We have been experiencing an incredibly strong local real estate market with brisk sales at a typically slow time of the year. Over 750 homes went pending out of around 3000 homes available in the month of September 2012. I can recall how slow it was 4 years ago (just before the election) and can't even compare the two periods. Well priced homes are selling in weeks instead of months.
The strength of our market can be attributed to 3 main reasons in my opinion.
1. Incredibly low interest rates. Not new news, but this past week I locked in a new home buyer for a single family home for sale in Lakewood Ranch at an incredible low rate of 3.2% for a 30 year FIXED FHA loan. This allows this home buyer the ability to have a mortgage payment including taxes insurance and PMI, for much less than a comparable home would be rented. That particular home for sale in Lakewood Ranch at around 150,000 would have had a rent rate of 1,500 a month, plus first last and security. The buyer if he were to rent a similar home would have had to put down 4,500, along with no interest deductions and no ability to gain equity. As a home buyer of a similar type of home for sale they were able to roll in closing costs and have a total out of pocket of 3.5% and a payment less than the equivalent rent, not even factoring in the potential interest deductions.
2. Tight inventory supply. The bottom of the market was most likely hit in the end of 2011. With prices stabilizing and even rising (quickly) in some neighborhoods in Sarasota and Manatee. With only a very limited number of options more buyers are vying for the same home causing multiple offers to become commonplace, and over asking price sales a regular occurrence. The media is reporting the improving conditions that are forcing more buyers that were on the fence about buying into the market.
3. Additional buyers able to buy after waiting out time from a short sale or foreclosure. We have had a decreasing market here in Manatee and Sarasota counties since 2006. Most people that have had financial challenges, forcing them to either short sale, deed it lieu, or let their home foreclose are now at the point were they can now potentially qualify for a mortgage again. This number of home buyers will be increasing every month as the number of people that short sold their home 3 years ago are now able to be a potential buyer today.
I have assisted with selling hundreds of short sales over the past 6 years. About three years ago we were probably at our peak of short sale inventory. That translates into a lot of potential buyers reentering the market. Or the "boomerang" buyer.
Fannie Mae and Freddie Mac will allow a buyer that has done a short sale qualify for a new mortgage after 3 years. In some cases, even sooner. VA and FHA have conditions that will even allow for shorter time periods after a short sale. In fact, The FHA will allow a seller who is current on the payments, short sale their home, and IMMEDIATELY be able to by a new, more affordable home.
Local portfolio lenders have also stepped up too.
This past month I closed a sale in Palm Aire neighborhood in Sarasota with a buyer that was qualified by a local area lender. That buyer had a pending short sale that was up north where they were moving from. They were upside down in that home and were doing a short sale. This lender qualified and closed this borrower for a purchase here in Florida, before that sale even closed for a new purchase! Pretty remarkable. Again, in this situation the borrower was able to get a mortgage payment well below the cost for a comparable rental home. That home buyer had to have a high down payment (20%) and at higher interest rate than a typical conforming loan but regardless was able to qualify and buy a home before her short sale even closed. Something I would have thought to be impossible 6 months ago.
So with a tight supply of homes, high demand from an increasing pool of buyers, at ridiculously low interest rates ( below the annual cost of living) Prices are going to continue to rise. The only control I see that could slow down a massive increase in property values in our market is the back log of foreclosure homes that have yet to come on the market here in Sarasota and Manatee Counties. There are a ton of homes in some stage of foreclosure, and the odds that a home owner will be able to modify, or catch up payments in arrears is very low. Can these future homes for sale by the major lenders be absorbed quickly enough to not have a downward effect on pricing?? I think the answer is yes.
6 months of inventory is considered a "stable" market. Right now, we are running at around 3-4 months supply. In certain areas, like Lakewood Ranch, we are under a 3 month supply of homes already. Foreclosure inventory would have to more than double to have any noticeable impact on pricing. Also, with the media coverage of increasing prices a bunch of home sellers might decide to list their homes with the news of price increases. If these sellers flood the market that could cause the prices to stabilize by giving the buyers more options.
No one has a crystal ball to predict the market but it is my opinion that anyone that buys a home at current market values is doing great, especially considering the cost to rent in comparison, and the fact that prices are about the same as they were 10 years ago.
When you are ready to get real estate advice please feel free to give me a call or email. Whether buying or selling we know the real estate market here in Manatee and Sarasota County. Real Estate experts for Bradenton and Sarasota.
Regards,
Top 30 Coldwell Banker Agent in Florida!
Voted Best in Client Satisfaction by my clients and Sarasota Magazine as a Five Star Real Estate Agent - Seven consecutive years!
Posted via email from Joe Murphy Knows Real Estate in Bradenton
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