Florida Market Update - June 24’
Blue Bay Fund I
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Hello and good morning, investors. I’m excited to officially present my June Florida Market Update via my Cigars, Whiskey & Capital Journal! I have written and continue to write articles throughout the month detailing investing education, strategies, and perspectives on the markets. I encourage you to take a look at my previously authored articles HERE. This past month was pretty relaxing, and I honestly did not do a good job documenting anything… so no photos this month! Sorry, I’ll do a better job with that in the coming months. But, this is good for you who are “Meat & Potatoes” type of investors, so let’s bypass the fluff and get right down to business.
This month, I am adding two additional incredible metrics. We will review the Listing Price Drops per 10,000 residents within that MSA. This will give you a strong indicator of whether the MSA is in a seller, buyer, or transitioning from one phase to another. I am adding a new section called the MARKET section, which will be below the MLS section. The Market section covers long-term trends and has more Census Bureau data than the MLS data. Now, we can look at national trends and how they affect the Florida markets. Some of these data points will only be available after a quarter ends and typically around 56 days after the prior quarter ends. For example, our Q1 Data was just made available to us in late May (which was after my last monthly report was released). Q2’s data will not be available until late August, and I cannot report on it until Sept 10th’s Market Report Update, literally one month before the start of Q4. Just be aware the quarterly data points will lag behind significantly yet they help give us a well rounded and seasoned view of the market, that way we are not jumping around every month trying to chase the next big thing.
JUNE 2024 FLORIDA SFR MLS REPORT
FLORIDA SINGLE-FAMILY RESIDENCE MONTHLY INVENTORY
MONTHLY INVENTORY
This data is based on spot data for a specific time period and market. It measures Active Listings for the current month divided by Sold + Expired listings from the prior month. This data is a RAW Score report reflecting the actual numerical value for that particular Metropolitan Statistical Area (MSA). Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores. You can see more details about that month’s snapshot by clicking on the heat map.
The Heat Map Key to the left indicates what the corresponding MSA colors mean. Red equals very few months of inventory, <1, while pink equals the most months of inventory, >8.
Monthly inventory has continued to creep up throughout the past three months. The Villages and Sebring/ Avon Park MSAs show the highest increase in inventory over that period, with the villages increasing from 1.9 to 3.1 and Sebring/ Avon Park increasing from 2.7 to 3.8. It’s not that much of an inventory increase, and this would be an indicator that there are sufficient buyers for the properties being listed or that there are fewer houses being listed in the Florida housing market that are being bought up at a reasonable rate. In either case, we are not seeing a dramatic increase in inventory, which is a good thing.
For our real estate investors, the expectation should be at least for those with properties about to be listed. Your expected time on the market should be averaging around 3.4 months, with the most monthly inventory being 4.6 months in the Punta Gorda MSA’s. The Panhandle continues to hold close to 4 months average with Pensacola MSA being the outlier holding closer to 2.6 months.
For our capital partners, most loans you have invested in, if the maturity date is within 3 months and the asset has not been listed yet, there is a chance there will need to be an extension.
FLORIDA SINGLE-FAMILY RESIDENCE DAYS ON MARKET
DAYS ON MARKET
This data is based on spot data for a specific period and market. The Days On Market metric is the median number of days between a property’s listing. When it is noted as ‘sold’ or ‘off the market.’ This data is a RAW Score report reflecting the actual numerical value for that particular Metropolitan Statistical Area "MSA", Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores. You can see more details about that month’s snapshot by clicking on the heat map.
The Heat Map Key to the left indicates what the corresponding MSA colors mean. Red equals very few days on the market, <45, while pink equals the most days on the market, >180.
Days on the Market have held pretty steady, right around 60 DOM. Tallahassee MSA holds as the most steady hot market, while The Villages MSA DOM has decreased, a good move. Looking at both the DOM and the Monthly Inventory heat maps, you can see that they do correlate, and there are no MSA’s “acting up”
Again, our real estate investors should take into consideration the changes and make plans accordingly. For faster sales, aim for more middle-of-the-market listing prices, and for those properties that are above the Average Listing Price, be prepared for longer DOM. Ensure your loan with us has plenty of time left before the maturity date to list and sell at your projected price. Otherwise, you will need to request a refinance or pay us off in the time that we require.
The same goes for our capital partners. We will continue to monitor the Market Inventory and DOM and make adjustments on our initial loan. Remember, the BEST risk mitigation in real estate note investing is to have shorter loans that allow you to take your capital out of the market before the market makes a hard turn South. By investing in our notes secured to Florida real estate through our Investor Club, you are investing in risk-mitigated loans and reducing your exposure to the market.
FLORIDA SINGLE-FAMILY RESIDENCE AVERAGE LISTING PRICE
AVERAGE LIST PRICE
This data is based on spot data for a specific time period and market. The Average List Price metric is the average price of all properties listed during the month. This data is a RAW Score report, reflecting the actual numerical value for that particular Metropolitan Statistical Area "MSA". Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores. You can see more details about that month’s snapshot by clicking on the heat map.
The Heat Map Key to the left indicates what the corresponding MSA colors mean. Red equals very inexpensive properties, <$200K, while pink equals expensive properties, >$800K.
The average listing price has also been steady throughout Florida. While the averages are provided for the month in each heat map above, I have also provided a breakdown of what exactly is happening in each market (the heat maps are easy to read; however, sometimes getting granular historical data is better). Below I have broken down each of the MSA’s with their specific average listing prices from lowest to highest, based on May of this year. Please note that the “Prior 3-Month Change” looks at three months ago from that month. So March’s 3-Month Change is based on December’s A.L.P., and Mays’s 3-Month Change is based on February. It is clear to see that the South Florida Market A.L.P. had changed the most in March, while by May, the downward movement had stopped. This would indicate a leveling out of the A.L.P. The only MSA to have a “significant” drop was Prot St. Lucie, which was only -3.94% from the previous month. These numbers support the previous two sections and indicate that the Florida real estate housing market seems to have settled… for now. Continue to watch the market and stay on top of the market with my monthly reports. This will help you strategize and game-plan not only your exit but also your acquisition strategy.
FLORIDA SINGLE-FAMILY RESIDENCE PRICE DROP PER 10K Pop.
PRICE DROPS
The number of properties with a lower list price per 10,000 people. You can see more details about that month’s snapshot by clicking on the heat map.
The Heat Map Key to the left indicates what the corresponding MSA colors mean. Red equals equal or less than two price drops per 10,000 residents, a good indicator of a strong seller’s market. Pink indicates a weak market, where the buyers are able to set the price, and sellers have to adjust their listing prices. Higher than 18 indicates a very strong buyers' market, and more than likely, real estate investors will not be able to sell their assets at the value they thought they could 6 - 9 months ago.
This is a new metric that I’m glad to be bringing you. While we are clearly cooling off from the market fury during 2018 - 2021, there is good news as the number of price drops per 10K residents in that MSA shows a consistent improvement, which again supports that the market is finding its equilibrium as far how many listings are dropping their prices. Remember this is a metric per 10K in residents. So larger MSAs, such as the Miami/ Miami Beach/ Kendall, Ft. Lauderdale/ Pompano Beach/ Sunrise, and Orlando/ Kissimmee/ Sanford, while having higher numbers, also have more residents, thus more listings. Several MSA’s that have consistently improved over the past two months have been: North Port/ Sarasota/ Bradenton from 54 listing price drops in March down to 43 in May; Naples/ Marco Island from 71 listing price drops in March down to 45 in May; Cape Coral/ Fort Myers from 67 listing price drops in March down to 49 in May, and Punta Gorda from 101 listing price drops in March downs to 76 in May. These MSAs have been ranking higher in the previous three sections, so this is a welcome trend.
JUNE 2024 FLORIDA MARKET REPORT
FLORIDA INVESTMENT REAL ESTATE QUARTERLY MOMENTUM ALERT
Momentum Alert
Like canaries used as early warning indicators to detect poisonous gas in coal mines, this score attempts to provide early warning of potentially weak, weakening, or even crashing Metro and State markets. Real estate markets tend to appreciate in a stair-step-up fashion, but take an elevator down when depreciating!
Entering markets with Canary scores below 20% should be done with extreme caution, if at all. Scores below 40% require caution and can often indicate or precede loss of home values. Proper underwriting and thorough due diligence are required.
Scores above 70% can indicate a strong, upward MOMENTUM, but not necessarily an entry point into this market or adding to your position. Use the other indicators’ scores and tools for better entry point timing signals.
The past performance of any indicator, score, or algorithm is not indicative of future results. Do your analysis before entering or exiting any market. You can see more details about that month’s snapshot by clicking on the heat map.
The Heat Map Key to the left indicates what the corresponding MSA colors mean. Red equals very a trend towards a strong quarterly outlook. Pink equals a trend to a very weak outlook. This is a quarterly report, so I will not have this in every Florida Market Report Update. However, it will be useful in the coming months as I will be presenting the Cash Flow outlook and House Values outlook, which will correspond to this heat map. This heat map is NOT to be taken as the sole indicator of where an MSA is definitively headed, but it is a key indicator.
The market data from Q1 2024, shows a leveling off from a significant drop in Q4 2023. 2024 ended here in Florida with a pretty solid correction, but as you can see, the market has rebounded, and the correction was cut in half. My expectation as we enter the summer months is to see the trend continue to level out and improve to an overall positive integer as far as a percentage of change. I am attaching the specific MSA numbers below. You will see that by the end of Q3 2023, many MSAs were still in the middle of trending strong for a market outlook. By the end of December, several MSA’s had a significant weakening in their outlook, for example: the Jacksonville MSA dropped 55% in its market outlook; Deltona/ Daytona Beach/ Ormond Beach saw a 54% decrease in market strength; Lakeland/ Winter Haven saw a 56% decrease in market strength; Punta Gorda saw a 48% decrease in market strength; and Cape Coral/ Fort Myers saw a 49% decrease in market strength.
This wraps up my June Florida Market Report! I trust you and your family are planning your summer and spending some time away from the screen. Get outside, enjoy the hot, muggy, and humid weather! LOL. In the meantime I will continue to provide insight and solid data for the Florida real estate market. If you know someone who would enjoy these monthly reports send them this page link, and encourage them to signup for my Investor Club where they not only receive these monthly reports but also receive investment educational emails.
With Honor,
Edwin D Epperson III,
Manager& CEO
- Soli Deo Gloria
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