Weston Market Report - Feb/March/April 2004

  Weston Market Report: Sizzling Sales Slowed by Reduced Supply

 By Howard J. Willis *

 The Weston area residential real estate market has in a word been “Hot”.  Despite tough economic conditions, war, and other challenges Weston’s real estate market has steadily grown in values over the last two years.  When compared to other Broward communities Weston has reached the “tipping” point ** of supply and demand.  Weston’s supply and demand overlapped in April capping a steady trend of declining numbers of homes on the market, resulting in the same number of homes sold as listed for sale. 

 Supply Compared to Sales

In Feb/March/April of 2003 there was a total inventory of 1,860 homes and condominiums for sale, resulting in 1,425 home sales or 77% of supply. Compared to the same period in 2004, Weston had 1,120 homes for sale resulting in 96% of the inventory being sold or 1,050 homes.  This is a 40% decrease in available homes, telling us that continued demand for fewer homes from new home-buyers will probably continue to put pressure on average prices.  Month to month number of homes for sale decreased steadily over the last (15) months, from 650 homes in 2/03 to only 320 homes available in 4/04. 

 Prices

As we might expect, as supply has tightened, prices have increased both in listing price and actual sold price.  Listing prices increased from 2/03’s average of $450,000 to 4/04’s average of $660,000.  Prices increased year to year in each of the three months studied an average of 39%.  So of course we do see a direct correlation of increasing prices to a dwindling supply decrease of 40%. Listing prices increased this year month to month anywhere from $20,000 to $35,000.    But before you conclude that you have struck gold, let’s examine what we refer to as “yield” on a sale.  Yield is defined here as the selling price as a percent of the asking price.  Sellers often place unrealistically high prices on their homes and as we say help sell their neighbors’ home first before their own sale.  In ’03 the average yield for the period was 62%.  This percentage fell ten points in the same period of ’04 to 52%. This suggests that perhaps sellers raised prices higher in anticipation of their own perceived value compared to the reality of the market. 

 Let’s Compare

When we compare Weston with a population of 49,000 to Plantation with a population of 75,000, there are a few interesting differences in their respective market trends.  For Feb-Apr ’03 Plantation had a total of 1,075 homes on the market and sold 610 or about 57% same month inventory sold.  Weston had 1,860 homes for sale at that time and sold 1,425 or about 77%. 

 When we fast-forward to Feb-April ’04, Plantation had 1,315 homes on the market and sold 705 or 54% of the inventory.  During this period Weston had 1,120 homes for sale and sold 1,050 or 96% of inventory.  So while Plantation’s listing inventory increased by 22% for the three months year over year, Weston’s listing inventory decreased 40% and unit sales went down by 26%. Plantation’s sales trended in a positive direction, from 610 sales in ’03 to 705 sales in ’04 or an increase of 16%.  Weston’s trends went in the opposite direction, with 375 fewer homes sold in ’04 and 740 fewer homes on the market in ’04. 

 Price per Square Foot

In the $200-299,000 home price range, prices per square foot increased by more than 10%, from $108/SF in Feb-Apr ’03 to $119 in ’04.  In the $300-399,000 home price range, prices per square foot increased by more than 12%, from $140/SF in Feb-Apr ’03 to $157 in ’04. In the $400-499,000 home price range, prices per square foot increased by almost 13%, from $135/SF in Feb-Apr ’03 to $152 in ’04.

 In the $500-599,000 home price range, prices per square foot increased by almost 4%, from $152/SF in Feb-Apr ’03 to $158 in ’04.  In the $750,000 and above home price range, prices per square foot increased by only 1%, from $184/SF in Feb-Apr ’03 to $186 in ’04. Weston Prices increased highest in the $400-499,000 home price range 

Days on Market

In ’03 Weston averaged 50 days for a home to sell.  In ’04 this average dropped to 46 days.  Plantation had a similar decrease, from 48 days in ’03 to 44 days in ’04. 

 What Does All This Mean?

Weston is increasingly a seller’s market, benefiting from demand for its’ amenities and quality.  The city is essentially built-out and is for the foreseeable future selling most of the inventory that is placed on the market for sale.  Sellers will be challenged to market their home in a way that captures the highest possible yield.  Attention will be turned to not if the home will sell, but how and by who price will be maximized. Small changes, adjustments to price, home condition, and other factors will maximize yield.  

 Challenges on the Horizon

Mortgage rates have risen almost a full percentage point since the middle of March. Some analysts believe that the Fed's next rate increase already is priced into today's mortgage rates. Interest rates will have an important effect on new buyers entering the market.

Interest Rates Late May and Forecast:

 The demand for houses remains strong. Housing starts declined slightly in April, but the number was still high, at a seasonally adjusted annual rate of 1.97 million.  South Florida continues to draw a variety of buyers into the market, from corporate re-location to snow birds who want to make their home here and others.  Housing analysts are keeping a close eye on the home-buying patterns of baby boomers, who are beginning to retire. "As baby boomers are leaving the labor force, or preparing to leave the labor force, they are lining up their second home/retirement home," notes Credit Suisse Asset Management economist Kathleen Camilli. "Don't be surprised by a stronger than average U.S. housing sector in this decade."

 ** The concept that small changes will have little or no effect on a system until a critical mass is reached

 *Howard Willis is a realtor affiliated with Esslinger-Wooten-Maxwell Realtors.  The statistics for this review are collected from EWM’s Facts & Trends data base. He and his partner Allegra are principals in Allegra & Howard Willis Real Estate Group.  Howard has a law degree and specializes in providing real estate sales and services to premium home and condominium owners. Call with your questions and comments to (954)949-0444 or to @thewillisgroup.com. Learn more about Allegra and Howard at www.thewillisgroup.com