Nationally I’ve been reading stories about writers concern there may be another housing bubble forming. Anytime prices rise people wonder when it will peak, and anytime prices fall people wonder when it will bottom. It’s just human nature. So the question is, has the SW Florida real estate market run out of stem?
Latest national statistics released this week show pending sales up 3.1% despite colder weather up North. With an improving economy and still historic low interest rates it would be hard to argue the market could cool off.
Another report suggests home prices are outpacing wages which could damper prices. This is true. Sometimes home prices rise faster on low supply, and when this rise outpaces wages eventually this can slow price growth until wages catch back up. It’s not totally a supply/demand market as other economic forces will limit prices beyond simply supply.
As you can see from the attached chart, locally our prices have more than doubled in the past 4 years. SW Florida has been on a good run, so naturally people may wonder if there is a bubble forming locally as well.
The good news is we don’t think so. Are 25% price gains year after year sustainable? That answer is no. February 2015 median sales prices were up 6.5% over 2014. That is sustainable. Traditionally average annual price gains have been 3-5%.
It’s quite natural our prices have doubled because really they fell too far and too fast in the bust. That was an over-reaction due to a banking crisis and banks dumping assets on the market.
Banks are lending again and they no longer have the properties to dump on the market. Prices fell below replacement cost which means they were artificially too low. We think prices are back to a healthy balance between replacement value, supply, demand, and economic conditions.
The future looks better for SW Florida than does the rest of the country. The US economy is growing again and that’s good news for everyone but it isn’t growing at the pace it should be. By all accounts Florida is, and SW Florida is leading the way.
We have below state and national unemployment averages. Our weather and lifestyle is an alluring attraction to employers and employees alike.
Home building is back which will add jobs to our area. All signs point to a good economic climate in Florida for the foreseeable future. The prognosis may be for measured, sustainable gains which are always preferable.
Season was busy. Have you noticed traffic has lightened up substantially this past week? We’ll be watching March sales numbers when they’re released later in April. We think they’ll be pretty decent.
All eyes locally turn to the next few months. We’ll be watching pending sales in April and May and this will give us a pretty god sign of what 2015 will bring. So far it’s been a good season, but we have noticed a few buyers showing indifference this year compared to years past. This is always the case, but there is a general feeling amongst some buyers that the big gains are over and our market is back to fully priced.
Nobody is afraid prices could go backwards, but they’re not afraid prices will be 50% higher in 2 years either. It’s causing pause and normalcy, even in a low inventory market.
If you’re a seller and you’ve been waiting, now may be a good time to sell. Our prices are up and we don’t have inventory, Yet! That could change one day when our market flattens out, whenever that day is. We don’t have that crystal ball. We just feel it’s more likely to flatten than go up or down substantially. Better yet, let’s just keep the truck rolling at normal sustainable gains and call it a day!
Call us to sell your home. 239-489-4042 Feel free to search the MLS at www.Topagent.com
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