Tuesday, March 22, 2016
Real Estate Season - Home Buying and Selling
Hot Springtime Demand About To Start!
The first month of each year when home buying starts to heat up is always April. Experts at the Florida Association of Realtors are expecting the next 4 months (April to July) to have the highest number of buyer and seller transactions all year. Considering real estate transactions have already started this year off at an extremely fast pace, it is exciting to think about the upcoming spring season of 2016.
Sellers will remain in the driver’s seat at all pricing levels. Inventory of homes around $100 to $125K are sparse and extremely competitive, down 8.6% since January of last year. At this price point, there are typically investor type properties needing work and / or updating. You can also find homes and townhomes that attract first time homebuyers looking to step into the real estate market. Overall inventory has been sub 4 month levels all year long here in Florida, almost all of 2015 as well.
Even though we expect a lot of new listings to come on the market in the next 30-60 days (normal in the spring), we also predict buyers to be out in droves. In fact, the number of new buyers looking under $400K should drastically outnumber the new inventory that pops up. This will further reduce inventory and further increase home prices throughout the entire state. Daren Blomquist, chief economist researcher for RealtyTrac, explains that “homes tend to sell faster in the spring because of demand”. This is nearly always true as springtime is when schools wind down, everyone has a firm grasp on their finances/budgets, tax returns, and the first quarter of the year is coming to a close.
So how much more activity level in the Florida housing market could we see exactly? Since homes have been selling quickly all year long, we are not sure how much faster homes could be sold. Forbes real estate offers this advice to buyers who are about to start looking in the spring buying season: “buyers should be prepared to move quickly, exceed the asking price and be flexible. Pay a compliment to the space you are considering and connect with the owner, who may be willing to sell to someone who will occupy the house rather than to an investor”. Wow we have come a long way since the recession… Forbes is now recommending wooing the seller in order to persuade them to accept your offer over someone else’s! To put demand into a statistical perspective, in just 12 months’ time, demand has driven the median price for single family home resales in Florida up 8.2% to $213,800. Bob Walters, chief economist for Quicken Loans says the inventory woes and subsequent rising prices are due to “a decade of pent-up demand”.
On the finance side of things, Interest rates have increased three times in March. Although they have been raised several times, they are still holding below 4%. Since the Fed keeps offering these extremely attractive rates, there is a growing sense of urgency to purchase very soon! The entire real estate / housing industry knows interest rates simply cannot stay this historically low for much longer. Low rates compounded with the normal increase in demand for the spring housing market will be a perfect storm to motivate buyers into an action plan who were otherwise on the fence. Increasing competition and reducing inventory even further could very well happen! To coincide with all of this new buyer demand, if you are a seller or may be thinking of selling your home you absolutely should not wait. Start preparing your home ASAP for listing, and taking care of minor things that a home inspector may find. You should also spruce up the exterior of your home with some landscaping maintenance, paint or pressure washing depending on your home’s needs. A little curb appeal will go along way with potential buyers. You will sell your home even faster and for an even better price! Will suggest more in another listing blog coming soon.