Re-Sale Home Inventory in SW Florida Falls To 2007 Levels
Posted by Benjamin Dona on Sunday, June 22nd, 2014 at 8:07am.
The available SW Florida re-sale home inventory for May is at its lowest level since 2007 according to the latest Naples Area Board of Realtors (NABOR) monthly sales report.
Demand remains high too, with overall pending and closed sales both topping 1,000 for May. Many local real estate brokers are saying they don't see these factors as signs that a new bubble is building, which is defined as too much demand chasing too little supply, which pushes up prices to unsustainable levels for the average buyer. We concur with this observation at this point in time. Basically, what we have here is a lid being kept on the market by the fact there is a large supply of new construction homes available as an alternative option for buyers and tighter lending standards also helping to keep a rapid price rise in check.
The fact still remains though that sales price continues to rise at double-digit rates, even while supply and days-on-the-market contnue to shrink. Overall, median home prices jumped 12 percent year over year in May, to $275,000. Prices also rose year-over-year in the under $500,000 price range, but cooled in the higher price range categories. That's a change from the first four months of this year, when the higher ends of the market were seeing the biggest price gains.
The median single family home price rose to $380,000 in May, a 19 percent rise, while condos were up 10 percent to $225,000. Overall inventory fell to 3,919 units from May 2013, an 8 percent decline. The decrease was mainly in the condominium market, where inventory fell 19 percent to 1,850 units from May 2013.
NABOR President Pat Pitocchi said many factors are driving the disappearance of condos from the market. "One is rising prices of single family homes, which forces some buyers into the less expensive condo market." Another is the lack of new condos being built. And still another is the off-season influx of international buyers, who prefer condos to single family homes because they are easier to maintain from afar. “Also, some buyers who bought when prices were higher are renting them out rather than selling,” she explained. Many are investors waiting for prices to rise yet again and are simply in a holding pattern right now.
Single-family home supply bumped up 5 percent to 2,069 units for the same period, fueled by the areas new home construction. About 30 new communities are currently being built in the SW Florida area. In addition, single-family homes were on the market for 91 days, down 41 percent from May 2013. For condos, days on the market dropped to 100, also a 41 percent drop.
Both closed and pending sales slowed year over year. Closed sales fell 7 percent, to 1,016, while pending sales dipped 34 percent to 1,096. In a statement, NABOR attributed slowing sales to the inventory shortage.
Basically what we are seeing here in SW Florida is the market that continues to stabilize. Most experts who have looked at the numbers agree with that assessment. We do too. We also are seeing other signs that this is occurring. For instance, markets typically become more stable when distressed sales (defined as short sales and foreclosures), make up less than 10 percent of the overall sales activity. Here in SW Florida, distressed sales made up just 9 percent of closed sales in May.
*Sales Data Statistics from NABOR.
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