News outlets reported today that “Mortgage Applications are down and have fallen for the 3rd straight week.” These reports are released regularly…..Applications are down this week….up this week……….
Interested Buyers and others who are watching the Market often use these Reports to gauge the health of the Real Estate Market, however, these Reports have to be considered in combination with additional information and placed into correct context in order to get a true picture of the current Real Estate Market. Taking one piece of information and running with it instead of evaluating all relevant data just isn’t a great idea.
In previous Markets, Mortgage application activity was very closely tied to the number of Real Estate sales, however, in the current South Florida Real Estate Market, Mortgage Application activity is a very inaccurate indicator of the current level of Real Estate activity and sales. The reason is because our current Market is one that’s dominated by Cash Buyers.
- ~80% of Condos sold are Cash sales
- ~40% of Single Family Homes sold are Cash sales
Sales in South Florida are the highest they’ve been in 5 years and current sales have actually exceeded the number of properties sold during the peak of Market in 2005. The market has improved significantly and because of increased sales, inventory has decreased drastically. It’s not 2007 – 2008 anymore (that was when we had the lowest number of sales and highest levels of Inventory).
Related information:
- Is it still a Buyer’s Market in Broward County?
- 2011 Real Estate Market Report for Ft. Lauderdale
- South Florida’s current Real Estate Market