February 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 February 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:

Real Estate Cycles – Norms, Exceptions, and Expectations Shaping 2023

As we move out of two and half years of one of the most dynamic luxury real estate markets and transition into a new cycle, there is still an underlying apprehension as to what 2023 will bring, especially in the upcoming spring market.
For the most part, expert and media expectations of a recession causing major impacts on the market have quieted, and the talk is now of ‘correction’ rather than ‘crash.’

It has long been a common belief that the real estate market is cyclical, with predictable patterns emerging both in the short term as well as over multiple years. It is contended changes are not random, and most patterns involve cyclical trends that recur both seasonally and in the long term.

However, there is also an expression “there are always exceptions to the rule,” and certainly, the last three years have seen outside influences impact the speed of change and some of the expected norms in traditional cyclical periods.

Cyclical Trends

Understanding real estate cycles are important as they can provide reliable information about how and when to buy and sell, particularly when a market is moving through a transition.

Typically, the short-term real estate cycle in North America happens over the four quarters of the year, when generally the overall market sees definite and distinctive ebbs and flows. In normal years, expectations are that the winter months will see the build-up of interest by sellers to list. This is in anticipation of buyers wanting to purchase in the spring market, which is usually the most prevalent time for buying and selling. 

Summer typically sees a decline in sales, and as inventory remains on the market longer, the negotiation power starts to shift to the buyer’s favor. Fall sees inventory levels that have increased significantly during September create the second busiest time of year, only for inventory and sales to decline as we head toward the end of the year.

Driven by economic forces, the long-term cycle usually overlays the short-term’s cyclical patterns and is responsible for providing a bigger picture of the status of the market (i.e., whether it’s buyer, seller, or balanced) and the overall direction of consumer demand. 

It is comprised of four main phases: Peak, Recession, Trough, and Expansion, and unlike short-term cycles, there is no exact science on when and how long each of these phases last.

Historically, these cycles will be experienced consecutively as you cannot have a sustained expansion or peak without an eventual recession and trough. How strongly each of these phases impacts the market also varies considerably.

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