Market Update- December 2021
With Brad O'Connor Ph. D.
TRT: 5minutes 23 seconds
Video Transcription

Brad O'Connor directly addresses camera: The final numbers from Florida Realtors on the 2021 Florida housing market are now in, and wow, what a year it was. In all, there were over 528,000 sales of existing homes in 2021--an increase of 19% over 2020's total. The dollar volume of these sales totaled nearly $241 billion, which, because prices also swelled in 2021, represented an increase of over 48%.
Much of this huge increase in sales was due to the return of the spring buying season here in the Sunshine State, which we missed out on in 2020. And wouldn't you know it, we had a spring buying season for the ages. Closed sales of existing homes were up 43% in the first half of the year compared to the same period in 2020. Of course, some of that massive increase is also due to sales being weak in the first half of 2020 at the onset of the pandemic. But if we compare to the first half of 2019, we were still up 29% in 2021.
The second half of 2021 was a bit of a different story, but only on the surface. Sales of existing homes in the latter half of the year were only a little over 1% higher than they were in the second half of 2020. But that's mostly because the second half of 2020 was arguably the best second half of any year we've ever seen in our housing market, thanks to so much unmet demand from spring being shifted further down in the calendar. But if we compare the second half of 2021 to that of 2019, our most recent normal year, we find sales were up by over 20%. So the market remained strong going into 2022.
In terms of sales, 2021 could also be characterized as “The Year of the Condo.” Over 160,000 existing homes in the condo and townhouse category sold in 2021, marking a more than 34% increase over 2020's total. In contrast, the over 350,000 sales in the single-family home category, while over twice the size in number, represented only about a 13% increase, year over year.
Inventory levels at year's end were dangerously low in both property type categories. As of December, we were at almost exactly 1 month of supply for single-family homes, compared to 1.4 months of supply a year ago. Over in the condo and townhouse category, we fell dramatically from 4.2 months of supply in December 2020 to 1.3 months of supply in December 2021. The fact that we started the year with so much more relative supply in the condo and townhouse category helps explain why we saw so many more sales in this category than we did for single-family homes. But with inventory as low as it is now, early 2022 isn't looking so great for prospective buyers in either property type category. Current homeowners, however, continue to have the opportunity of a lifetime in the strongest seller's market in ages.
From the outset in 2021, home prices were rising at an astounding pace. Mortgage rates, however, were somewhat more stable compared to 2020, when they were in freefall. As a result, they were no longer counterbalancing the rapid rise in prices and, therefore, monthly payments for new mortgages began to rise. This softened some housing demand on the margins, leading to some slowing of home price growth in the summer and early fall. But by year's end, prices were starting to rise rapidly again. The median sale price for existing single-family homes selling in December was just under $374,000, an increase of 21% over the median of December 2020's sales. Over in the condo and townhouse category, the median price increased nearly 24% year-over-year, rising to $285,000.
With the Federal Reserve now getting serious about tapering its mortgage and bond purchases, as well as preparing to raise the federal funds rate later this year, we should expect mortgage rates to rise in the coming weeks. This increase has been underway for a couple of weeks already, in fact. If these increases are sustained, then we should eventually expect some slowdown in the rate of price growth, which on whole is probably a good thing. The last thing anyone needs is an overheated housing market as our economy continues to recover from the impacts of the pandemic.
Now, in this video, I've covered the state as a whole, but every local market has its own trends to be aware of. So Realtors, be sure to check out sunstats.floridarealtors.org for interactive local market statistics, or visit our storehouse of local- and state-level market reports at floridarealtors.org/research. See you next month!