News housing price research complied by the Ellis Team at Keller Williams suggests changes in the local real estate market.
We have been predicting for many months that in May we will see year over year price declines in the Lee County housing market. This does not mean that prices are declining now, only that the media will first pick up on the fact that prices have come down from last year. The price declines already occurred in 2022, and then a funny thing happened.
Home Prices Stabilized
Home prices in Lee County have leveled off in 2023. In January the average price was $581,598. Today the unofficial number is $583,567. The median price in January was $420,000. Today the unofficial median price is $438,000. While prices dropped in 2022, it looks like they’ve stabilized in 2023.
Keep in mind we’ve just come through the seasonal months in SW Florida where the higher priced homes tend to sell, so we could still see further drops in prices going forward. Inventory is still rising, and demand has softened slightly from 2022. We have been tracking closed sales more in line with 2020, and we believe there will be a spike in official closed sales for April when numbers are released next week.
Nobody can predict exactly where the market is headed. What we can say is it looks like the market is stable. There are many factors pulling the market in different directions, and which factors win out will be fascinating to watch.
Debt Watch
Household debt has reached record levels. Credit card debt is now $2.9 trillion higher than it was pre-covid. Mortgage debt has soared to 12.04 trillion. Student loan debt and automobile debt is also up. Americans have borrowed to keep this economy floating, but there are limits.
As I write this article, the federal debt is in limbo also. Leaders have still not worked out an agreement on raising the federal borrowing limit, and the first US default on its debt is a possibility. We expect mortgage rates will soar as we get closer to a default deadline.
The real question is, would loans be funded at all? When a real estate closing takes place with a loan involved, the lender sends the money to the title company, and everybody walks away happy. The lender typically bundles that loan and sells it on the secondary market with the help of FNMA or Freddie Mac. Loans are easily bundled because the loan was underwritten to their guidelines for the purpose of bundling and selling. But what if that secondary market is uncertain? What if they don’t want to honor rate locks before a US default? How many buyers would no longer qualify?
The other thing we don’t know is what would happen to FHA and VA loans? If the US defaults, what would happen to retirement accounts? The stock market could implode, and with that many people’s wealth.
The mind can go a thousand directions thinking of the possibilities. We prefer not to do that. We will deal with whatever comes if and when it comes. A default on debt could be catastrophic to our way of life. The dollar may no longer be recognized as the world’s currency of choice. Interest rates might rise if the dollar is replaced.
Good News
The good news is Florida is still desirable. Whatever happens in other cities and states, Florida is still the #1 place people want to relocate to. As northern states react to budget deficits and higher taxes, Florida looks safer all the time. Predicting which economic forces will win the day is impossible. Just pray for the leaders to work out a deal on the debt and be grateful we live in a state people are attracted to.
If you have real estate questions, call Sande or Brett Ellis about this new housing price research at 239-310-6500. Good luck, and Happy Selling!