Practically every week there is a trend in the real estate market directly related to the COVID-19 pandemic. The health crisis has taken over every aspect of our lives, but it appears that housing and real estate values have been especially impacted. The latest effect is the shortage of building lots to meet the demand for new construction.
The U.S. Commerce Department has reported that new home sales rose 19.1% in volume in the first 11 months of 2020 compared with the same period in 2019. Even little Cortez has been affected, with two lots sold and one currently on the market in the past six months per realtor.com.
With the shortage of previously-owned homes on the market, record low interest rates and the desire for more space during the pandemic, builders are running out of land. Some builders are limiting the number of sales they put in contract, worried they won’t have enough buildable land to start construction on. Land development is a long and expensive process that involves permitting and infrastructure planning long before a shovel goes in the ground.
This demand is also likely having an impact on green buildings according to the American Institute of Architects. Their goal was to hit “net zero” construction by 2030, however, they have a long way to go and few of their members are meeting their goal. The majority of people just aren’t asking for green construction.
To complicate the new construction industry further, investors – sometimes partnering with builders – are building tens of thousands of houses expressly to rent. Their bet is that the housing culture has changed enough this past year with individuals and families embracing suburban living to keep the demand for single-family homes increasing.
In addition, because of the demand for single-family homes, prices have soared, and in spite of low mortgage rates, availability is unaffordable for many. It’s projected that newly-constructed homes sold straight to investors will exceed 5% over the next few years, up from the historical average of approximately 1%.
When I went online at the Realtor Association of Sarasota and Manatee’s website so I could report on the December sales statistics, the first thing I saw was “single-family homes flying off the market in Sarasota and Manatee.” So here are the numbers on homes in flight.
Sales of single-family homes were up 41.6% from last December. The median sales price was up 6.8% to $357,900 and the average sale price was up 14.5% to $496,984. The median time to contract was 60 days, down 33.3%, and the month’s supply of homes is 1.5 months, down 54.4%.
Condo sales were up 45.1% from last December. The median sales price was up 19.5% to $239,000 and the average sales price was up 52.4% to $365,012. The median time to contract was 26 days, down 43.5%, and the month’s supply of condos is two months, down 51.2%.
According to the Realtor Association of Sarasota and Manatee’s president, “This is one of those weird moments when it’s a great time to sell, but it’s also a great time to buy. If this trend continues, and data is showing that to be the likeliest forecast, then sellers can get top dollar in record short timeframes, while buyers can lock in record low interest rates and buy a home that is going to be worth much more in a year from now. And if they do both, then they can get the best of both worlds.”
The best of both worlds doesn’t come along very often; enjoy while you can. Stay safe.
