Current State of the Real Estate Market – February 2023
Upward Real Estate Trend Continues Despite Media Gloom and Doom
The current state of the real estate market is quite positive, with prices continually increasing for over a decade, despite ongoing concerns about a potential real estate market bubble. However, with the possibility of a downtrend in the United States Dollar beginning in late March 2023, we believe it is a great time to buy real estate, particularly if you are not already in the market. It is also a good time to evaluate your current real estate holdings and rotate out of your lesser properties and replace them with properties with greater appreciation potential paying particular attention to location, condition, and rentability.
It is important to keep in mind that the relationship between the dollar and the real estate market can be complicated, and the impact of a weak dollar can depend on several factors, such as interest rates, inflation, and global economic conditions. Therefore, a weak dollar may potentially lead to higher inflation and interest rates, which could make borrowing more expensive and impact the affordability of real estate. Generally speaking, when the dollar is weaker, things that are priced in dollars tend to go up in price. This is typically true for precious metals, stocks, and yes, real estate. Dollar down = prices up.
Aqualand Real Estate continues to see the realty market trending upward into 2026ish. Based on the 18.6-Year Real Estate Cycle as published by our friends at PropertySharemarketEconomics.com, we are in the second half of the cycle. The second half of the real estate cycle tends to have the greatest percentage gains as well. In general, the cycle is 14 years up and 4 years down. See the last cycle with prices generally up from approximately 1994 to 2008 and down from 2008 to 2012. The 2001 recession represented that cycle’s Mid-Cycle Slowdown.
Real Estate Prices Up 131 Months in a Row
According to this recent article https://southfloridaagentmagazine.com/2023/02/21/nar-existing-home-sales-post-12th-monthly-decline-in-january-as-prices-rise-again, real estate prices in most markets have increased each month for the last 131 months. Yes, that’s over 10 years. While the media has been telling you the sky is falling, housing prices have quietly been inching ever upward. The covid crisis represented the Mid-Cycle Slowdown portion of the cycle around 2020, which was followed by a knee-jerk reaction of pent-up demand thereafter.
Real estate appreciation in 2021 exceeded 25% in many markets. Much of 2022 was marked by slowing appreciation, but appreciation nonetheless. Many Sellers thought they had missed the market top and started offering concessions to buyers. In addition, days-on-market crept up a bit as well, but are still well below what is generally considered a ‘healthy market’.
Meanwhile, housing inventory remains historically low, but demand still exists. According to this article, https://www.floridarealtors.org/news-media/news-articles/2023/02/changing-market-more-va-fha-loans-cash-sales, 31% of purchases are still All-Cash. Obviously, cash buyers aren’t terribly concerned about home loan interest rates. In addition, the article states that FHA and VA loans were up, indicating that first-time homebuyers are increasingly coming into the market – despite all the fear and loathing about increasing mortgage interest rates.
Side Note:
If you are located in Florida and are interested in
getting prequalified for a mortgage or
would like to explore the possibilities of
tapping your equity via a cash-out refinance,
Aqualand highly recommends
Charles King at Grass Roots Mortgage.
He can be reached at 954-296-0098.
Charles has been our go-to mortgage guy for over a decade.
For the record, Aqualand does NOT receive any sort of
kickback for recommending Charles, or anyone else.
So, what’s the market actually look like right now?
Here’s the data for Single-Family Detached Homes in the Saint Augustine MLS for the Current State of the Real Estate Market
As of February 25, 2023:
845 Currently Listed
$646,316 Average List Price
83 Average Days on Market (A typical healthy market is 3-4 months, up to 6 months)
Last 12 Months:
5,301 Total Houses Listed
3,811 Total Houses Sold (71.9%)
$529,052 Average List Price
$502,287 Average Sold Price (94.9% of Ask Price)
50 Average Days on Market
Conclusion: In the last 12 months, houses have taken less than 2 months to sell
and have sold at a 5.1% Discount to Asking Price.
Here’s what it looked like just a few months ago in our November, 2022 update post.
Dollar Down = Prices Up
The US Dollar, as represented by $DXY (the US Dollar Index) has been in an uptrend since its 2008 low. Remember that the last real estate market top was also in 2008. According to this video https://www.youtube.com/watch?v=N-kTcY79JAU by Robert Miner at DynamicTraders.com, the $DXY likely topped out at its September 2022 high and has started making a long-term correction since. If his charting is correct, (and it usually is), there’s a good chance that the dollar continues its decline into the third quarter of 2026 and possibly into the first quarter of 2028.
History doesn’t always repeat, but it often rhymes. If history rhymes this time, the bottom in $DXY could represent the top of the real estate market again. When you consider that the 18.6-Year Real Estate Cycle is projecting a real estate market top for 2026ish, the confluence is significant and interesting. We’ve inferred from PSE’s outlook that there will likely be mass bankruptcies and even bank failures around 2028 as real estate moves into its 4-year downturn in earnest.
Disclaimer: Assuming that the dollar will experience a downtrend beginning in late March 2023 and continuing until the third quarter of 2026, and possibly even into 2028, it is possible that the real estate market may be affected to some degree. However, it is also important to remember that real estate investments are typically long-term investments, and short-term fluctuations in the market may not necessarily have a significant impact on long-term returns.
One potential outcome of a weak dollar is that foreign investors may find real estate more affordable, leading to increased competition and potentially driving up prices. On the other hand, if rising interest rates result in higher monthly payments, demand for real estate may decrease as buyers find it harder to afford such payments. In addition, increasing inflation may lead to a decrease in purchasing power, which could also affect the affordability of real estate.
It is worth noting that the current state of the real estate market may not be a reliable indicator of future trends. As a result, it is important for investors to remain informed and aware of market trends in order to make informed investment decisions.
Real Estate is Always Local
While there are obviously national and regional real estate trends, all real estate is local. As the saying goes, the three most important aspects of real estate are Location – Location – Location. Being represented by an experienced real estate broker can take much of the guesswork out of the real estate buying and selling process.
In conclusion, the possibility of a weak dollar may impact the real estate market, and it is important to keep in mind that real estate investments are typically long-term and may not be heavily impacted by short-term market fluctuations. If the dollar is in a longer-term downtrend, it could very well fuel the meteoric rise in real estate prices we typically see in the second half of the 18-year real estate cycle. Investors should remain vigilant and up-to-date on market trends to make informed investment decisions.
If you are interested in receiving a Free Comparative Market Analysis on your current property or if you’d like to stay abreast of the market with a Free Customized MLS Search, please Contact Us today. There is never any obligation. Our goal is to EARN your real estate business.