Have you read the headlines lately? Home sales are sliding nationwide. September home sales fell 4.1% nationwide, and we hear new home construction has fallen too. What’s to blame for this? Home affordability. Rising rates are cutting into home buyers’ ability to pay ever increasing prices, and it’s showing up at the closing table. Rates have risen about 1% in the past year. Some experts warn of shifting nationwide real estate market upcoming.
We know that a 1% rise in interest rates erases about 11% of buyer’s purchasing power. So if a buyer could afford a $250,000 home last year, that same buyer can now only afford $222,500 unless they received a pay raise since last year. Nationwide wages are growing while unemployment is falling, so there is room for further gains, but that takes time. Higher rates are here now.
Locally in SW Florida, we may be in good shape. If you look at the chart, you’ll notice that SW Florida hasn’t participated in a price run-up the past two years like the rest of the state has. Prices in September are down. The median price in September was down 3.9% while the average price was down 3.5%. Remember, closing last year was disrupted due to Hurricane Irma, so we can’t read too much into this just yet. We don’t know if the lower or higher end were disrupted, so these numbers could potentially level out in coming months.
We know active inventory is up 18% over last year. Again, many listings came off the market after Irma, so that’s not a surprise. Inventory has been building a bit in 2018, but so have the closed sales. In fact, 2018 is shaping up to be a very good year for home sales. We have the highest YTD home sales of any year since 2015.
Is SW Florida in a Shifting Market? Not right now. Technically we’re still in a seller’s market, but it is getting very close to a balanced market. The thing that may be protecting SW Florida versus the rest of the country is the fact that we didn’t go up in value the past 2 years. The median price of a home in January 2017 was $245,000. Today, it’s $245,000. The average price of a home was $340,604 in January 2017. Today it’s $313,102.
Could our market shift? Absolutely. No market stays the same forever. Agents who have been in the business less than 5 years probably don’t know how to handle a shifting market. The way you sell in a rising market is completely different than in a declining market. An experienced agent can sell in an up, down, or sideways market. Today, all indications are we’ve got a pretty good market, and there’s no reason to believe that will change drastically one way or the other.
It always pays to study the market. We have a Market Report section on our website, so buyers and sellers can study the active, pending, and sold listings in a neighborhood as well as view all the photos. No other site has the sold data for you like this. It’s updated instantly, so when a home goes pending or sells in your neighborhood, you’ll see it live. You can create your own neighborhood report if you don’t see yours listed. Simply go to www.LeeCountyOnline.com to view your neighborhood.
If you want a quick and Free home price analysis, go to www.SWFLhomevalues.com In less than a minute you’ll have your home’s value. If you’re thinking of selling, please call Sande or Brett Ellis 239-489-4042 Ext 4. We’ll be happy to answer your questions, show you how much you’ll net at closing, and about how long it will take to sell your home.
Good luck and Happy Selling!