As of 09-09-2020, In the areas we reviewed, there are 30% fewer Single Family homes listed for sale than last year. The volume of sold houses remains lower than normal as well.
The good news is that right now, prices are holding. The houses that are listed for sale are selling faster than the same time last year.
A reality check says it won't last. When a normal volume of houses are listed for sale, all of the other pressures that already exist will create pricing pressures.
If you're going to sell, list your property now.
- THE FIRST ACTIONS OF A PENDING DOWNTURN HAS OCCURRED
- WHY PRICES ARE UP WHILE SOLD VOLUME IS DOWN
- INCOMES ARE DENTED
- FLORIDA HOME VALUES CAN BE HURT BY PRICES IN OTHER STATES
- A DISCONNECT BETWEEN BUYERS AND SELLERS
- THE START OF A DOWNTURN
- OCTOBER/NOVEMBER ARE THE MONTHS TO WATCH
- THE DRIVING FORCE BEHIND MARKET PRICE
- MARKET PRICE VS HOME VALUE
- WHAT YOU CAN EXPECT AS A SELLER
There is a moratorium on foreclosures which was extended again to October 1st. Once the moratorium is lifted, the volume of listings from foreclosure will increase. This is in addition to other pricing pressures.
THE FIRST ACTIONS OF A PENDING DOWNTURN HAS TAKEN PLACE
Banks have tightened lending requirements which prevents many buyers from being able to get loans, although many other lenders are still making loans to people with lower credit scores than what appears below.
- Chase now requires a credit score of 700 and 20% down
- Wells Fargo requires a credit scott of 720 and 20% down
- Bank of America and others are similar or the same as Chase and Wells Fargo
Many buyers who have an established relationship with their banks may be able to get a mortgage with a lower credit score or less money down, but most buyers will not be able to get approved
unless they meet the requirements.
If you're a buyer running up against these requirements, speak to a Mortgage Broker. They work with many lenders and know which lenders are more likely to approve you.
Lenders have several reasons for tightening credit requirements. One is that they don't want to get stuck with a bunch of bad loans if the economy doesn't turn around. Another is that a large number of mortgages are now in forbearance (which puts mortgage payments on hold). Banks may have to carry a huge number of homeowners for up to 12 months. The sharp increase of forbearances means less money to lend.
WHY PRICES ARE UP WHILE SOLD VOLUME IS DOWN
Real Estate prices in Florida have not declined and in many areas, they're increasing. This is a tricky situation. The reason prices are holding is because fewer homes are being listed for sale.
This is a pure Supply and Demand situation. Once the normal volume of homes listed for sale return, all of the other pressures that already exist will bring prices down.
If I was planning to sell my home in the near future, I would change my plans and list now to avoid the risk of getting caught in a Real Estate market downturn.
One new element has entered the picture which may help keep prices up for a bit longer. The riots and looting going on all over the county (not the protesters), are
causing many people to want to move now instead of at a future date. Many people realize that they can work from anywhere. They can leave the cities for sunshine, beaches, lower taxes and a more enjoyable
lifestyle. Within a couple of months, the data will tell us if the riots are driving people away from those cities. As of now, the data is showing an exodus by many who can afford to move.
INCOMES ARE DENTED
There are so many examples of disruptions taking place. You might not personally be feeling the pain, but financial issues are being felt nationwide. At any time in history, you need a humming economy for prices to maintain the highs of an upmarket. Florida has a major advantage which is that people want to move here for the beautiful weather and lifestyle. That fact will help home sale prices hold for A bit as people flee other States but prices won't hold long term if the economy doesn't show a healthy recovery. Recent data shows that many part of the economy are recovering. Even so, many other industries are losing a lot of money.
While you've seen or heard about many closed businesses, there are just as many that are out of sight and mind. Restaurants, entertainment destinations, and schools all stopped buying Florida crops during the peak of the virus. This left Florida farmers with no orders. The result is an estimated 85% loss from crop profits as well as food sent to trash. But it also affects employment from the crop fields all the way to the point of sale.
FLORIDA HOME VALUES CAN BE HURT BY PRICES IN OTHER STATES
A lot of people from other States rely on selling their home so that they can buy in Florida. If their home price drops significantly, many people will put off their move to Florida. This is now more of a January concern, but it's a factor.
A DISCONNECT BETWEEN BUYERS AND SELLERS
If the real estate market does in fact move into a downturn, there will be a few months of a disconnect between buyers and sellers. Some sellers will win the early stages of the price tug of war, but ultimately, you’ll see sellers dropping their prices. Eventually, most sellers will be willing to sell at new lower price points.
THE START OF A DOWNTURN
At the start of a downturn, if a low offer is made, sellers will be looking at comparisons of recent high prices and most sellers will counter back at their full ask or just reject all offers below their target sale price.
At some point, able buyers will want a steep discount off the current list price.
LATE OCTOBER/NOVEMBER ARE THE MONTHS TO WATCH
The cities and counties in Florida that we reviewed in April and May showed a 33 -to- 44% decline in volume for year-over-year SOLD single-family houses.
Prices held in June, July and August. If the economy doesn’t show strong signs of turning around, October/November will see a shift start to take place. I'm leaning toward November for when pressures will start to show sellers dropping price.
THE DRIVING FORCE BEHIND MARKET PRICE
If the expected downturn does occur, buyers who must buy and sellers who must sell will be the driving force behind market price. It might take 6 -to- 12 months for a new normal real estate market to develop. A lot depends on whether the reopening of local economies creates enough of a recovery to erase the losses created from the closing of our economy.
There are always going to be people who need to sell or buy now. If you’re one of those people,
don’t hesitate to put your house on the market. But, make decisions using short term data. You need an analysis from a broker that shows you the best way to position your house in the market based on price
and targeting specific buyer profiles so that you can focus your marketing to your best prospects. You need more than just appearing in the MLS.
For setting your best price, see: Absorption Rate Pricing
See year over year sales volume data:
Home Sales Volume Dives Year Over Year April
Home Sales Volume Dives Year Over Year May
MARKET PRICE VS HOME VALUE
This is the tip of an iceberg explanation. The market price is the amount a buyer will pay for your house whether or not the buyer's price equals the value you believe your house is worth. An offer
by itself is not a market price, but if you accept the offer and complete the sale, regardless of the value factor, the sold price is now the market price. It may or may not affect other home sale prices in your area, but it can.
You might have remodeled your kitchen beyond the price point that is typically found in your neighborhood. When you decide to sell your house, you may choose to list at a higher
price to reflect the value of your remodeled kitchen but your potential buyers may not be willing to pay more than what your house would sell for had you not remodeled your kitchen.
Here's a simple concept, if you don't get offers within your area's normal time frame (absorption rate period), you
are either priced wrong or your marketing isn't targeting your correct buyer type.
WHAT YOU CAN EXPECT AS A SELLER
Right now and possibly through September, you may be able to list at the high end of your price range for the condition of your property. If you wait to list until September, you might need to consider a lower price point. You should give more weight to the short term Absorption Rate in your area than you do to simply looking at comps. You'll end out getting a better understanding of how your property will fit into the market.
RELATED:
1) WILL FORECLOSURES FLOOD THE MARKET WITH NEW LISTINGS?
If you need to sell, contact Scott today to list your house. We will do more than traditional marketing and we’ll show you the recommended price to attract your ideal buyers.
"Scott" Polisar
Broker Associate
Hunt Realty Group
We provide service in SWFL areas and referrals to great broker everywhere else in Florida
Call Scott:
941-882-5494 Ext 701
813-324-1005 Ext 701
We will update each Month through September on select Florida markets. We'll look at Punta Gorda, Port Charlotte, North Port, Venice, Valrico, Riverview, Lithia, and various counties. Check back.