Coastal: Market Report Q2-2022

2022 Second Quarter 2022 Market Report

Report Written By: Elliot F. Eisenberg, Ph.D. Source: Stellar MLS

Economic Overview Nationally By: Elliot F. Eisenberg, Ph.D.

Economic Overview

T

his has been a painful half-year for the U.S. economy, with Q1-2022 GDP declining at an annualized rate of 1.6%. At this point, the best-case scenario for Q2-2022 is for very slight growth, around 1% or so, but it is more likely to come in flat or slightly negative as the economy continues to be battered on multiple fronts. While the impacts of Covid-19 are declining, both in the US and globally, resultant supply chain issues remain a problem. Inflation is very high and is impacting household incomes, in fact, national real income has been declining since fall of last year. Household savings, which had been near record highs, have declined, especially in lower-income households, and consumers are spending less. Fuel prices are at record highs, impacting both households and businesses, and the stock market posted the worst half-year since 1970, with both stocks and bonds performing poorly.

Monthly employment growth remains strong, although first-time jobless claims have noticeably risen.

Collectively, this is a lot to overcome, and the forecast for GDP growth for CY-2022 is, at best, 1%, with the probability of a recession sometime in 2023 at 75%. The good news - the economy entered this troubling situation in much stronger condition than usual.

Corporate balance sheets are strong, household finances are objectively good, and banking institutions are solid. If we do wind up in a recession, this is in no way a repeat of the Great Recession of 2008/2009. Current expectations are that inflation will top out no later than Q3-2022, pulled back by both the Federal Reserve Board’s interest rate hikes, some organic improvements to supply chains, and slowing consumer demand, especially for goods. That said, the projected decline in inflation is unlikely to be fast enough to change the Fed’s rate-raising trajectory and certainly not after the recent strong jobs data. This is because inflation has become increasingly economy wide, and is no longer contained to autos, energy, and food.

As a result, the Fed has made it quite clear that they will continue to raise rates due to worsening inflationary pressures even if it pushes the economy into a recession. They have signaled intentions to raise the fed funds rate every six weeks for the near future (perhaps for as long as a year) with the next several hikes in the 0.5%-0.75% range and then 0.25% until the inflation target rate is in sight. If inflation data does not worsen, the Fed will not alter the current course, and 10-year Treasury and 30-year mortgage rates should not meaningfully change from where they are now. Of course, if inflation gets significantly worse, the Fed will tighten monetary policy further. Conversely, should inflation dissipate more quickly or if the economy stalls or falls into a recession, the Fed might institute fewer or smaller rate hikes, or stop rate hikes earlier than they would otherwise. Regardless, expectations of inflation went up rapidly in the first half of 2022, and rates are more likely, if anything, to fall from where they are now than rise.

Housing Market Overview There are several key factors to watch in the housing market for the rest of 2022. First, while mortgage interest rates are unlikely to rise significantly higher than they are now, we are already starting to see the impacts of rising rates on the housing market. May closed sales, based on contracts from March and April when rates had increased somewhat, already show signs of slowing, and with higher mortgage rates since, sales activity is likely to show additional declines. In addition to interest rate impacts, softening in the job market, reduced household savings, and falling equity prices, will slow sales. We already see this in data for weekly applications for first-time mortgages, which continue to decline on a relative basis compared to pre-pandemic levels.

Another meaningful change of late in the housing market is the rise in year-over-year inventories for the first time since early 2019.

However, inventory growth, while high in percentage terms, in actual units remains relatively small. At the national level, available inventories are at 1.16 million units, still well below normal pre-pandemic levels. Price appreciation through the first half of the year was surprisingly strong, much stronger than most economists had predicted. However, higher home prices and interest rates will manifest in slowing rates of home price appreciation, which should go from 15-20% over the past year to closer to 5-7% by the end of the year.

If inflation is considered, real price appreciation may be around zero.

In terms of new housing supply, new construction of multifamily properties will continue to do well but perhaps soften slightly because of tightening credit conditions. Single-family starts are likely to decline somewhat from where they are now, but not by much. The number of single-family units under construction is relatively high, but that is less because of new starts, and more because builders have been unable to complete homes under construction due to supply chain issues.

Economic Overview Florida In Florida, the statewide unemployment rate was 3.0% as of 05-2022, slightly below the national average of 3.8% and down substantially from the pandemic peak of 13.9% in 05-2020; the lowest was 2.7% in 02-2020. In Hillsborough County, the 05-2022 unemployment rate was 2.3%, the lowest rate since 05-2006, while in Pinellas County it was 2.2%, a 0.1% increase over last month but otherwise the lowest rate since April 2006. Inflation-adjusted real GDP for the state in Q1-2022 was an estimated $1.03 trillion, down just slightly from Q4-2021 but still meaningfully higher than the pre-covid peak of $980 billion in Q4-2019.

Across the state of Florida, the median sale price of a single-family home in May (the latest data available) rose to $420,000, a 21.8% gain over last year, while the townhome/condo median sale price rose by 28.8% to $322,000. Compared to last year, closed sales of single-family homes in May were down 6.9% while condominium and townhome sales were down 14.4%. Higher prices pushed overall sales volume up despite declining sales, and sales volume of single-family homes rose 7.7% over last May while volume of townhomes and condos was up just 2.1%. Inventories of single-family homes rebounded significantly and there were 40,013 active listings at the end of May, a 1.4 month’s supply of inventory.

Inventories of townhomes and condos, at 18,725 active listings, were down from last May and represented a 1.5 month’s supply of inventory.

Across Florida...

Higher prices pushed (combined data), Q2-2022 In Hillsborough and Pinellas counties median prices continue to show significant over last year, overall sales appreciation with single-family homes gaining 25.0% to $435,000, an all-time high, and townhomes and condos up 27% to $285,970, also a record. Average were at record levels volume up prices as well, with single-family homes at $564,222, up 25.0% over last year, and townhomes and condominiums at $380,517, up 22%. Not surprisingly, the high prices and despite given higher interest rates, closed sales of single-family homes during Q2-2022 compared to the second quarter of 2021 were down by 14.0% while sales of and condos declining townhomes were down by 17.0%. New listings of single-family homes compared to Q2-2021 were up 8.0%, while new listings of townhomes and condos were almost and in combination sales. flat, with the sales slowdown, inventories nearly doubled. Month’s supply of inventory for both types of property bumped up dramatically this quarter and is at 1.4 single-family homes and 1.2 month’s supply of townhomes and condos. days on market dipped to all-time lows, with the typical single-family home for just 13 days and a townhome or condo on the market for 14 days, well below the 18 properties were on the market last year.

month’s supply of Interestingly though, remaining on the market and 26 days, respectively,

Florida continues to have a very strong housing market, with high in-migration from other parts of the country, especially the northeast where property and income taxes are much less favorable. While much of southeastern Florida lacks developable land, the Tampa/St. Petersburg area is welcoming and continues to grow rapidly. New amenities are being constructed and announcements of firm relocations to the area are a regular news item. Data from the Federal Housing and Finance Authority show that the Tampa/St. Petersburg/Clearwater MSA, with annualized price appreciation of 29.04% for the year ending Q1-2022, was the 14th fastest appreciating MSA of 237 metros surveyed, or in the top 5%. While there may be a perception that the market is being flooded with more inventory, the reality is that inventory levels are currently increasing by about 10% per week, but days on market are at record lows. Still, improving inventory levels may be the first signs of a slightly loosening market, welcome news for buyers looking to enjoy the opportunities and amenities that the area provides.

About the Author: Elliot Eisenberg, Ph.D. is the Chief Economist of GraphsandLaughs, LLC, a Miami-based firm specializing in national and international macroeconomic consulting and speaking. Dr. Eisenberg earned his Ph.D. from Syracuse University and was formerly a senior economist with the National Association of Home Builders. He is a regularly featured guest on cable news programs, talk and public radio, and authors a daily 70-word commentary on the economy that is available at www.econ70.com.

Pinellas County Single-Family Homes In Pinellas County, the median sale price of a single-family home was at an all-time high of $446,000, up 24% compared to last year. The average price rose 25% to $600,142, also a record high.

Sales volume of single-family homes in Pinellas County during Q2-2022 was nearly $2 billion, an 8% increase over last year.

Closed sales during the quarter declined 14% compared to last year, to 3,267, while new listings rose 4% to 4,333. That pushed inventories sharply up to 1,569 active listings, which represents 1.4 month’s supply of inventory, a huge gain over last year’s 0.5 months and last quarter’s 0.5 months.

The most expensive single-family home sold in Pinellas County during Q2-2022 was for $10.7 million.

The most expensive single-family home sold in Pinellas County during Q2-2022 was for $10.7 million.

Days on market for single-family homes in Pinellas County was at an all-time low of 13 days during the quarter, down from 18 days last year and from 21 days last quarter, while percent of sold price to original list price of 101% was up from 100% last year and the same as last quarter.

Median Sold Price $446,000

500

400

Aver age Sold Price $600,142 600

$360,000

500

300

Thousands

Thousands

350

250 200 150 100 50 0

2020 2021

2021 2022

Second Quarter

24%

$480,866

400 300 200 100 0

2021

2022

2020

2021

Second Quarter

25%

Dollar Volume

Closed Sales 2.5

5000

3,782

2.0

3,267

Billions

4000

3000 2000

1.5 1.0 0.5

1000 0

$1,960,664,631

$1,818,635,410

2021

2022

2020

2021

Second Quarter

0.0

2021

2022

2020

2021

Second Quarter

14%

8%

Percent Sold Price to Original List Price 100%

101%

2021

2022

Second Quarter

New Listings

5,552 4,150

1%

6,558 4,333

Aver age Days on Market

18

13

2021 2021

2022

Second Quarter

4%

2021

2022

Second Quarter

28%

1830 McCauley Rd Clearwater, Florida 4 BEDROOMS | 4 BATHS | 4, 563 SQ FT

879 Harbor Island

Clearwater, Florida 4 BEDROOMS | 3 BATHS | 3,426 SQ FT

Pinellas County Condos and Townhomes The Pinellas County median condo and townhome price of $282,000 rose 24% above last year and was at an alltime high. The average price of $391,948 was 18% more than last year and also a record high.

Dollar volume of townhome and condo sales during Q2 was down a slight 1.0% to $987 million.

The number of closed sales compared to last year was down 17% to 2,518, while new listings were up 1% to 2,822. The 968 active listings at the end of June represent a 1.2 month’s supply of inventory, double last year’s level.

In the condo/townhome market in Pinellas County, the most expensive property sale was $6.4 million.

Days on market for condos and townhomes in Pinellas County fell from 30 days in Q2-2021 to 16 days in Q2-2022 and were down from 21 days at the end of Q1-2022. The percent of sold price to original listing price ratio of 100% was the same as at the end of Q1-2022 but higher than last year’s 99%.

In the Pinellas condo and townhomes market ... The aver age price of $391,948 was 18% more than last year and also a record high.

Aver age Sold Price

Median Sold Price 300

$391,948

400

$282,000

$331,246

250

300

200

Thousands

Thousands

$228,250

150 100 50 0

2020 2021

2021 2022

Second Quarter

24%

200

100

0

2021 2020

2022 2021

Second Quarter

18%

Dollar Volume

Closed Sales

$1,000,364,180 1BIL

$986,923,879

4000

800

3,020 3000

Millions

2,518

2000

1000

0

600

400

200

2021

2022

2020

2021

0.0

2021

2022

2020

2021

Second Quarter

Second Quarter

17%

1%

Percent Sold Price to Original List Price 99%

100%

2021

2022

New Listings

5,552 2,799

6,558 2,822

1% Second Quarter

Aver age Days on Market

30

16

2021

2022

2021 2021

2022

Second Quarter

1%

Second Quarter

47%

911 EDEN ISLE DR NE St Petersburg, Florida 4 BEDROOMS | 3 BATHS | 3, 322 SQ FT

1102 Beach Tr ail

Indian Rocks Beach, Florida 3 BEDROOMS | 3 BATHS | 3, 311 SQ FT

Hillsborough County Single-Family Homes Both median and average prices for single family homes in Hillsborough County for the second quarter of 2022 rose to alltime highs. The median price of $430,000 was up 28% compared to 2021 and the average sale price of $541,338 gained 25% over last year.

Q2 sales volume of about $2.8 billion was up 8% over last year.

Closed sales during Q2 were down 14% from 2021 to 5,128, while new listings rose 10% to 7,237. There were 2,597 single-family homes available for sale at the end of June, double what was on the market at the same point in 2021, but still representing just 1.4 month’s supply of inventory.

The most expensive single-family home sold in Hillsborough County during the second quarter of 2022 was for $10.8 million.

Compared to the same period last year, days on market declined from 17 to 13, a 24% decrease and is well below the 20 days from Q1-2022.

Percent of sold price to original listing price rose to 101%, an increase compared to Q2-2021’s 100% and the same as last quarter.

Median Sold Price 500

Aver age Sold Price

$430,000

Thousands

Thousands

500

$337,000

300 250 200 150 100 50 0

2021 2020

2022 2021

Second Quarter

28%

$541,338

600

400 350

The most expensive single-family home sold in Hillsborough County during the second quarter of 2022 was for $10.8 million.

$433,983

400 300 200 100 0

2021

2022

2020

2021

Second Quarter

25%

Dollar Volume

Closed Sales 6000

5,935

3.0

5,128 4000

2.0

Billions

5000

2.5

3000 2000

$2,775,980,222

2021

2022

1.5 1.0 0.5

1000 0

$2,575,690,059

2021

2022

2020

2021

Second Quarter

0.0

2020

2021

Second Quarter

14%

8%

Percent Sold Price to Original List Price 100%

101%

2021

2022

Second Quarter

New Listings

5,552

6,558

1%

6,558

7,237

Aver age Days on Market

17

13

2021

2022

2021 2021

2022

Second Quarter

10%

Second Quarter

24%

4715 San Jose St Tampa, Florida

4 BEDROOMS | 3 BATHS | 3,382 SQ FT

4713 W Melrose Avenue Tampa, Florida

4 BEDROOMS | 5 BATHS | 3,662 SQ FT

Hillsborough County Condos and Townhomes The median price for townhomes and condos in Hillsborough County rose 30% to $292,000, an all-time high and the highest level of price appreciation across the region. The average price of $362,585 was also at an all-time high and gained 30% over last year.

Sales volume increased 6% compared to Q2-2021 to nearly $582 million.

There were 1,605 townhomes and condos that sold this quarter, which was down 18% compared to last year, while new listings were almost flat at 1,982. Active inventories more than doubled to 601 available units. While that represents only 1.2 month’s supply of inventory, it is a vast improvement over the 0.4 months available at this point last year and at the end of Q1-2022.

The median price for townhomes and condos in Hillsborough County rose 30% to $292,000, an all-time high and the highest level of price appreciation across the region.

In the condo/townhome market, the most expensive home sold during Q2-2022 in Hillsborough County went for $5.6 million.

Days on market for condos/townhomes was 11 days, down from 18 days in Q2-2021 and down from 14 days at the end of Q1-2022. Units generally sold for a bit more than full listing price, at 102%, up from 100% of original list price at this point last year and from 101% last quar ter.

Median Sold Price

Aver age Sold Price $362,585

300 –

$292,000 $225,000

200 –

100 –

0

2021 2020

2022 2021

Second QUARTER

30%

Thousands

Thousands

400 –

300 –

$279,615

200 –

100 –

0

2021 2020

2022 2021

Second Quarter

30%

Closed Sales

Dollar Volume 600

3500 3000

1,605

1000 500

Millions

1,964

1500

0

$581,948,368

2021 2020

2022 2021

500

2500 2000

$549,163,761

400 300 200 100

2020 2021

2021 2022

Second Quarter

0.0

Second Quarter

6%

18%

Percent Sold Price to Original List Price 100% 99%

102% 101%

100% 100%

100% 100%

2021

1,965

Second Quarter

2022

New Listings 5,552

2%

6,558

1,982

Aver age Days on Market

18

11

2021 2021

2022

Second Quarter

1%

2021

2022

Second Quarter

39%

16458 REDINGTON Drive Redington Beach, Florida 3 BEDROOMS | 2 BATHS | 1,680 SQ FT

485 Harbor Dr S

Indian rocks Beach, Florida

4 BEDROOMS | 5 BATHS | 4,413 SQ FT

691 S Gulfview Boulevard Clearwater Beach, Florida 3 BEDROOMS | 3 BATHS | 1,698 SQ FT