than in 2020.
  • The volume of newly listed single-family homes is the same as it was in January 2021, but that is considerably lower than previous years.
  • On average for the last four weeks, home prices are up a whopping 24% from a year ago.
  • An extreme shortage of inventory remains, leaving no end in sight to the current, incredibly strong sellers’ market.

Following the onset of the Covid-19 pandemic, there has been a huge increase in the demand for homes resulting in an extreme shortage of inventory. In many areas, including here in Brevard County, buyers are having a very difficult time purchasing a home because whenever a decent one comes on the market, the seller immediately receives multiple offers. In a survey conducted by Move.org, 45% of respondents who had moved in the past year reported it was due to the pandemic. And it appears that Florida is one of those places that people are moving to, with that trend expected to continue.  Some reports suggest that this influx into Florida is due to the increase in remote workers; when given the option of living anywhere, people are choosing to move to Florida for the mild winters and the lack of state income taxes.

But how long can the housing market favor sellers in this way? Will we eventually see an influx of new listings now that the moratorium on Federally-backed mortgages has ended? Is there any indication that the market may be shifting? Real estate reports provided to REALTORS® and the public show monthly statistics almost two months after the fact. That’s why we here at Florida Coast Realty of Brevard have created a system to track the trends in the Brevard County housing market in more of a real-time fashion, so we can identify a shift in the local market as soon as it begins to happen. We update our findings every two weeks with current data.

All of the graphs below represent data from January 1st, 2019 through January 14th, 2022. Each calendar year is represented by a different color. It is important to graph the data year over year because real estate sales are traditionally cyclical with the greatest number of new home listings and sales occurring between late winter and early summer.

The first two graphs depict the number of single-family homes and condos that went under contract during each two week period of 2019, 2020, 2021 and 2022. The 2019 and 2021 data (represented by the red & green lines, respectively) have a seasonal pattern that is typical for home sales. But due to the restrictions and initial uncertainty that existed at the beginning of the Covid-19 pandemic, 2020 home sales (represented by the blue line) dropped off drastically in March and April when sales would normally be on the rise. But, surprisingly, sales then spiked in late May and early June. This spike not only made up for the temporary decrease in sales due to the pandemic shutdown, but it was also the beginning of a new trend of significantly higher sales volumes. Specifically, for the second half of 2020, there were 30-40% more single-family home sales than in the same period of 2019. The condo graph is a bit more difficult to read because of the fluctuations caused by a relatively low number of total sales. However, on average, the number of 2020 condo sales was up from 2019 levels by between 15% and 30% throughout the second half of the year.

In 2021 (represented by the green line), sales volumes remained well above 2019 levels, and they were somewhat similar to the 2020 sales volume in the second half of the year. Now, we are a couple of weeks into 2020 and so far there has been essentially no change to the current pattern. If this year follows the typical seasonal pattern, there should be an increase in sales over the next four weeks. Check back here to see if that happens.

Note that there is an important distinction between the data presented in Graphs #1a & #1b, which show the number of homes “going under contract”; versus the statistic that you typically see reported number of homes “sold” (i.e. closed sales). There is normally a 4 to 8 week lag time between the time a house goes under contract and the time it closes and is marked as “sold”. Therefore, when tracking the real estate market in real-time, it is imperative to use the number of homes going under contract because if you track the number of homes sold you are pulling data this is lagging several weeks behind the behavior of home buyers. 

The next two graphs show the trend in the number of single-family homes and condos that are newly listed. Both graphs #2a and #2b show that before the Covid-19 restrictions hit in March 2020, the number of homes and condos coming on the market was somewhat similar to the same period of 2019. However in 2020, corresponding with the pandemic shutdown, the number of new listings dropped drastically throughout March and April, and then went back to just below the typically seasonal volume. Then in 2021, as you can see on both graphs #2a and #2b, that the year started off with the number of new listings below previous years’ levels, but by mid-April that shifted to be more in line with 2019 numbers. Now at the beginning of 2022, we can see from graph #2a that new listings for single-family homes are almost exactly where they were a year ago, which is about 25% less than previous years. And, as depicted in graph #2b, for the first two weeks in 2022, condo listings are down even more from typical levels. Based on seasonal patterns we should see an increase in listings over the next four weeks. Check back here to find out the latest.

So we’ve looked at sales and listings, but to understand what that means for the overall Brevard County real estate market we need to do further analyses that looks at that balance between supply and demand. Typically, the way the market works is that when supply is up and demand is down, it is easy for buyers to get good deals; and conversely, when demand is up and supply is down, sellers benefit and prices typically rise. The second set of graphs above (new listings) depicts changes to supply, and demand is represented by the first set of graphs (new pending sales). To best determine how these changes have affected the overall balance of the market, we can look to another metric used in real estate called “Month’s Supply of Inventory” which I will abbreviate here as “MSI”. The MSI reflects the number of months it would take to sell all the current inventory of homes at the current rate of sale. The formula is total number of all active listings divided by the number of sales in the period. Typically, the number of sales used in the formula is a rolling average over the last 12 months. However, given that our current circumstances are unique and ever-changing, we are calculating the MSI on a bi-weekly basis using the actual number of sales in a 2 week period and then converting that bi-weekly supply of inventory into a monthly number by dividing it by 4.2 (the average number of weeks in a month) and multiplying by 2 (since it is a 2 week period).

It’s OK if you didn’t completely understand the previous paragraph because we’re going to give you the gist of it now. The lower the “month’s supply of inventory” (MSI) the better the market is for sellers; and the higher the MSI, the better the market is for buyers. A “seller’s market” is commonly defined as when the MSI is at less than 6 months and a “buyer’s market” when the MSI is greater than 6 months. In the previous last few years, we have been in a strong Seller’s Market with the MSI averaging around 2 to 3 months for single-family homes, but as you will see from graphs #3a and #3b below, 2020 proved to be a considerably stronger seller’s market, and 2021 was almost off the charts!

The MSI reflects the number of months it would take to sell all the current inventory of homes at the current rate of sale.

  • Lower MSI is good for sellers
  • Higher MSI is good for buyers
  • “Seller’s Market” defined as MSI < 6 months
  • “Buyer’s Market” defined as MSI > 6 months

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The next two graphs depict the trend in the MSI for 2019, 2020, 2021 and 2022. These graphs show significant increases to the MSI after the onset of the pandemic in March 2020, followed by a decrease beginning in mid-April. The single-family home graph shows that for the period ending January 14th, 2019 the MSI was 4.0, on January 14th, 2020 it was 2.6, on January 14th, 2021 it was 1.1 and now in January 2022 the MSI is only 0.8. This means that if no one listed their home for the next month, but people kept buying homes at the current rate of sale, in less than a month there would be no homes left to buy! This indicates that we are in an insane sellers’ market for single-family homes! The MSI for condos isn’t much different with the current period MSI at only 1.4 months. 

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As you might imagine, a very strong sellers’ market means that prices are likely to rise at a higher than normal rate– and they have. Traditionally in a balanced real estate market, we would expect around a 3-5% annual increase in home prices. But we are nowhere near a balanced market, and for the last four weeks the average sales price of a single-family home in Brevard County was up a whopping 24% for the same period a year ago! That’s an incredible amount of annual appreciation, but not unexpected given the unprecedented lack of inventory.

Notes:

1) The final sales price on a home is not published until the sale actually closes, and since it typically takes 30 to 45 days after a contract is signed for the sale to close, any price changes we see in the graph, actually reflect what buyers were paying 4-6 weeks prior.

2) We have not displayed a graph for condos because the relatively low number of condo sales combined with the wide range of condo prices makes those prices difficult to interpret in the short-term.

Brevard County Housing Market Outlook

It is likely that the Brevard County real estate market will remain incredibly strong for sellers for quite some time. There is now such a massive shortage in housing inventory that we can’t approach a more balanced market until listings increase significantly and new home builds start catching up to demand. The federal moratorium on foreclosures just ended five months ago, so possibly we will see some foreclosures hitting the market and increasing the inventory, but personally, I think it is unlikely there will be a flood of foreclosures. However, since some people are predicting that foreclosures will cause a shift towards a buyers’ market, we are now tracking the number of new foreclosure listings. Since the numbers are currently so low, we are only reporting this on a monthly basis. As you can see in graphs #5a and #5b, a flood of foreclosures have not yet appeared in the Brevard County residential listings.

Check back every two weeks to keep up-to-date on the status of the Brevard County real estate market, and feel free to contact us with any questions or comments.

Brevard County Foreclosure Watch

The following graphs show the number of Brevard County foreclosures that were listed in a given month. The first graph, #5a, depicts the period from January 2019 through November 2021. As you might imagine, due to the foreclosure moratorium, the number of foreclosures listed in 2020 and 2021 was less than the number in 2019. But there is no sign yet of a significant increase in these listings following the end of the moratorium, which was on July 31st. Keep in mind, however, that it takes some time for a home to be listed after a foreclosure occurs, which explains why there were still some foreclosures being listed during the moratorium.

Graph #5b includes the same data as graph #5a except that additional years of data has been added for 2010, 2013 and 2016. This was done to provide the viewer with some perspective regarding the number of Brevard County foreclosures that were being listed when we were in a strong buyers’ market. The year 2010 is widely considered to be the bottom of the housing crash.

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