Rising interest rates led to Lee County home sales decline of 20.63%. Nationwide home sales fell 17.8% in 2022 which was the sharpest annual decline since 2008.

Hurricane Ian Impact?

You might be wondering if the hurricane had an impact on our local sales. I went back and analyzed sales prior to the hurricane and we were down 12.24% through August. It is safe to say Hurricane Ian did negatively impact home sales as many homes were not sellable after the storm.

Experts are predicting home sales to fall further in 2023. One prominent trainer is telling agents to prepare for a further 35% fall in home sales nationwide. I just checked sources and here is what they are predicting:

National Association of Realtors predicts 7.0% decline in number of homes sold. Fannie Mae predicts 21.1% decline. Mortgage Bankers Association predicts 13.7%. National Association of Home Builders predicts 15.7% decline. Realtor.com predicts 14.1% decline in 2023. The bottom line is everyone is expecting less home sales in 2023.

The reasons for declining sales are many. Inventory is still low. Interest rates are still high but have come down some. Personally, I think SW Florida might do a little better than the national averages.

As damaged properties receive insurance proceeds and get fixed up some will go on the market. We have seen inventory levels shoot up throughout 2022 and the trend is continuing into 2023. Demand may not be what it once was, but there is still demand.

Buyers Are Here

 Already the first two weeks of January have seen stronger buyer demand. We may not have 50 offers per property, but we are still seeing full price offers on homes that are priced appropriately. Sellers are more reasonable as they understand we are not in the market of 2021 anymore. Home prices are well above what many paid for their homes. While sellers cannot get as much as they want, many are satisfied with what they can get.

Of course, the market does have some sellers that still believe it is March is 2022 and they want those prices, plus a premium. I’ve worked in the SW Florida real estate market for 35 years and no matter the market there will always be some unrealistic sellers. I can say the same for buyers too. The deals happen when the unrealistic face reality and become realistic. The only difference is how long it takes to get there and how much does it cost them to be unrealistic.

I’ll give two examples. Many sellers get caught chasing the market down because they were unrealistic. At some point circumstances change and now they must sell. They sure do wish they had sold earlier when prices were higher.

Similarly, we’ve spoken with many buyers that came down and didn’t like our prices because they had gone up. They wanted last year’s prices and were willing to wait out the sellers until the market gave them the price they desired. Later, they regretted missing a 100% rise in prices. Those buyers were so ate up with a 10% rise that they missed home prices doubling.

View all listings in MLS here.

2023 and Beyond

 We believe interest rates have stabilized and may bounce around where they are. With any luck they might even touch the 5’s soon. We know many companies have planned layoffs in the coming months. The Fed may raise rates again in February and March by 25 basis points each. At some point soon they may signal they are about done raising. This does not mean they will lower them in 2023. Many believe this process wouldn’t begin until 2024. If this scenario occurs, we could see 30 year mortgage remains remain steady or dip slightly, perhaps into the 5’s. This would setup a balanced real estate market in 2023 with prices neither rising nor falling much. We’ve already seen price declines in 2022 but nobody knows it. Inventory levels and pending sales will be what we keep watching in 2023. Lower interest rates could lead to a rise in Lee County home sales.

Median home prices fell in 2^nd half of 2022, and if prices do not change course, we are one to three months away from showing price declines year over year. The media and the public in general tend to focus on the headline number which is year over year sales.

In a few months people will begin reading how home prices are down and they will think the market suddenly turned. The truth is the market turned February 15th of 2022. How do we know this? Some will argue home prices increased until April or May, but many of those sales were the results of pending sales in February. We know this because February 15^th is the day inventory started rising. Not long after, pending sales began dropping.

Not all Bad News For Sellers

The news isn’t all bad for home sellers though as prices rose dramatically since 2019. You might be surprised to know that the median home price back in November 2019 was $262,500. November 2022 median price in Lee County was $400,000.  While this number is down from $470,000 back in April, it is still up 52.38% in three short years.

Buyers love to time buying at the bottom of the market, and sellers love to sell at the absolute top of the market. A small percentage of buyers and sellers can time the market perfectly.  Interest rates have impacted homebuyers’ ability to afford as much home as they once did, and this has contributed to a cap on prices.

Sellers need to know what is happening in the market. There is a reason some sellers overprice their homes. They mistakenly believe the market is something it isn’t. This real estate market is great, but it isn’t escalating 2% per month like it was. In fact, median home prices are down 14.89% since April.

Facts Speak Louder Than Words

Our job as Realtors isn’t to trick buyers and sellers into believing the market is hotter or colder. The market is what the market is, and we simply help interpret it for our clients. We would do a disservice to our clients if we tried to sell the market. Rather, we educate our clients on market conditions so they can make the best decision for their family.

We are upbeat about the market. Just because the market is off it’s all-time highs doesn’t mean it’s not a great market. The market rarely stands in one place. It is always on the move, and sharp agents can help you spot opportunities as they happen.

Future market conditions will bring future market changes. Whatever those conditions are, we help our clients spot those changes and react faster. I remember several times when we saw conditions changing for our clients and alerted them before the market realized the changes. We saved our clients thousands by acting sooner.

New and Better Way to Sell Homes

Next week we will be announcing a new and better way to sell homes coming to SW Florida. This new program nets sellers more money than traditional sales, and it works in any kind of market. We expect there to be several expired listings January 1^st and many of those sellers will be looking for a new and better way to sell their home. Pricing is just one factor in selling a home for Top Dollar. The other is choosing how the home is marketed.

If you are thinking about selling your SW Florida home, or have tried in the past and not happy with the results, you can call Sande Ellis or Brett Ellis at 239-310-6500 or email Brett@topagent.com with the subject line New Way and we’ll put you on a path to selling your home fast and for Top Dollar. Keep in mind, our price may be more than the online value models like www.SWFLhomevalues.com and others.

Stay tuned next week for the announcement.

Happy New Year, and Happy Selling!

FNMA predicts price declines in the housing market nationwide for the next two years. In the first quarter of 2023 they predict year over year appreciation at 3.3%, but all this appreciation has already occurred in 2022.  Home prices have been dropping nationwide and the stats won’t show year over year declines until the 2^nd quarter.

Starting in the 2^nd quarter of 2023 FNMA predicts declines of 1.3%, followed by declines of 1.4% and 1.5% in the 3^rd and 4^th quarters. Going into 2024 they are predicting declines of 1.4% in the 1^st quarter, 1.5% in the 2^nd quarter, and declines of 1.4% in the 3^rd and 4^th quarters.

Have Home Values Peaked?

If FNMA is correct, what does all this tell us? Home prices have already peaked, and interest rates and the economy are influencing home prices. They are not predicting major price swings, so buyers can rest assured if they find a home, they love at an interest rate they can afford, they should buy.

For sellers, it is a slightly different story. Your home probably already peaked in value back in May. We study the local median and average home prices, and they are split as to when home prices peaked. One says May, the other says June. Since then, we have watched home prices fall locally and nationwide.

As Realtors we do not advocate for prices to rise or fall. The market is what it is, and a trusted Realtor should properly interpret the market and the data and explain what is going on. A good Realtor is your economist of choice if they study the numbers. Over the years the Ellis Team has been able to get our listed sellers out in a declining market because we know how to market a home in a shifting market.

Experience Counts

85% of Realtors today have never worked in a shifted market. They only know one thing, and it’s up. How you price, market, and find buyers changes in a shifting market.

Our Current Market Index stands as high today as it has all year. While the numbers are not alarming, it is not a good sign as our index accurately predicts the market going forward. We have also noticed the differential between active listings and total pending listings is as high as it’s been all year. Another sign that the market has cooled.

The 2021 market is not coming back. We are back to a normalized market subject to market conditions and changing economic numbers. Builders are reducing prices and offering incentives. It is not a horrible time to sell. It might seem horrible compared to previous years. Sellers no longer have the upper hand. The good news for sellers is, neither do buyers. We have a more balanced market than we have seen in years, and that’s not a bad thing.

It Pays to Know the Data

If you’re playing a sport or a board game, it pays to know the rules. If you are buying or selling in the real estate market, it pays to study the data. Knowing what is going on in the street is invaluable. Always ask a Realtor to prove to you what the market is doing. So many Realtors give advice based upon how their personal month is going. A Realtor can have one good month and think the market is great followed by a horrible month the next. This doesn’t mean the market changed drastically, simply that their sales did.

Too many Realtors judge the market by how they are feeling in the market and how their sales are going. True professionals study the market and can explain to you what you need to know to make the best decision. A Realtor’s value is never greater than in a shifting market. Choosing the wrong Realtor can cost you thousands, even when you think you are saving.

Good luck, and Happy Selling! If you are thinking of selling, call Brett Ellis or Sande Ellis 239-310-6500 or visit www.SWFLhomevalues.com

December SW Florida Real Estate Market Update

Toys for Tots

The Ellis Team is a drop-off location for Toys for Tots. Please help us provide a Happy Holiday Season by dropping off toys to our office by December 15th.

Single family home and condo listing inventory resumes rising trend for third consecutive week. Single family home inventory rose for the third consecutive week while condo inventory rose four consecutive weeks.

Pending sales have moderated a bit too, leveling out the past two weeks. One of the things we look at is the difference between listing inventory and total pendings. That difference just reached the highest level all year. Basically this means more properties are coming to the market then jumping off.

This is a trend we saw prior to Hurricane Ian. When Hurricane Ian hit, there was a temporary lull which caused that differential to drop. Since November 9^th that differential has begun to resume that upward trend.

Forget Button

Hurricane Ian caused many in SW Florida to hit the Forget Button. They forgot what was happening in the market prior to Ian. Our lives were turned so upside down that economics and reality didn’t matter, if only temporarily. We were in survival mode and everyone did what they had to do to find housing, work, food, water, etc. Now things are settling back down for most and returning to normal, even if it is a new normal.

I don’t like the new normal, but nature didn’t ask my opinion. I don’t like that we don’t have a beach to go to, or the fact so many cannot live in their home after the storm. So many people don’t have their same job because the business isn’t open or doesn’t exist.  Nobody asked for the new normal, and yet to survive we must deal with it.

Rising interest rates caused home buying activity to slow nationwide, and here locally. One of the reasons prices were able to rise like they did the past several years was because of low borrowing costs, but those days are over.  Home prices haven’t statistically fallen much, but it has affected home closings which are down significantly.

Inventory Levels Affect Future Pricing

One of the reasons we track inventory levels is because eventually that could affect home prices. Right now many home sellers can be choosy. Many don’t have to sell, so they don’t. Eventually more and more homeowners must sell for various reasons.  If supply continues to build, it could affect home prices going forward.

The Fed is still tightening short term interest rates. Economic data is due out this week after this article is written which could affect long term interest rates. Recently 30-year mortgage rates have fallen back to about 6.58%, down from over 7%. This has helped some real estate deals. We will keep our eye on rates going forward. Any help we can get on interest rates can directly impact the market.

30 year mortgage rates are pegged on the 10 Year treasury note which declined in recent weeks because many thought the Fed would be less aggressive going forward. We believe the Fed will talk tough this week, and the markets will react. The tougher the Fed talks, the quicker we can get to peak rates and eventually lower rates. The Fed has been slow and behind the curve. They must raise unemployment and slow housing to curb inflation. Both are moving, just not quickly enough to move the needle.

Home Prices

Home prices have remained amazingly steady locally. They don’t seem to be rising or falling, although we are seeing price reductions. This is a sign that sellers do not rule the roost anymore and it is heading towards a balanced market. Going forward we will be watching interest rates, inventory levels, and of course our Current Market Index which we share with Ellis Team sellers.

Home to Sell

If you have a home to sell, Always Call the Ellis Team at Keller Williams Realty 239-310-6500 We’d love to sit down with you and discuss your options. We have more inside information we can share. Good luck, and Happy Selling!