Real estate trickle down
Did you know that the trickle-down effect is an actual theory? I always thought it was invented by a creative public relations guy for a non-creative politician. No one person is given credit for the term. It just evolved starting in the mid 1800s, and what it essentially means is that the money the wealthy spend on goods and services influences all social levels below them in a vertical fashion. All real estate values, of course, are also influenced by what goes on in the upper level marketplace, and so far, the marketplace is looking positive.
In spite of increased mortgage rates, Americans are buying homes at the fastest pace since 2007. During the month of January, per the National Associations of Realtors, home sales rose 3.3 percent over the end of 2016 numbers. Job gains, pay raises and a higher level of consumer confidence are given credit for the upswing, as well as anticipation of home prices continuing to increase.
Certain markets around the country are experiencing bidding wars and homes flying off the market at an amazingly fast pace, leaving very little inventory. Not all of this is good for a healthy market, and, hopefully, there will be a much needed adjustment in these overheated markets.
However, one of the benefits of all of this growth is the money new homeowners spend when purchasing a home. New homeowners purchase furniture, appliances and spend more on landscaping and, particularly in Florida, more on pools and outdoor entertaining areas, growing the economy across the board. In addition, home purchases spur renovations and updates to older properties generating construction jobs, as well as the cabinets, lighting fixtures, countertops and supplies needed to make these improvements.
In Manatee County the trickle down is in full swing with January and February statistics all in the positive range. The following numbers are from the Realtor Association of Sarasota and Manatee counties and generally reflects all multiple listing real estate transactions.
Single-family homes in January of this year had a median sale price (half above and half below) of $279,000, 1.3 percent higher than January of last year, and an average sale price of $359,590, 8.4 percent higher than last year. The condo median sale price for January of this year was $175,000, 3 percent higher than last year, and the average condo sale price was $203,160 this January, 3.3 percent higher than last year.
The month of February this year was also very good, with a single family median sale price of $289,752, 13.6 percent higher than February of last year, and an average February sale price this year of $353,244, 7.9 percent higher than February of last year. The condo median sale price in February was $174,500, 5.8 percent higher than February of last year, and the average sale price was $202,810, 3.4 percent higher than last February.
These are great numbers, and we haven't even see the March, April and May sales figures, which are always the biggest sales months in our area. However, the down the road potential problem continues to be a lack of inventory. Across the board in both January and February, the average months supply of inventory of single family and condos is stubbornly sitting just over four months below what is considered normal.
You could have a very long conversation about the benefits of trickle-down economics and whether or not it benefits the country as a whole. But when it comes to real estate, the trickle is real and almost audible around Anna Maria. Drip there's another new restaurant; drip there goes the pool company; drip another furniture delivery and drip drip drip drip flooding your home's equity.
