Be cautious of the real estate high
We’re on a high, no not a drug induced one but a high that if maintained could produce similar results. Let’s call it the “all of a sudden it looks like my house is going to sell” high or the “I better hurry up and buy a house” high. Whether you’re a buyer or seller, the real estate high is in the air and is very intoxicating.
According to the National Association of Realtors, existing home sales are at a three year high. Nationally, home sales increased 0.8 percent in February from a month earlier to a seasonally adjusted annual rate of 4.98 million the highest level since November 2009
It further went on to say that sales were 10.2 percent higher than the same month a year ago, and that it took a median of 74 days for homes to be sold in February of this year compared with 97 days last year. Median prices are also up 11.6 percent from a year earlier with the February median price at $173,600.
The Manatee-Sarasota single family home prices also rose 13.2 percent in February to $178,250, higher than the national median, with an increase in home sales of 9 percent. Condominiums, which have been slower in finding their footing in this market, also rose 8.6 percent to a median of $142,300. Statewide the results are similar with median sales prices for single family up 12.8 percent, which represents the 14th month in a row of growth.
Further supporting our growth is the C & P Case Shiller Indexes released on Feb. 20 reporting that the Tampa metro area has experienced an increase in home prices of 7.2 percent year over year.
The future is looking pretty good as well according to those in the know. Existing home inventory in January was lower than in 2001, with the general consensus that inventory levels should start to go up as sellers start seeing the value of their homes increase. This puts them in a better position to sell and encourages them to sell and buy new properties.
Also, the Zillow Home Price Expectation Survey estimates that 2013 should see a 3.1 percent increase in prices with the years between 2014 and 2017 also increasing between 3.6 and 3.2 percent.
The other outlying factor influencing home sales is the mortgage interest rate. The Federal Reserve Board says it is committed to keeping rates low, which, according to some economists, will be in excess of 3.75 percent or an even a higher 4.4 percent predicted by the Mortgage Bankers Association.
And just in case you’re in the mood for a little crystal ball predictions, Case Shiller Indexes also have published the 15 best housing markets for the next five years. The top of the list is Medford, Oregon, with an 11.2 percent growth rate and Glens Falls, N. Y., with a 7.7 percent expected growth rate. Florida has three cities in the 15 best – Ocala, 8 percent; Sebastian-Vero Beach, 8.7 percent; and Panama City-Lynn Haven, 9.5 percent.
Case Shiller also has a prediction for the 15 worst housing markets for the next five years. Miami-Miami Beach Kendall, Fla., is at the bottom of the list at negative 1 percent growth and Austin-Round Rock-San Marcos, Texas, at the top with 1.4 percent growth.
Interestingly Naples-Marco Island, Fla., is among the 15 worst growth cities at .70 percent. Our area does not appear on either the 15 best or 15 worst growth regions, which I take as a good thing.
Like all highs, the real estate high we’re on is dangerously addictive, so be careful not to make the wrong decisions while under the influence. Let’s not forget what happened the last time we were all high on real estate and the hangover that followed.