December 2023 Boca Raton Area Luxury Market Report from Jean-Luc Andriot and The Institute for Luxury Home Marketing

As I am a member of The Institute for Luxury Marketing, I thought I would share with you their December 2023 report for Boca Raton - Delray Beach.

It is your guide to a general analysis on the trends and comparative data on the top-residential markets in the Boca Raton - Delray Beach area.

Statistics are separated between single family homes and condominiums / townhomes in Boca Raton - Delray Beach.

At the national level:

The Glimmer of Change Grows Brighter

Last month, we reported a glimmer of hope as the luxury market, for the first time in 2023, witnessed an increase in the number of sold properties and new inventory entering the market compared to the same month in 2022. This encouraging trend continues this month.

The Numbers are Up

Compared to November 2022, the number of sales last month rose 5.1% for single-family homes and 13.7% for attached homes. This is not the only growth statistic that could show the start, albeit a slow one, of a market comeback.

The number of new listings entering the market last month also increased compared to November 2022, by 21.1% for single-family homes and 29.3% for attached properties. The rise in new inventory entering the market is equally significant as it shows a growing confidence by sellers compared to last year.

Lack of new inventory has been one of the most significant challenges to the growth of sales during most of 2023, as it created a roadblock for opportunity. This was especially significant in a market where buyers had become highly specific in their property specification preferences.

As we noted last month, an increase in new listings has opened the door for this uptick in sold properties. This would not be the outcome, especially at this time of year, if the market was moving in a downward trajectory.

Other statistical parameters are also showing growth indications. The median sold price rose yearover-year just under 2% for single-family homes and over 5.3% for attached properties. The soldprice-to-list-price ratio also increased slightly by 0.2% to 98.2% for single-family homes and 0.6% to 99.0% for attached properties.

It is important to reiterate that these are not month-over-month increases, nor should there be an expectation of growth at this time of year. However, importantly, what has happened is a much slower rate in the slowdown of sales and new inventory than typically expected in November. This, again, is a positive indicator of seller and buyer optimism.

Interest Rates Trend Down

This turn of events has also been bolstered by the much-publicized decreases in interest rates over the last month. Not because the rate has decreased significantly, but for the first time since March 2022, there is a definite indication of a halt in the rise of mortgage costs.
So, the big question is will interest rates fall in 2024?

Fannie Mae forecasts that rates will drop from 7.6% to 7.1% during 2024. The National Association of Realtors is slightly more optimistic, with predictions of 7.5% in Quarter 1 and 6.3% in Quarter 4. The Mortgage Bankers Association predicts an even lower rate of 6.1% by the end of 2024.1

In Canada, rates are predicted to fall even further. Currently around 7.2%, the Prime Rate is expected to drop as low as 5.95% by the end of 2024. However, much of this depends on whether the Canadian government can reach its target of a 2% inflation rate.2

As economists continue to feel optimistic that interest rate hikes are done, especially after recent rate falls and signs of slowing inflation, it will still be the right combination of factors that will ultimately control the speed of the market’s recovery.

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