To describe the real estate market on the Emerald Coast in the last 18 months as brisk would be an understatement. It has been red hot. Since the lifting of the short-term rental ban in May 2020, the market has seen a rapid growth in the number of transactions. This growth subsequently reduced the amount of available inventory. The graph below (Chart #1) shows the number of properties listed for sale (orange line) and the number of pended transactions (turquoise line) for each month during the last three years through 9/30/21.
As the chart indicates, the number of pended transactions jumped in June 2020. Most of this increase was from pent up demand from buyers that could not view homes during the COVID shutdown in March and April. This demand outpaced the number of new listings in the market causing a steep decline in inventory that lasted through March 2021. During this period, it was very common to hear of listings that were on the market for only one day with multiple offers being made for the property.
It’s clear that something happened in March 2021 that resulted in a decline in pended transactions. The chart below (Chart #2) helps to explain this.
This chart (Chart #2) shows the average list price for active properties (orange line) and the average sold price (turquoise line). This chart shows the rapid growth in list prices starting around December 2020, peaking in May 2021. Interestingly, the average sold priced maintained its consistent price growth with a little leveling off during the last six months. In contrast, the average list price has had a decline since its peak in May. Keep in mind that even with this pull back in list prices, prices remain higher than in the pre-COVID period and for a year after the lifting of the short-term rental ban. In addition(Chart #3), the inventory of available listings remains very low at 2.0 months of inventory.
Putting it all together leads to the following conclusions, the rapid increase in listing prices was too much too fast. The market was not willing to purchase properties at the same pace as it was 6 to 12 months ago at those now higher relative prices. Inventory in the market will continue to rise until listing prices correct to a level that is more attractive to buyers. As seen in Chart #2, this decrease in listing prices has started. Remember, the average price for pended transactions is stable, further supporting that the recent decline in pended transaction is a function of overpriced supply versus lower demand for property. Sellers have options. They can be patient at their current price and be willing to wait, reduce their list price, or make improvements to justify a higher price, just to name a few. Demand remains strong and buyers are ready to buy at the right price!
Posted by PPG Website Administrator on