What’s going on in the market?
The real estate market is a living, breathing thing, and like all living things, sometimes it doesn’t do what we want or expect of it. But then again, sometimes it does and those are the moment we live for.
Last week the National Association of Realtors reported that sales of existing homes increased 4.9 percent in May from the previous month, but were down from last year. In addition, the median sale price of a home in May was up 5.1 percent from a year ago to $213,400 which sounds like progress, but it was actually the slowest annual gain since March 2012. Much of this slow down is attributed to increased interest rates, a harsh northern winter and generally a less than robust economy.
Another reason the overall market could be having a problem rebounding is the lack of first time buyers giving it a jump start, which had been predicted but never happened. Tight lending standards, higher prices and higher interest rates are keeping first time buyers in rentals or living with parents. First time buyers are an important link in the real estate chain since move-up buyers can’t move if there aren’t any first time buyers to purchase their home.
In addition, recent reports from the Census Bureau, Trulia and Fannie Mae are indicating that baby boomers aren’t moving. The typical pattern of downsizing after the kids are gone isn’t happening, putting another road block in front of improving the overall real estate market. Some of this stagnation is because boomers don’t have as much equity in their homes as they had planned and are holding out for more, and also because they may be locked into low interest rates at a time when rates are increasing.
Another element in the real estate market that has to be thrown into the pot is a drop in short sales reducing inventories. Because of the expiration of the Mortgage Forgiveness Debt Relief Act in December, homeowners are less inclined to accept short sale offers. The Mortgage Forgiveness Debt Relief Act passed in 2007 essentially forgave a portion of the mortgage debt a seller would be required to pay in income tax on the amount forgiven by the lender. Now that the forgiven amount, the difference between the sale price and the outstanding mortgage may be subject to income tax, homeowners would rather not sell than subject themselves to the possibility of thousands of dollars in tax liability.
In view of this less than perfect news, I decided to take a look at the Manatee Association of Realtors’ statistics for the Manatee County island communities. The most recent numbers were from April and are certainly worth noting. The Manatee Association of Realtors defines "islands” as all three of the cities on Anna Maria, Cortez and north Longboat Key.
For April, the median price of single family homes increased from $575,000 in 2013 to $737,000 in 2014. The days on market decreased from 85 in 2013 to 70 in 2014. Certainly the Island statistics represent the high end of Manatee County with properties on Longboat Key pushing the numbers up, but it doesn’t look like we’re experiencing as sluggish a market as much of the country is.
There are few people in America who aren’t invested in some way in the real estate market. We all have to live somewhere, and whether we own our home or rent, the fate of the real estate market can dictate our fate as well – just like all the other living breathing things around us.