Status of Melbourne FL – Brevard County Real Estate

Current Status of the Brevard County Real Estate Market

Last updated 9/22/2022 with data through 9/9/2022

Snapshot of the Current Brevard County Residential Real Estate Market

  • On average for the last 10 weeks, the volume of single-family home sales was 13.4% lower than the same period in 2021.
  • The number of single-family homes being listed in the last 10 weeks was, on average, 5.1% higher than the same period of 2021, and 117.4% higher than in 2020.
  • The volume of housing inventory has increased by 95% in the last 5 ½ months!
  • Home prices peaked in May 2022 but since then have remained at or near the same level. The median home price in the most recent two week period was 6.4% lower than the median price in the highest priced periods.

Following the onset of the Covid-19 pandemic people started moving in record numbers, and it appears that Florida is one of those places that people are moving to. A report came out in April 2022 listing Melbourne, Fl as 15th among all U.S. cities for population growth. And the Palm Beach Post reports that in 2021, 547,000 people exchanged their out-of-state driver’s licenses for Florida licenses; that number is 20% greater than the five-year average between 2017 and 2021. Many articles 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.

This huge increase in the demand for homes in Brevard County resulted in an extreme shortage of inventory. Buyers were having a very difficult time purchasing a home because whenever a decent one would come on the market, the seller immediately received multiple offers. I personally experienced this problem when home shopping in March of this year, as my husband and I were repeatedly outbid on homes despite making offers over the asking price. In one example, in the popular area of Viera, we put a cash offer on a home at $21K over asking, and not only did we not get the house, we were told that all 31 offers on that home were “well over” the asking price! Unfortunately for me, the end of March, when I purchased a home, appears to have been the worst time for buyers because that is when available housing inventory in Brevard County was at an all-time low.

But since March the Brevard County real estate market has been cooling off. This may be due to increasing interest rates, higherprices, or simply a natural market fluctuation. I think it is likely a combination of all three.

Real estate reports provided to REALTORS® and the public show monthly statistics almost two months after the fact. But when the unexpected and drastic changes in the housing market began to occur after the onset of the pandemic, I decided waiting nearly two months for information was just way too long! That’s why we here at Florida Coast Realty of Brevard 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 September 9th, 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 a greater number of new home listings and sales occurring between mid-winter and late 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 2020. 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), the sales volume remained well above 2019 levels, and was somewhat similar to the 2020 sales volume in the second half of the year. In 2022, you can see from the orange line on graph #1a that the single-family home sales volume has followed a typical seasonal pattern, although year-to-date sales volume in 2022 is 11.1% lower than the same period of 2021, and is now close to pre-pandemic sales levels. Condos have seen a much more significant decrease in sales in 2022. As depicted on graph #1b, year-to-date condo sales are down 23.6% from the same period in 2021.

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 were newly listed. Both graphs #2a and #2b shows 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 typical seasonal volume. Then in 2021, listings started off the year below previous years’ levels, but by mid-April that shifted to be more in line with 2019 numbers. However, for the first 8 weeks of 2022, listings of single-family homes were down again to the lower levels found in early 2021. But then beginning in March, the volume of new single-family home listings began gradually increasing to levels that exceeded all previous years’ levels for the same time period. This trend of increased listings lasted up until about a month ago and that, combined with lower demand, greatly improved the amount of available single-family home inventory. In fact, the number of single-family homes for sale on September 9th, 2022 was a whopping 111% higher than it was on March 25th, 2022. Condo inventory has also increased, but not by as much (63.6% since March).

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 look 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 the 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. The MSI in a balanced market is somewhere around 4 to 5 months. When the MSI is below 4 months, the market favors sellers, and when the MSI is greater than 6 months, the market favors buyers.

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 < 4 months
  • Balanced Market defined as MSI  4 – 6 months
  • “Buyer’s Market” defined as MSI > 4 months

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Prior to the onset of Covid-19, we had been in a solid sellers’ 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 through the beginning of 2022 was almost off the charts! But then in the beginning of April of this year the single-family MSI began climbing. That MSI for the current 2 week period is at 2 months, which is 4 times higher than its low point in March. The condo MSI has followed a similar pattern and is now at 2.5 months, which is 3 ½ times its low point from 6 months ago. Although an MSI of 2 months is indicative of a strong sellers’ market, in my opinion, the slow but consistent increase in the MSI seen over the last 6 months is strong evidence that we have begun a slow shift to a more balanced housing market in Brevard County.

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As you might imagine, a strong sellers’ market means that prices are likely to rise at a higher than normal rate– and they certainly have! Traditionally in a balanced real estate market, we would expect around a 3-5% annual increase in home prices. But we are not in a balanced market, and in 2022 year-to-date, the median sales price of a single-family home in Brevard County was up on average 21% from the same period a year ago. But note that graph #4 shows that the median sales price declined throughout the month of June and has since bounced around, currently landing at a price level a little below where it was at its high-point. So while the YTD prices are up on average 21% from last year, if you compare the prices from just the last 12 weeks to the same period in 2021 you’ll find a much lower increase of 14.4%. We’ll definitely want to keep an eye on this data going forward, since we may be witnessing the beginning of a downward shift in prices. But we need to be patient and wait to see what patterns emerge over the course of several more months before drawing any conclusions.

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 Real Estate Market Outlook 2022

The recent significant increase in housing inventory suggests a market shift is underway. But overall, the inventory is still low, so the Brevard County housing market is likely to continue to favor sellers for some time. However, the good news for buyers is that single-family home prices have stabilized in the last few months and are actually slightly lower than their high point in May. Although it’s possible that prices will continue to drop slowly, in my opinion it is just as likely that they will remain stable for awhile.

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 August 2022. 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, so far, there is no sign of an increase in these listings following the end of the moratorium, which was over a year ago (July 31st 2021). However, it does take 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. So, there is still a chance that we may be seeing a more significant increase in foreclosures in the near future, although the chances of that occurring are becoming less likely as time passes. We will continue to track this information until the end of 2022, but will stop after that if no increase occurs.

Graph #5b includes the same data as graph #5a except that additional years of data have 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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