Official housing numbers for May are in and both the median and average sales price are up over 20% over last year. The results are noteworthy and we expect the market to ride similar margins throughout the year, but the big gain in prices may have subsided for a bit. June SW Florida Real Estate Market Update.
A few months ago we warned that prices were rising steadily however this is a trend we’ve seen repeat over the past several years only to watch the market cap out for the year around April-May. In several past articles we pointed out that beginning in May we’ll be watching the month over month prices to see how the market is faring in real time.
This month we decided to post a historical price graph dating back to January 2009 illustrating the median single family home in Lee County Florida. Sometimes agents will make predictions based upon gut feelings on what they perceive is going on in the market. While this gut feeling can be a useful tool, it can also be deceiving. In the past I’ve spoken with different agents in a given month. One would be super busy and another would be having a lull, for whatever reasons. You can just guess which agent was more optimistic and which was more pessimistic that month.
We prefer to make predictions based on facts, data, and logic. Yes we’ll throw in a feeling from the street if we hear changes in buyer’s or lending activity, but it has to be founded on some mathematical data to be meaningful. We try to pull out numbers that are meaningful and not just stats, because as you know, anyone can make stats say about anything.
May numbers are in and they’re actually down from April’s numbers. May’s median price was $176,330 compared to April’s $182,000. May’s average price was $288,547 compared to April’s $292,201. If you look at the graph you’ll see this trend has occurred each year beginning about May for the past 3 years. Back in 2008 we predicted 2009 would be a year of bouncing along the bottom and that’s what it did. There just wasn’t a lot of price swings.
January of 2011 was the beginning of the breakout in prices. Listing inventory fell again in May and pending sales are up, so why didn’t prices increase? The answer is our more expensive properties sell when we have the most affluent buyers here which is in season. We still have strong sales all year round, but not as many higher end sales. New pending sales have ranged from 1,465 to 1,485 from March through May. It’d probably be higher if we had more inventory, but not necessarily the prices.
Remember, all real estate is local. This means that even though the market may plateau for awhile, there can still be pockets where prices increase. The whole market doesn’t march in unison. The low end could be appreciating while the high end is suffering. We’ve seen instances where prices get a little ahead of themselves in Cape Coral so people started buying in Lehigh because it offered more value. Sure, Cape Coral off water has always held a premium over Lehigh, but there are limits and we saw those back in the big buildup in 2004 and 2005.
The same can be true with any area. If waterfront prices shot up instantly in Fort Myers at some point buyers would move over to waterfront in Cape Coral. Fort Myers may hold a premium, but there is a limit.
Next month will be most interesting to see how the numbers fare. It really sets us up for the balance of the year if recent history has anything to say. of course, we all know recent history can be trumped by future news, so we’re also keeping our eye on the bond markets and how that will affect interest rates, the economy, taxes, etc.
Stay tuned. If you’re in the market to buy, heed the warnings! Interest rates are on the rise. Waiting will cost you money. A month or so ago we posted on our Blog how the Fed’s pullback of QE (Quantitative Easing) may impact the stock market and affect interest rates. You may want to check out that article (May 23) at Is Stock Market Ready to Make a Move?