Is affordability Driving Market Bottom for Daytona Beach Homes?
Maybe. Over the past few days, we’ve seen a few articles that are saying that the bottom of the recent big price drops may have been reached. We also see that the median price of Daytona Beach Homes has jumped from $175,000 in May to $189,000 this month. That’s a fairly big increase, but we are not ready to call the bottom of the market. Here’s why:
- Just as we are increasing sales and prices are rising, mortgage rates jumped 0.5% over the past two weeks
- Market behavior by sales price range is very different
- Daytona Beach Condos are selling below historic percentages
Mortgage Rates Jump
We reported a few days ago that mortgage rates jumped 1/2% in the past two weeks. This will impact buying decisions and may put pressure on prices for buyers to get the same home value at a higher mortgage payment. Many people buy their homes based upon the total payment, not necessarily home price. See Mortgage Rate Increases Headline Daytona Beach Real Estate News for more on the impact of the mortgage rate increase.
Daytona Beach Real Estate Market Segmentation
There are three distinct markets that we have identified through our recent analysis:
- Daytona Beach Homes for sale under $200,000
- Daytona Beach Homes for sale over $100,000
- Daytona Beach Condos
In May, over 58% of all sales in Daytona Beach were under $200,000 and 85% were under $300,000. We would say that this market is fairly stable and in balance. Homes sold at over $300,000 are not selling at the same rate and we expect the price bottom has not been reached in that market.
Daytona Beach Condo Sales Lagging
Finally, condos have historically been selling at about 21% of all home sales, or, one condo for every 4 houses sold. Last month, condos made up only 13% of sale and this month to date, they make up 17%. So the condo market is not showing enough strength yet and will probably see prices drop a little more.
Our Call for Daytona Beach Real Estate Prices
Our analysis says that we are at or near the bottom of the under $200,000 house market. Other markets are lagging and sellers will need to be very aggressive in those markets, resulting in price drops. The condo market is still soft and we are not willing to call a bottom to that market.
The good news is that homes are more affordable and because of this, new buyers, who were priced out of the market in the past, can now afford a home. New buyers coming into the market can do nothing but improve the market.
I’m not an economist, I’m a Daytona Beach Real Estate Agent who looks at the numbers and talks to a lot of people. My personal sales are improving this year and I have had a lot more inquiries and showings in the past few months. I am busy again. This is not translating into as many sales as I would like, but, is an indicator that things are improving “beyond the numbers.”
The Daytona Beach Homes market will eventually stabilize as will the economy. We’ve seen these cycles before and we’ll see them again. We will continue to analyze and report as best as we can.