Speaker Intro:
Welcome to the Southwest Florida Realty show with Billee Silva and here’s your host Billee Silva!
Billee Silva:
Hi, it’s Billee Silva with the Southwest Florida Realty show. I can’t believe the first quarter of 2022 is already in the rear view mirror, so I thought today would be a great time to share with you where we’ve been so far this year and where we’re headed. It’s no secret that there’s a home shortage, and it’s not just here in Southwest Florida. It doesn’t matter who you talk to, or what part of the country folks live in the common denominator nationwide is rising prices and historically low inventory. Just when we think inventory can’t decrease any more and prices can’t continue to rise, the data proves us wrong. Here in Lee County, closed sales for single family homes are down 15.3% from a year ago, but that’s because we have nothing to sell. The number of single-family homes for sale in our area is down 57.3% from last year at this time and the median sales price is up 26.5%. The statistics for condos and townhomes are even more bleak. Inventory for condos and townhomes are down 75% and the median sales price is up 38.5% from a year ago.
As housing affordability declines, a lot of would-be homebuyers are turning to the rental market, but that’s just as bad, if not worse as rental prices are skyrocketing and vacancy rates remain at record lows.
The delay in building new homes as a result of higher material costs and difficulty finding laborers is also contributing to the housing and inflation crisis.
The continued limited supply means that homes are selling at a fast pace, and we can anticipate home sales and prices in Florida will continue to increase and remain tight throughout 2022 and more than likely 2023.
Sadly, higher mortgage interest rates and rising construction costs are pricing buyers out of the market, and these higher costs are particularly hurting entry-level and first-time buyers. Across the country, consumers are feeling the bite of inflation and surging mortgage interest rates, Over the past month alone, the average 30 year fixed mortgage rate has spiked from 3.11% to 5.11%. Housing affordability remains a challenge, and higher mortgage rates may mean some buyers who had previously qualified under a lower rate are forced to rethink their plans.
The big question over the next few months will be how much the recent and continued elevations in mortgage rates will slow price growth. However, even with rising mortgage rates and higher prices, the housing market should remain strong due to increasing demand. All you have to do is look at the data, there are approximately 1000 people moving to Florida every day, the number of buyers paying cash for homes has increased more than half so rising mortgage rates are not going to affect a large percentage of home buyers. Secondly, Millennials are the largest generation in history, and they are in their prime home-buying years and realize buying is more cost-efficient than renting. And, now that people can work remotely, it’s not just retirees who are flocking to the sunshine state to enjoy all the wonderful amenities our area has to offer.
So, I think it’s safe to say the market will still be quite competitive throughout the year, so to all you buyers out there, I can’t emphasize enough the importance of having all your ducks in a row. First of all, if you are going to finance you need to be preapproved for a mortgage before even beginning to go out with a realtor to look at properties. Not a pre-qualification letter but a pre-approval, because there is a difference, and in this market you want to be as competitive as possible so choose a lender who will pull your credit, and review all your documents prior to issuing the letter because in a multiple offer situation, it’s not uncommon for the listing agent to call your lender to verify how solid of a buyer you really are. If you’re paying cash have your proof of funds available before you go out looking with your realtor, because once you find a home you like, if you have to scramble to find these documents it’s not unlikely the home will be under contract before you have everything together. And as a home buyer in this market, it’s extremely important to understand your must haves versus your want to haves when looking at properties. Even in a buyers’ market there really is no such thing as the perfect house, but in a sellers’ market you need to understand you’re going to probably have to make some compromises. Also, be realistic about changes you can make, you may not like the flooring, or the paint colors, but those are easy and relatively inexpensive fixes. Do you like the layout and the neighborhood? Does the home check most of your boxes? If you can answer yes to those questions, don’t wait to buy if the numbers seem to work out for you now. Most likely, a year from now, mortgage rates will be even higher and home prices will be even higher. The market might leave you behind if you try to hold on for more favorable conditions.
For all you sellers out there it’s still a good idea to make sure your property is attractive to buyers and that your asking price is reasonable. It’s also smart to make sure you know where you’re going to next, whether that means buying another property while you sell your current one, or having a rental lined up, you need to have a plan. This spring homebuying season is going to be another busy one, and buyers especially will have to be prepared and ready to pounce when suitable properties become available. The trends that have been here for much of the pandemic will continue to linger — but rising mortgage rates could start to wield some pressure for the market to adjust.
Just to give you an idea of the current market we’re in, when I looked on the Multiple Listing Service this morning there were only 1358 single family homes for sale in all of Lee county, and only 489 condos & townhomes. And, that’s all price points folks, so even with rising mortgage rates and higher prices, the housing market should remain strong due to increasing demand and a shortage of homes for sale.
As always, thank you for tuning in and I wish all of you an amazing day!
Speaker’s closing remarks:
Thank you for listening to the Southwest Florida Realty Show with Billee Silva. To learn more about Billee Silva go to www.sw-floridarealtor.com. That’s www.sw-floridarealtor.com. Or call 239-247-2490.