Single Family Sold Home volume (not price) took a dive in April and May. Right now, prices are holding for those who want to sell. A reality check says that's not going to last. Fewer Single Family Homes are listed for sale which is helping to keep prices up. When that changes, all of the other pressures that already exist will bring prices down.
There is a moratorium on foreclosures which was extended to August 1st. Once the moratorium is lifted, the volume of listings will increase. If you're going to sell, list your property now.
- THE FIRST ACTIONS OF A PENDING DOWNTURN HAS OCCURRED
- WHY PRICES ARE UP WHILE SOLD VOLUME IS DOWN
- INCOMES ARE DENTED
- FLORIDA HOME VALUES CAN BE HURT BY PRICES IN OTHER STATES
- A DISCONNECT BETWEEN BUYERS AND SELLERS
- THE START OF A DOWNTURN
- MID-JULY/AUGUST/SEPTEMBER ARE THE MONTHS TO WATCH
- THE DRIVING FORCE BEHIND MARKET PRICE
- HOME SALES VOLUME DECLINES AGAIN: MAY 2020
- MARKET PRICE VS HOME VALUE
- WHAT YOU CAN EXPECT AS A SELLER
- CORONAVIRUS EFFECTS ON HOME SALES
THE FIRST ACTIONS OF A PENDING DOWNTURN HAS TAKEN PLACE
Banks have tightened lending requirements which prevents many buyers from being able to get loans.
- Chase now requires a credit score of 700 and 20% down
- Wells Fargo requires a credit scott of 720 and 20% down
- Bank of America and others are similar or the same as Chase and Wells Fargo
Many buyers who have an established relationship with their banks may be able to get a mortgage with a lower credit score or less money down, but most buyers will not be able to get approved
unless they meet the requirements.
If you're a buyer running up against these requirements, speak to a Mortgage Broker. They work with many lenders and know which lenders are more likely to approve you.
Lenders have several reasons for tightening credit requirements. One is that they don't want to get stuck with a bunch of bad loans if the economy doesn't turn around. Another is that a large number of mortgages are now in forbearance (which puts mortgage payments on hold). Banks may have to carry a huge number of homeowners for up to 12 months. The sharp increase of forbearances means less money to lend.
WHY PRICES ARE UP WHILE SOLD VOLUME IS DOWN
Real Estate prices in Florida have not declined and in some cases they're increasing. This is a tricky situation. The reason prices are holding is because fewer homes are being listed for sale.
This is a pure Supply and Demand situation. Once the normal volume of homes listed for sale return, all of the other pressures that already exist will bring prices down.
If I was planning to sell my home in the near future, I would change my plans and list now to avoid the risk of getting caught in a Real Estate market downturn.
One new element has entered the picture which may help keep prices up for a bit longer than our forcast. The riots and looting going on all over the county (not the protesters), are causing many people to want to move now instead of at a future date. Many people realize that they can work from anywhere. They can leave the cities for sunshine, beaches, lower taxes and a more enjoyable lifestyle. Within a couple of months, the data will tell us if the riots are driving people away from those cities.
INCOMES ARE DENTED
There are so many examples of disruptions taking place. You might not personally be feeling the pain, but financial issues are being felt nationwide. At any time in history, you need a humming economy for prices to maintain the highs of an upmarket. Florida has a major advantage which is that people want to move here for the beautiful weather and lifestyle. That fact will help home sale prices hold for A bit as people flee other States but prices won't hold long term if the economy doesn't show a healthy recovery.
Even as Florida and other states reopen their economies, it's going to be a slow process.
While you've seen or heard about many closed businesses, there are just as many that are out of sight and mind. Restaurants, entertainment destinations, and schools stopped buying Florida crops which have left Florida farmers with no orders. The result is an estimated 85% loss from crop profits as well as food sent to trash. But it also affects employment from the crop fields all the way to the point of sale.
FLORIDA HOME VALUES CAN BE HURT BY PRICES IN OTHER STATES
A lot of people from other States rely on selling their home so that they can buy in Florida. If their home price drops significantly, many people will put off their move to Florida.
A DISCONNECT BETWEEN BUYERS AND SELLERS
If the real estate market does in fact move into a downturn, there will be a few months of a disconnect between buyers and sellers. Some sellers will win the early stages of the price tug of war, but ultimately, you’ll see sellers dropping their prices. Eventually, most sellers will be willing to sell at new lower price points.
THE START OF A DOWNTURN
At the start of a downturn, if a low offer is made, sellers will be looking at comparisons of recent high prices and most sellers will counter back at their full ask or just reject all offers below their target sale price.
At some point, able buyers will want a steep discount off the current list price.
MID-SEPTEMBER/OCTOBER ARE THE MONTHS TO WATCH
The cities and counties in Florida that we reviewed in April and May showed a 33% -to- 44% decline in volume for year-over-year SOLD single-family houses.
Prices held. June and July will also see prices hold but if the economy doesn’t show strong signs of turning around, July/August or September will see a shift start to take place.
I'm leaning toward September for when pressures will start to show sellers dropping price, but that also assumes that more homeowners list their homes for sale.
See year over year sales volume article:
Home Sales Volume Dives Year Over Year
THE DRIVING FORCE BEHIND MARKET PRICE
If the expected downturn does occur, buyers who must buy and sellers who must sell will be the driving force behind market price. It might take 6 -to- 12 months for a new normal real estate market to develop. A lot depends on whether the reopening of local economies creates enough of a recovery to erase the losses created from the closing of our economy.
There are always going to be people who need to sell or buy now. If you’re one of those people,
don’t hesitate to put your house on the market. Make decisions using short term data. You need an analysis from a broker that shows you the best way to position your house in the market based on price
and targeting specific buyer profiles so that you can focus your marketing to your best prospects. You need more than just appearing in the MLS.
For setting your best price, see: Absorption Rate Pricing
HOME SALES VOLUME DECLINES AGAIN: MAY 2020 (Select cities)
See year over year sales volume data:
Home Sales Volume Dives Year Over Year April
Home Sales Volume Dives Year Over Year May
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MARKET PRICE VS HOME VALUE
This is the tip of an iceberg explanation. The market price is the amount a buyer will pay for your house whether or not the buyer's price equals the value you believe your house is worth. An offer
by itself is not a market price, but if you accept the offer and complete the sale, regardless of the value factor, the sold price is now the market price. It may or may not affect other home sale prices in your area, but it can.
You might have remodeled your kitchen beyond the price point that is typically found in your neighborhood. When you decide to sell your house, you may choose to list at a higher price to reflect the value of your remodeled kitchen but your potential buyers may not be willing to pay more than what your house would sell for had you not remodeled your kitchen.
Here's a simple concept, if you don't get offers within 35% time period of your area's normal time frame for Sold status homes (absorption rate period), you are either priced wrong or your marketing isn't targeting your correct buyer type.
WHAT YOU CAN EXPECT AS A SELLER
Right now and possibly through September, you may be able to list at the high end of your price range for the condition of your property. If you wait to list until September, you might need to consider a lower price point. You should give more weight to the short term Absorption Rate in your area than you do to simply looking at comps. You'll end out getting a better understanding of how your property will fit into the market.
BACK TO TOP
1) CORONAVIRUS EFFECTS ON HOME SALES
2) SHORT TERM VACATION RENTALS SUSPENDED UNTIL PHASE 2 OF THE REOPENING OF FLORIDA
If you need to sell, contact Scott today to list your house. We will do more than traditional marketing and we’ll show you the recommended price to attract your ideal buyers.
Hunt Realty Group
We provide service in SWFL areas and referrals to great broker everywhere else in Florida
941-882-5494 Ext 701
813-324-1005 Ext 701
We'll follow-up on select Florida markets during the first week in June. We'll look at Punta Gorda, Port Charlotte, North Port, Venice, Valrico, Riverview, Lithia, and various counties. Check back.