2020 Real Estate Forecast for 2020

by Jeff Lichtenstein – Broker and Owner of Echo Fine Properties

First of all, I want to wish all of you a Happy and Healthy New Year in 2020! Whether you are renting, just here for the season, or a full time resident we all know that we are so fortunate to live in what is surely the nicest spot in the entire United States. From the glorious weather and the beautiful beaches, to the exciting activities and the plentiful restaurants – I don’t think you can find a better place to call home.

2^nd of all, if you’re selling… I’m sure you will like what I’m going to say in this article. If you are buying… my advice is to move on things fast. Hindsight will be 2020 if not. (That’s the first 2020 pun!)

This time of the year I get a lot of people asking, “What do you see for the real estate market in 2020?” If you had asked me last year, you would have known that I had very bearish feelings on the market. Those unfortunately, were spot on. The ‘long term growth’, especially over the next 15 years what with the amount of baby boomer retirements and weather/tax reasons to move to Florida, will always keep the market here strong. But supply patterns, the economy, interest rates, and so many other factors can affect prices on a year to year basis. Last year I heard rumblings as early as October that we were going to be in for a tough season. Lots of those warning signs came out of California, and involved Title companies and Mortgage companies making severe cutbacks due to a slowdown. They correctly forecast a slowdown – much of it due to higher taxes (The State And Local Tax deduction or SALT Tax) in “Blue states”, and higher interest rates. In addition to this, people were not moving as much, and seemed to be staying in their homes longer than anticipated.

*Long term Projected Population Growth Palm Beach County per FDOT

2010: 1,320,134

2020: 1,473,000

2025: 1,559,600

2030: 1,636,400

2035: 1,703,700

2040: 1,760,000

2045: 1,809,800

To give you little background so that it’s easier to understand, our market is tough to predict in the fall. This is because while we aren’t as seasonal as we were when I first started in 2000, right now two thirds of the activity occurs in the Jan-June months. An important pattern here in Florida involves the snowbirds coming to town between October 15^th and November 15^th. However, they then often go back and forth for the holidays. Grand-kids may visit over winter break and leave January 5^th. The seasonal rentals start on January 1st. Their visitors then also leave on January 5^th. Once everyone does their Costco run and plays a round of golf or has a nice dinner, they then tend to call us to see homes around January 10^th. Usually, the first month of season is more exploratory. It is often less about offers than the other months (although a well-priced cherry location property will always go first), but then the faucet turns on and by mid-February it’s bedlam – with multiple offers taking place. This continues hot and heavy through to March 31st (when many renters go home) and even for another 6 weeks as buyers who lost something, or people who haven’t pulled the trigger, now do. Families usually start the process in March and want to finish up by July 1st so they can get in their new homes by the start of school in mid-August. July – September is ordinarily our slowest time.

Therefore, I normally look for 2 signs to gauge the strength of season. The first is “do we have a pre-season market in November-December?” This is important as many years it can be non-existent. The second sign is the strength of foot traffic in January.

Now, let me go back to 2019.

Interest Rates were higher in fall of 2018.
Government shutdown throughout January 2019
Reality of SALT taxes in Blue states people really didn’t plan for effected overall market
Bad real estate market in northeast – Many of those sellers are our buyers
Stock market had its worst December drop in 2018 since Great Depression
Adjustment period to lower price
Tons of new construction local startups. From Alton to Artistry to Avenier. There must have been 20 new projects in the Northern Palm Beaches that increased the supply.

Those 7 things combined killed the 2019 season.

This year, most of those things are not at play. Interest rates are lower and taxes are not a surprise. Price reductions or staging issues needed to move homes both in the Northeast and here have had a year to adjust. We had a terrible 2019 season but an unusually strong selling summer and as prices lowered and many buyers who had passed in the season, ended up buying in the off-season. This has let our inventory become way down. Our under contracts for 2020 January and February closings (homes that went under contract before season) as well as foot traffic and inquiries are way up.

On January 1, 2020, we were internally (through all of our exclusive ways that we collect leads) near 150 inquiries. Granted, we do have some exclusive sources, a $300,000 brand new website, and as a company are uniquely set up to handle inquiries with an in-house client concierge team, but that’s still a crazy amount of inquiries!

This is all the ‘pre-boots on the ground’ evidence that we have experienced – before the numbers hit the general public and the appraisers. Good inventory is very difficult to find. The million dollar and country club market – which was dead last season – has rejuvenated.

Obviously there are many factors that can affect markets, including unforeseeable economic events, but I see 3-5% market appreciation on property – depending on how the home shows, how it is marketed, and some other factors. Therefore my real estate forecast for 2020 is…. “Sunny skies ahead!”

Most Sincerely,

Jeff Lichtenstein

For a free and confidential evaluation of your home’s value, please contact me at 561-346-8383 or [email protected]

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