Who says summer is sleepy in Vero Beach Florida? May showed several key movements in the Vero Beach Florida real estate market. 

Each month we’re your eyes and ears to look at the datum to show us whispers and signals that may not be obvious but warrant watchful observation that may be forward-looking indicators of where our market is headed.

Some movements of note for May:

Inventory is Down

After a climb to a peak of 236 homes for sale on our island – still 30% less than pre-COVID history levels – May saw inventory decline to 189 detached homes for sale on the island – a whopping 43% lower than pre-COVID norms!

What’s up with that? Are Sellers taking their homes off for the summer as is not uncommon – or did the recent hot inflation reports and uptick in interest rates deter Sellers from listing? 

While we know that anytime inventory is down DEMAND exceeds SUPPLY – the better question is WHY. This bears watching, with the later Q3 and 4 activity producing the answer.

Slight Reduction in Price Reductions

Sellers taking price cuts to get a sale reduced by 8%, down to 47% from our peak of 51% May 3. Florida has been getting a lot of negative headlines by pundits saying we and places like Austin TX are among the softest markets -- keep in mind all real estate is HYPER LOCAL, with the WEST coast of FL seeing the biggest inventory gains + price reductions. Our take: Vero’s long-standing low-density zoning acts to some degree like Teflon for vagaries of the market. Again, this bears watching.

Delta Between New Listings and All Listings

New listings came on priced at an average of $1.595 – while the average of ALL LISTINGS including those listed previously and yet unsold – is 11% higher at $1,800,000. This is big in our judgment, as the consensus is typical as Mike Simonsen often says ‘the cohort of new listings in aggregate’ knows how to price homes to sell. Does this delta portend some softening in average sales prices – given values are up 50% since 2019? Perhaps, this delta needs to be watched in conjunction with the percentage of listings taking price cuts in an effort to sell.

Middle Market Remains the Softest Sector for the 3rd Month

This is also big. Historically Vero’s island market has been an inverted pyramid, with the most expensive homes taking the longest to sell. Since March however, we noticed a new phenomenon in which the island’s middle market – ranging from 1.2/1.4 to 2/2/2M – has been the slowest price sector to sell, period, as much as 11-20% longer to sell than any price sector, including our luxury sector, usually defined as over $4.4M.

What’s the deal??? These homes are often in what we term “house purgatory” – too expensive to raze and rebuild for their neighborhoods, yet often perceived to need renovation by Buyers, who are certainly higher net worth individuals, but not of the uber net worth shopping in our top market sector. And for these Buyers, the uncertainty of the cost of renovation (also higher post-COVID) combined with the inflated cost of insurance and taxes gives them pause. And so these homes sit. 

These homes are what I’d instinctively say represent the majority of our single-family homes, built between the 1980s and early 2000s.

Buyers have shown a willingness to pay more for a home they perceive to be move-in ready. And often these Buyers will pay 2-3 times more than the cost to them if they were to take on the very same updates. 

This is a cautionary tale to Sellers wondering why their homes are not selling. Look at your home through Buyer's eyes. What lever can you pull to increase demand for your home? Price? Cosmetic updates like painting walls and cabinets, changing outdated light figures and wall coverings? 

Talk to your broker to assess cost and likely return to see which levers make sense for you to pull to respond to the market’s reaction to your home and put your sale back on track with you in more control of the outcome. 

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