According to Lawrence Yen, whom I quote frequently, “It’s a unique market condition.”
Coming from the chief economist for the National Association of Realtors, this is saying something considering all of the other unique markets we’ve lived through. This particular unique market is the continuation of a lack of inventory even though sales are down in most areas of the country including many parts of Florida, as well as ours.
The problem is that a large portion of homeowners in the country don’t want to sell. This group may actually want to sell and move on to a larger family home or retire to a smaller home, but they feel they are locked into very low-rate mortgages. The “golden handcuffs” homeowners find themselves locked into are keeping the supply of homes for sale unusually low.
The lack of properties is not the first time this has happened. The sub-prime mortgage crisis slowed things down, as did COVID-19 when buyers rushed to snap up larger homes when remote work and school necessitated more family space.
So, what happens when supplies go down or at least don’t go significantly up? Supply and demand kicks in and prices go up. A healthy housing market is traditionally described as having four to six months’ supply of homes. Right now, Manatee County is at 2.7 months for single-family homes.
However, builders are getting a boost from the lack of resales and are starting to build again now that the supply chain is improving. And home improvement contractors are also benefiting since those homeowners who are staying put are expanding and remodeling.
According to the mortgage data firm Black Knight, as of March 31, nearly two-thirds of primary mortgages had an interest rate below 4%. In addition, about 73% of primary mortgages have fixed rates for 30 years; these mortgages are “golden” and something homeowners won’t easily give up. Current mortgage rates are approximately in the mid-6% range and have fortunately been steady for a while.
The April sales statistics for Manatee County were released at the end of last week so it’s time to report what the Realtor Association of Sarasota and Manatee published.
Single-family homes in Manatee County hit a record median sale price of $570,000, 10.7% more than in April last year. This surpasses the previous record for median home prices, meaning so far, our local market continues to be strong relative to the country as a whole. Here’s the rest of the story.
Single-family homes closed with 4.3% fewer properties from April of last year. The median sales price was $570,000, up 10.7% from last April, and the average sale price was $735,779, up 0.9%. The median time to contract was 28 days versus five days last year. New pending sales were up 30.2% and the month’s supply of properties was 2.7 months.
Condos closed 15.8% fewer properties from April of last year. The median sales price was $380,795, up 8.8%, and the average sale price was $452,160, up 12.9%. The median time to contract was 27 days versus five days last year. New pending sales were up 4% and the month’s supply of properties was 3.5 months.
One of the advantageous side effects of this unique market is the fact that in spite of inflation and job layoffs, the housing market and housing prices may stay strong nationally. Not great news for marginal buyers or first-time buyers, but buyers with equity from a previous home and income to cover the additional mortgage rates will keep things afloat.
Unique can be a good or a bad thing; either way, we’re still struggling with a lack of inventory.