Recent sales numbers suggest local home sale prices under pressure from rising interest rates. Nationally we are seeing price resistance due to rising rates, so we decided to study the local market to see what is happening here.

From the graph we can see both median and average home sale prices topped out around April to May. We must be careful here because there is seasonality to the market, and it is not uncommon to see this in normal years.

Preliminary July numbers show a median sales price in Lee County of $425,000 and an average sales price of $552,596. Keep in mind these numbers were pulled July 26^th and do not incorporate a whole month.  It does give us an indication though of what we have seen the first 26 days of the month.  In June 2022 the media sales price was $449,950 and the average was $587,904.

Home Sale Prices Under Pressure

If these numbers hold up, that’s a big drop from June’s numbers. If true, this would support the cause that rising interest rates may have influenced home sale prices locally as well.

This makes sense because we have seen single family home inventory triple since Feb 15^th.  This tells us supply is outpacing demand. Home prices are fabulous compared to what they were a few years ago if you are a seller, but they may not be what they were back in February.

Pricing for sellers will be critical with home sale prices under pressure from rising interest rates. We are writing this article before the Fed announces its interest rate decision and GDP numbers.  If GDP numbers come out negative for the second quarter, we can safely say the US is in a recession.

We are already seeing layoffs at companies nationwide. We are particularly concerned with potential layoffs in 2023 as that is when we believe the pain of rising interest rates will be most felt.  It is possible that the Fed will raise rates 75 to 100 basis points this week and mortgage rates could drop. If they do it is because the markets are anticipating recession into 2023.

Opportunity for Buyers Right Now

We believe there is a window for home buyers to lock in lower rates. Nobody knows what long term rates a few months from now will be, but mortgage rates have crept down in recent weeks. Mortgage rates are based of the 10-year note, and the 10-year note is lower than the 2-year note. This is what is referred to as an inverted yield curve, and this too is an indicator of a coming recession. Again, we may already be in one now. The question is, what will 2023 bring and how severe could it be?

The good news for buyers is rates have come down and selection of homes on the market has risen. Prices have come down too, and in the coming weeks we can report official numbers to verify what we are seeing.

If you have a property to sell, Always Call the Ellis Team at Keller Williams Realty. 239-310-6500 Marketing and proper pricing right now are key, and many Realtors have only been in the business a few years and do not have the experience in a market like this. Brett and Sande have been through many real estate cycles, so no matter what the future brings us, we know how to handle it.

If you’d like to track your home’s value over time, check out www.SWFLHomevalues.com It’s a neat website that will email you your home’s value each month.

Let’s Talk

We are here to talk. Many times, buyers and sellers have questions, and you need a Realtor with answers based on knowledge, statistics, and experience. This is not the time to hire a newer agent.

Call the name you know, the Ellis Team at Keller Williams Realty. Good luck, and Happy House Hunting!

July housing inventory supply grew to 1.9 months supply, up from 1.18 months back in May. The $250,000-$299,000 almost doubled from .23 months to .41 months in July.

July Housing Inventory Supply Grew

Every single category grew in supply, so it is across the board. The market has slowed from a few months ago. Everything over $600,000 grew in supply by over a month. Inventory is growing while closed sales are falling. Pending sales are also declining, which is a forward indicator of future closed sales.

Because we watch the weekly inventory levels and the pending sales, we had a pretty good idea what was going to happen.  We’ve been reporting that single family inventory bottomed out February 15^th while condo inventory bottomed out February 8^th.

Closed sales prices lag these other indicators, so we knew it was only a matter of months before it started showing up in the sales prices, assuming the trend continued. The trend has continued, so here we are.

Did you Have the Talk?

Realtors are forced to have honest conversations with sellers about where to price their home.  Nobody sees a major decline in prices like we had in 2006 and beyond, but we could see some declines as the economy possibly enters recession. We may have some hangover effects from rising interest rates as well. Some say the ultra-low interest rates allowed for prices to balloon where they did, and when you take those away you take away the home affordability and the market stops.

The market doesn’t really stop but it feels that way in a shift. Buyers are reluctant to pay today’s prices in fear of the market moving lower. Sellers tend to want yesterday’s prices and cling to last month’s headlines. Each side backs into their corner until the realization sets in. Until each side recognizes the market of the moment, a stalemate happens.

Both sides eventually agree that it is either time to buy or sell, and the sooner they do that the better off their family will be.  Right now, we are in the messy middle whereby each side has not figured that out yet. Sure, lots of sales are occurring, because the buyer and seller are motivated and accept the reality of today’s market. Others want to test the market by listing above the market, only to reduce again and again later.  Buyers are guilty too. Some lowball and strike out again and again. They feel frustrated but comforted by fact they’ll be able to pick up a home tomorrow at prices lower than today.

Lock in Interest Rate Now

The problem is when rates are going up, lower home sales prices tomorrow still cost more than higher priced homes today. Locking in those rates is crucial. We’ve had a temporary pause in rates as the market reacts to recession numbers, but those interest rate hikes could pick back up again in a few weeks.

Buyers are in a better position today than a few weeks ago. Inventory has grown while rates have slipped back about .75%. Selection is better and purchasing power increased about 8.25%.  When rates go back up in a few weeks, that 8.25% purchasing power will be wiped out.

If you have a house to sell, call the Ellis Team at 239-310-6500. If you are interested in buying, call our buyer specialists at 239-489-4042 or visit www.LeeCountyOnline.com

Our team is here to help you navigate this tricky market. Our agents are trained on market conditions and how this affects you.

Don’t forget our Hurricane Party Giveaway too. Head on over to www.Facebook.com/Ellisteam to find out how you can win the hurricane party package which includes a generator, snacks, gas can, flashlight, batteries, and other stuff.

Good luck and Happy Selling!

Hurricane Party Prize Package

Lee County housing inventory trend line is on the rise. Local inventory has grown above the trend line for 6 straight weeks. Housing inventory has risen for 17 straight weeks.

This tells us the top of the frenzy probably occurred back in February. Agents across the county are noticing less offers on their listings, and the upward pricing pressure has abated.  We will still see higher prices year over year as the numbers come in, but we may not see substantial price increase month over month going forward.

The housing inventory trend line is a leading indicator for the local real estate market. Inventory levels tells us about the relationship between supply and demand. With inventory rising, supply is outpacing demand at these prices. Therefore, we are seeing so many price reductions in our market.

Sellers Pay Attention

Home sellers may have missed the peak of the market, but it is still a great time to sell. Housing inventory currently stands at 1.43 months supply which is still fantastic. We just do not have the upward pricing pressure fueling large price gains like we used to.

The best indicator we have is the Ellis Team Current Market Index. While we are no longer publishing this live data to the public, we can tell you that it almost doubled since April 26^th, which was just 6 short weeks ago. Ellis Team clients get access to this data which is crucial in making proper pricing decisions in a changing market.

Focus on Marketing

Today sellers are hiring agents with a focus on marketing. The past two years we noticed sellers were interviewing agents and sometimes selecting the lowest cost agent. Perhaps they felt any agent could sell a home in the heated market, and that was true. Not all could get Top Dollar, but they could sell the home for full price.  There is a big difference in the two.

Today marketing matters again. Sellers are not looking for the cheapest way to sell but rather the agent who can fully market the home and get Top Dollar. When the buyers fall off, marketing becomes more important to sellers. As inventory grows sellers know they must make their home stand out. It used to be that buyers were in competition with other buyers for the best homes. Now buyers have more choices, and we are heading towards sellers being in competition with other sellers for the best buyers.

Home prices have exploded in recent years and sellers do not want to jeopardize cashing in at these prices by hiring an agent that simply puts their home in MLS. When inventory grows, buyers shop online, and homes begin to look alike. Each home has its unique features, and you’ve got to create ways for that home to be seen by buyers who want those features.

Target Marketing

This is why we target market. Placing a home on Zillow or Realtor.com is not going to sell the home when inventory grows. We take our listings and place them in interested buyer’s inbox, social feed, and search online. Our marketing contains various target sets depending on which listing we are advertising.

We can reach buyers in out-of-town markets who want to buy here. Why advertise to only local buyers when you can target out of state buyers too?

This is the difference between selling a home to just one buyer or reaching many buyers from all over. Do you think you would get more money if you had one buyer interested or dozens of buyers interested?

If you are thinking of selling and want Top Dollar in today’s market, we should talk. Call Sande or Brett Ellis 239-310-6500 We’ll be happy to discuss your situation and show you how our marketing can give you an advantage. Real Estate agents aren’t cheap, so why not hire the best? A great agent can actually put more money in your pocket at closing!

Good luck, and Happy Selling!

Father’s Day Giveaway