It’s winter in Florida and it can be a little chilly in the morning, but, if you pay close attention, you may feel a slight warming breeze. However, the breeze I’m talking about is not in the air, but in the real estate market, and it’s starting to stir demand among buyers.
Mortgage rates have fallen by about a full percentage point for a 30-year fixed-rate loan, signaling that the Federal Reserve may be nearly finished lifting interest rates. As of this writing, the average 30-year fixed-rate loan is averaging about 6.79%, but there are loans out there that are as low as 6.46%, and a 15-year fixed-rate loan is averaging about 6.22%.
The last time we saw mortgage rates in the 6% range was for several years between 2003 and 2008 after which the rates started dropping. Understandably, new buyers to the market were appalled when the rates went over 7% from a low of 3% since they had never seen rates this high.
Redfin reports that the number of people contacting real estate agents to start their buying process has increased from a November low. In addition, real estate contracts rose in December and mortgage applications are up by about a quarter nationally since the end of last year.
The real estate market has always been a barometer of how the economy is doing in general because so much of a successful economy is driven by a successful housing market. Goldman Sachs Group economists said this past month “they expect the worst of the downturn has passed and housing is poised to exert less of a drag on economic growth going forward.”
And buyers are hearing the message and getting accustomed to their monthly housing costs being higher if they plan on buying a home. It’s a correction in their thinking which has finally taken hold.
Let’s see if Manatee County residents are also getting the message. These are the January sales statistics reported by the Realtor Association of Sarasota and Manatee.
Single-family homes closed 31.7% fewer homes than January of last year. The median sale price was $505,710, up 5.4%, and the average sale price was $650,544, up 5.8%. Median time to contract was 32 days, compared to 7 days last year, and the month’s supply of properties is 3.2 months.
Condos closed 24.4% fewer properties than last January. The median sale price was $345,000, up 14.4%, and the average sale price was $392,332, up 3.4%. Median time to contract was 26 days, compared to 6 days last year, and the month’s supply of properties is 3.2 months.
Cash sales continue to drop 31.6% for single-family and 34.6% for condos. However, inventory is increasing and the median and average sale prices are still in positive territory compared to last year. The combination of increased inventory and values that are holding is a great thing. There are regions around the country that would love to be in our position.
In addition, historically, 6% interest rates are not unusual. What was unusual was when they got down to 3%. We as a country have always survived high-interest rates frequently much higher than 6%. Buyers continued to buy even then because owning a home is ultimately the goal of most Americans. So, enjoy the warming trend and be patient it you haven’t felt it yet, it’s coming.