Throughout this year we’ve been reporting Lee County Florida listing inventory has been going down countywide approximately 500-1,400 units per month. Well, it happened again this month as inventory levels fell another 382 units which was a 4.38% fall in just one month. The biggest fall was in from March to April when inventory fell 12.66% followed by April to May when it fell 10.90%. Year to date inventory levels are down 29.3%
Official median prices are up 35% from January and it’s no wonder when inventory levels are falling so dramatically. The Ellis Team SW Florida Current Market Index now stands at 3.04 which is at its lowest level since September 2005 when it stood at 2.11 but was on the rise. The Current Market Index accurately predicts future direction of the market and has been so successful the National Association of Realtors has adopted its own Pending Home Sales Index. The difference is our index measures more than just pending sales which is why it’s been a leading indicator of where the market is headed.
Back in 2005 we were able to predict a market swing when most everyone else felt the SW Florida real estate market was a runaway train that couldn’t be stopped. We all learned a valuable lesson from that and realize anything can be stopped. This same indicator has been trending down since September 2010 when it stood at 5.0. The lower the number the hotter the market is. Another way to put it, the higher numbers signifies a buyers market and lower numbers signify a sellers market.
Now sellers can’t be too comfortable as it doesn’t mean prices can rise automatically as a number of factors have been in play which we’ve documented at length in past articles. Buyers have been nervous for months as well as they’re quickly realizing they’ve missed the bottom of the market and are frantically trying to get in before prices rise too much more.
The largest mistake we see buyers making today is making offers based upon sales back in January when prices were lower. We’ve always said you’ll never really know when the bottom is until after you’ve passed it. Buyers realize we’ve passed it, but they’re trying to go back and negotiate back to those bottom prices and it’s not working. Each time they fail there is less inventory to choose from and they begin the cycle all over again.
Education is so important in any market. Both buyers and sellers have to be educated to what’s happening today in real time. So often we see buyers and sellers using old data to influence their positions and desires in the market, and old data can let you down and cause you to miss out, or overpay or overprice depending on whether you’re a buyer or seller.
A seller never wants to overprice in a declining market just as a buyer never wants to lowball in a rising market. In each case they customer ends up chasing the market in the wrong direction, and when they figure out their mistake it costs them in the pocketbook.
A stock investor cannot count on buying a stock at the same price as it was last month or even last hour as the market changes. The only beauty of the stock market is its liquid and you only need to look at the Big Board or online to see the stock’s current value in real time. Real estate isn’t quite that simple as there is no Big Board or stock exchange to look at, but the principles are the same. Supply, demand, location, amenities, financing, jobs, and the economy all influence the market. Educating yourself to what’s going on today can save you mistakes.
It’s been proven that sellers who overprice end up taking less when it’s all said and done than the seller who prices correctly upfront. The greedy seller loses market momentum as the listing is best seen when it’s fresh and new to the market. After awhile it becomes stale and people wonder what’s wrong with it, and then the lowball offers begin, if there are any offers at all. The wise seller recognizes the market and lists accordingly.
The same can be true with the wise buyer. They say the early bird gets the worm. In this case, it’s not always the first offer that gets the prize; it’s the best crafted and educated offer that wins. Wisdom begins with educating yourself on current market conditions and we hope these stats help you in your decisions whether you’re buying or selling.
Watch Video – SW Florida Real Estate market on the Move