SW Florida home sale prices in Lee County single family home sales shot up another 16.68% over the previous month and were up 17.14% over last April’s figures as reported by the Florida Association of Realtors. Year to date home prices are up 34.35% bucking the national trend.
Buyers are astonished to see prices rising like this and inventory is shrinking. It should not come as a big surprise though to readers as we’ve been explaining for months why this would occur. It is simple supply and demand. Demand is still high for affordable homes both from prospective homeowners and investors who can actually cash flow properties right now based upon today’s prices and interest rates.
Typically in the housing cycle buyers try to wait until they perceive bottom and then scoop in and buy. Unfortunately you never really know when you’ve seen the bottom until you see it in the rear view mirror. I’m always amazed at the buyers in a hurry after they feel they’ve missed the bottom who low ball properties with one last try to make up for every last penny they were trying to save on the buy.
This makes about as much sense as the seller who over-prices his home by 20% just after the market has turned and headed down. Sellers never want to get caught chasing the market down, and buyers don’t want to get caught chasing the market up.
Unfortunately we’re seeing buyers chasing the market up and low balling offers only to lose out to another buyer and starting the process all over again. Buyers need to realize they’re not in competition with the seller, they actually in competition with all the other buyers out there. Supply of inventory has shrunk so there is less available property to go around for all the buyers out there. If sales go down later this year it won’t be due to lack of buyers, but rather lack of inventory.
We are expecting more foreclosure listings in the future although we’re not expecting a mass dumping of properties here in SW Florida because we believe we’ve seen the lion’s share of the investor properties that flooded the market the past several years. Instead, we believe we’ll see an influx of foreclosures on “Average Joes” who have lost their job or become underemployed due to the poor economy.
If our view is correct, and if we don’t see any major wildcards affecting the housing market, prices could maintain a slow pace upward until we see more inventory. Sellers have no competition from builders because there is little building activity at these price points. That will change once prices go higher, but the question is how long will it take to get to that point?
The outlook for sellers looks brighter unless you’re looking for a return to 2005 prices which isn’t happening anytime soon. Buyers need to decide if they’re serious and look to buy their 1st choice or their 5th choice. You can educate yourself by reading articles like this or speaking with your Realtor about what’s REALLY going on in your market. If you decide to take this advice, you might just have a chance at that 1st choice. If you’re the type that likes the do-it-yourself home study course, you might be looking down the barrel of your 5th choice. Either way, the market controls your direction and you control when and where you arrive.