I recently spent a weekend with some good friends, all of whom were either involved in real estate sales or still are. Naturally, there was a lot of conversation about soaring home values both here in Florida and on New York’s Long Island, where we are all from. The question kept coming up, what does everyone think about the future of the market? Not surprisingly, these four smart women with a combined 150 years of real estate experience didn’t have a clue and neither do the economists.
We’re starting to see signs around the country that the market may have peaked in some places. More properties are coming on the market, which could level off the appreciation rate. However, since all real estate is local, only looking at specific regions will tell the story, and we are going to look at Manatee County’s statistics for March.
But first, almost every homeowner in the country is sitting on what could be substantial equity in their homes. The definition of equity is the difference between the market value of your property and the remaining mortgage debt against the property. There is something called tappable equity, which is the amount of equity homeowners can access while retaining at least 20% equity. Nevertheless, it can still be a lot of money, which begs the question: What should be done with all the equity?
Every homeowner’s situation is, of course, different. Less affluent borrowers may want to take out home equity loans against their equity to pay off higher-interest debt or to fund college tuition. But wealthier homeowners are frequently purchasing second homes to use for future retirement or investment opportunities.
If your decision is to sell and cash out, make sure you have a plan for where you’re going to live. Chances are, if you even find a property to purchase, it will be a much higher value than you anticipated, and rentals are also few and far between.
Now back to Manatee County statistics for the month of March as reported by the Realtor Association of Sarasota and Manatee.
Single-family home sales were down 20.2% from last March, but the good news is new listings are up 6.2%. However, values were way up – the median sale price broke another record of $525,000, up 32.9%, and the average was $703,385, up 31% from last March. The time to contract is five days and month’s supply of properties is 0.6 months.
Condo sales were down 39.9% but new listings are up 2.5%. The median sale price was $320,539, up 30.8% from last March, and the average sale price was $394,151, up 31.5%. The time to contract is also five days and month’s supply of properties is 0.7 months.
Obviously, there appears to be a positive change in new listings compared to last year. The hope is that if this trend continues, available inventory will start to level off. The big question is, will increased inventory result in lower sale prices? With properties going into contract quickly towards the end of the traditional selling season, the sale prices over the next few months may tell the story, but don’t bet on it. The number of buyers out there just waiting for new properties to come on the market will take a long time to go through, and even higher interest rates will, in my opinion, have little effect on most buyers in our waterfront area.
If my experienced friends didn’t know what’s going on in the market, why should you or any other buyer or seller? Whatever your decision is to do with your newfound wealth, don’t make that decision until you know all of your options. If you’re selling high, you’re also buying high.