A financial term you’ll regularly hear bandied about is “Money in Motion.” Money in motion creates opportunity when money is active and circulating and things become stagnant when people sit on their money and save. We like to measure the Southwest Florida real estate money in motion by the number of home sales there in a month and multiply by the average sales price. It gives us a clue as to the overall activity in the market.
When home sales are up and prices are down, they offset each other. When both are down, money in motion is down. If both are up, the money in motion is most assuredly up.
As you can see by the chart, the total dollar volume in November was up 20.6% That’s the good news. For the better part of 2016 money in motion has been down. This is why agents have been complaining that their sales and earnings have been off.
Home sales have been off all year to the tune of 15-20%. Prices have been up against last year’s numbers but they’ve been flat all year. We haven’t really seen significant price gains in the market since November 2015.
Sellers measure the health of the market simply by the direction of prices. Some agents do too. Experienced agents look at the whole picture; prices and number of sales. By multiplying and tracking the two, you can identify trends in the market. Understanding each component of the money in motion principle helps explain what is happening and why which leads to what the market may do in the future.
Money in Motion
Home sales picked up in November. They were up 16%. Average prices picked up too, up 3.6% What helped with prices is last year’s numbers were adjusted down. Unless something changes, year over year prices will be flat going forward. If this remains true, total dollar volume will be influenced more by number of sales than price gains.
2017 will be more positive than 2016 in our opinion. We can’t say whether it will come in the form of price gains. Expect transaction volume to increase as more sellers decide to sell. We have a balanced market right now where neither seller nor buyer have the overall edge, except in certain price ranges. See last week’s article Southwest Florida Real Estate Inventory Supply Increases in 4th Qtr.
There is renewed optimism in the economy post-election. 2016 was a year where consumers and business sat on their hands. Both seem poised to start moving again. We could see more sellers begin to trade-up, or move to a different lifestyle home.
We could see more baby boomers buy 2nd homes in Southwest Florida. Retirees may flock here because their 401k’s have been doing well. No matter the reason, increased money in motion creates opportunity. Interest rates are rising, and the Fed has signaled last week’s rate hike won’t be their last. In fact, they predict 3 more rate hikes in 2017. Borrowing costs will be higher going forward.
The early bird gets the worm. Actually, late birds will get the worm too, it’ll just cost them more if getting a mortgage.
We’ll be tracking the money in motion for you in 2017. Sellers need agents more than ever as competition heats up amongst sellers. Buyers need agents too to assist them in sorting out total cost of ownership and factors which could affect the buyer.
Website Saves You Time
If you’d like to get a head start you can search for your dream home at www.LeeCountyOnline.com Beat out other buyers to hot new listings. Save your search and let the system notify you of hot new properties that match what you’re looking for. Or let one of our buyer agents help you search, just give us a call.
If you’re a seller, please call us at 239-489-4042. Ask for Sande or Brett. We handle the marketing for the Ellis Team and we can help you achieve Top Dollar for your home in 2017.
Good luck and Happy House Hunting!
December 2016 Ellis Team Seller’s Club Report
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