Hot off the press we have a look at February 2023 housing inventory supply numbers for Lee County Florida. Single family home inventory grew to a 2.81 month supply, up from 1.9 back in July of 2022.
Three price ranges saw the largest gains in inventory. The biggest gains from last July came in the $250-300k range, the $300-400k range and the $1 Million plus.
In the February 2023 housing inventory supply numbers, every single range saw an increase in inventory except the below $100k range because there are no homes for sale in that range right now. There has been a 23.09% increase in the number of listings on the market since July. The rolling 365-day closings has decreased 16.93%.
It’s simple math. If listings go up 23% and closed sales go down 17%, housing inventory supply numbers are going to increase. We have been predicting this for months as we track the weekly numbers.
Inflation and the Real Estate Market
The Fed released CPI numbers this past week which shows inflation persisting. The risk of recession is greater now and the bond market is forecasting it with a deepening inversion of the yield curve. Early analysis suggests the Fed will have to raise rates more than previously thought and keep them there longer.
The Fed’s intention is to slow housing and raise unemployment. It is working, but it is a slow process because inflation got so high. The best way to fix inflation would be to get the 5 million people who choose not to work back at work, and for the government to quit spending money. Both are tall orders, so the only other way the government has to control inflation is through monetary policy.
Basically, the consumer will be forced to do what the government cannot, at great expense to the consumer. Companies are laying off thousands, and eventually this will wear on wage growth. Fuel prices are going back up as China comes back online and release from the petroleum reserve wear off. Our petroleum reserve is at dangerously low levels and we cannot continue to release more oil, even though we just announced 26 million more barrels to be released over the coming months. This is all in an effort to bring down inflation, but it is a band aid.
Buyers Expect Prices to Drop
Buyers are reluctant. Many are waiting for prices to drop. Buyers fail to recognize prices have already dropped about 10-15% from their highs last year. Granted, some of that is seasonal, and some of it is real price deterioration. Buyers have been reading articles that suggest another 15% drop and they believe it.
Interest rates have ticked up again in the last week, and each time they do buyers cool off. The good news is pending contracts are up. Buyers are here to buy, but they don’t want to overpay. Buyers are looking for value, and they are finding it. When an inspection item comes up, or when a new home comes on the market, buyers are quicker to back out now than last year.
In other words, buyers are skittish. Sellers are confident. That math doesn’t always work. When buyers become confident the home they are buying is a good deal, they accept market risk with less fear. When buyers don’t feel like the home they are buying is worth the risk, they back out at much higher rates.
Home to Sell
If you have a home to sell, the Ellis Team can help you pick a price where the seller can be confident, and the buyers feel like completing the purchase. You can always get a Free On line price at www.SWFLhomevalues.com It’s quick, easy, and does a decent job in most cases if giving your home’s value. We think it’s fun to track the direction of the market over time as it will give you a new price each month.
Always call Brett or Sande Ellis 239-310-6500 for your price and strategy to sell your home fast and for Top Dollar in this market.
Good luck, and Happy Selling!
See last week’s article “Housing Demand Strengthens to July 2022 Levels“