You have heard me say it before, the most asked question any realtor hears is “How’s the market?” What I have been hearing lately isn’t really a question, but more of a statement “I hear the market is going to crash.”
Interesting…Where did you hear this?
Facebook, at Publix, at the gym, someone at work, it’s all over the news/internet and a few other “reputable” sources.
I don’t necessarily agree with that statement, but I have been keeping a close eye on what is happening with our MLS because we have been in a very good market the last 5+ years and we probably are due to have a correction. Here are some things I am seeing:
Our active inventory is up. Last year at any given time we had about 3100 properties active at any given time. So far in 2018, we have not been below 3300 active properties for sale. An increase of 200 active properties isn’t alarming BUT it is an increase of about 7%.
Right now (April 5th, 2018 4pm) we have 3371 active properties. 29% of these properties have been on the market for over 90 days (978 total). Over half of that inventory has been on the market over 150 days. That is a lot of stagnant homes for sale.
An increase in inventory is not a big deal if the sales are also increasing. The 1st quarter of 2017 we closed 3,107 properties per our MLS. In 2018, we closed a couple more; 3,119. I say Even Steven on sales in the 1st quarter. The * goes to how many of the properties took more than 90 days to close…about 20% (616 total). In 2017 was a little less, 577 closings took 90+ days to sell. This works out to a 7% increase in the 90+ DOM. (DOM=Days on market)
Am I concerned? No. Here is why.
The buyers I have worked with in 2018 are able to see everything that meets their criteria and in their price range in a relatively short period of time (usually 1-3 outings) If they like one of the properties enough to submit an offer; they are usually competing against other offers. If there offer is not accepted, I am recommending they consider being a backup offer. When a listing I have goes under contract, I am recommending the owners to allow me to change the status to “accepting back up offers” instead of just changing the property to contingent. (Contingent, Active, Back Up…What does this mean? Watch this video to learn about the Realtor lingo and the status of a property https://youtu.be/tkNoVOY79VY ) New listings also get a lot of showings the first 7 days because there are a lot of buyers looking for property right now & they have already seen the existing inventory.
What I am concerned about? Interest rates are on the rise. Most people are surprised when they first talk to a lender and hear anything over 4%. Freddie Mac has the average rate for a 30 year fixed rate mortgage is at 4.4%. I have seen them as high as 4.875 in the last few months. Rates have been under 5% since 2010. We have seen rates in 3 of the last 8 years under 4%. We have been spoiled with ridiculously low-interest rates for a long time. Prior to the drop in rates 10 years ago, 6-7% rates were considered to be pretty good.
Another concern are the price changes. We are seeing a lot of them lately. So far, we have had 3,352 price changes, which is an 18% increase over last year. This comes from sellers who are wanting to “test the market” or the mythical belief that our spring market brings northerners down and we can get them to pay more for our property. You will still need an appraisal to happen. If they happen to be paying cash, they will still have an appraisal contingency in the offer or expect to get a discount on the price because of the cash offer.
So what are the numbers for March? We have an active inventory at the end of March was 3,338. We sold 1,331 properties for the month, which puts our inventory at 2.5 months supply. REO/Foreclosed properties are almost non-existent. Only 27 sold this past March. Almost all the sales were standard sales (1289 properties)
Bottom line is our real estate market is still very active and most of the inventory is selling in less than 60 days. We are under a 3 month supply of property which is considered a seller’s market. My advice to someone who is trying to time the market? Good luck with that. If you need to buy, then start house hunting. Just give yourself a little extra time to find the right home. If you need to sell, have a plan in place if the right offer comes in and you still haven’t found your next home. Being able to coordinate a simultaneous closing (close on the sale of your home the same day you buy your next home) is not an easy task. If you are able to buy first, then sell, you will minimize a lot of stress that comes with timing this and you will not feel like you are settling for a particular home to buy or a price when you sell.
Questions about real estate or the current market? I would love to hear from you. Simply leave a comment below, send me a direct message, give me a call or text (321.795.1854), or send me an email (Eric@EricLarkin.com)
About the author:
Eric Larkin is a Broker Associate with REMAX Solutions. He lives, works, and plays in the Cocoa Beach area. Eric has been helping buyers and sellers with their real estate needs since becoming a real estate agent in 2003. His focus is always on helping, answering your questions, and doing everything possible to make certain you have a smooth transaction from beginning to end.