Harder to Get Good Deals?
It's time to take a look and how the current real estate market got into its current condition and where things may be headed from here.
Each month I go over the last month's sales statistics and look at what that tells me about our local market. This month, in addition to that, I'm going to go over what is happening with our inventory levels and what that has to do with the condition of the current real estate market here.
I'm also going to ask you about whether I should include a new feature on this site and need your feedback.
But I'm going to start with the June sales numbers....
Each month so far this year it appeared, in the beginning of the month that we were starting to seeing a slowing of the positive trend that has been going on the last few years and by the end of the month the sales were way up. I really thought that June would show a slowing of sales as it is pretty typical that the Spring months are strong and then sales weaken during the summer. So June was another surprise.
The sales last month were not only slightly up from May and higher than the month of June for the past 4 years, June's sales were actually the 3rd highest month from January 2007 forward. When you look at the chart below you'll be able to see that the turning point began in December 2008 and other than the 5 months following the end of the tax credit last year, every month starting with December 2008 has at least been above the same month in the previous year with the last 6 months being higher than the same month in the previous 4 years.
As I've been saying, this is a trend that shows a recovery in our local real estate market and demonstrates strength. This doesn't mean that everything is all better now or that there can't be some problems in the future. But it does mean that there is an underlying strength in the recovery in our local market House prices appear to have stabilized and condo prices look like they may have reached the bottom too.
Here's the sale chart for last month:
Now I'm going to take this a step further. There is another statistic that is used to look at the stability of a real estate market which I mentioned quite a while ago but haven't really covered since. It has to do with the existing inventory of homes for sale.
In the boom market that peaked in 2005, there were so few listings and so many buyers that sales and price statistics went nearly straight up for a while. A measurement of the condition of the real estate market can be done by taking the total number of properites for sale in a specific area at a given time and dividing that by the number of sales in that area during the same time period.
For example, if there were 10,000 properties for sale in a specific county at the beginning of July and during the month of June there had been 1000 property sales in that same county you would divide 10,000 by 1000 and get a figure of 10 - which is the # of months of inventory in that market.
During the peak of the market here the # of months of inventory was around 2, at the worst point it was about 32. A normal market is somewhere in the 5-7 months range.
Over the last few year I've been watching the inventory levels slowly descending on a steady basis and so I thought it might be a good time to look at the trend and I found something quite interesting when I put together a chart. The inventory levels are starting to flirt with the 'normal' range again. See for yourself:
There are also some repeating trends on this chart you should notice. The highest month each year is January (which is typically the lowest sales month); the graph trends downward from January thru about April each year then trends upward the rest of the year (except for 2009) and there is typically a steep drop in December. These tend to follow the buying trends - January the weakest month; improved sales throughout Spring; slower sales during the summer; strong sales in December.
If this year follows the typical trends we should see the the light blue line start trending upward and probably hovering around 10 during most of the rest of the year.
Now what does this mean and why did I call this newsletter "Are the House and Condo Deals Disappearing"?
With the inventory reaching more normal levels and the sales remaining strong we have a situation where demand has been increasing and supply has been decreasing. I wrote about this in a few of my previous newsletters where I described situations where buyers were losing out on deals because of competition from other buyers. In addition I've noticed that the low price range properties that were available at the end of last year aren't around anymore or are only rarely seen.
A lot of buyers and investors recognized what was going on in this local market and acted quickly to get in on the action and that resulted in increased sales and a reduction of inventory, especially the really well-priced properties. Another factor that increased the demand was a brutal winter season. I regularly hear from buyers in the northern states that they have decided they have had enough cold weather and are now ready to buy their winter home or retirement home in Florida, especially since the prices are so much better.
So what does this mean to you? It means that you need to know that sellers won't always be as easy to negotiate down in price, there will be less of the truly exceptional deals available and you will need to be fully prepared and act quickly when you find one, and that you shouldn't procrastinate if you're ready to buy but think maybe you should watch what happens just a little longer.
How this market will proceed in the future will depend on what happens with both the national and state economies and employment rates but even so I think that even if it doesn't continue to grow it will remain fairly stable.
Now there's one last thing I wanted to cover and I'd like your help on this. I've been working on putting together a report that will show all the foreclosures listed in the northern half of Pinellas County and the beach communities and have a way to publish this on my site with a daily update. I've got this report set up where it will show what is available broken down by type of property and by city and community, and I have been able to program it where you can search by price range, square footage, number of bedrooms or bathrooms, etc. and even will show you how long it has been on the market. But then I wondered if anyone would really use this tool or have any interest in it.
So I'd like your feedback on this to see if there actually is a demand for this information. Please either leave a comment below to let me know if you have any interest (or not) or send me an email to let me know. If I see that there is enough interest I will finish my work on this project and then let you know when it is ready.
Make sure you do something you enjoy this summer and I hope to see you here soon.