For a very long time now, those involved in the real estate market have been moaning about the lack of inventory. There are buyers ready, willing and able, but there’s not much to choose from. We’re looking at bidding wars and first-time buyers just throwing up their hands and signing another year’s lease.
No one seems to know the answer including the National Association of Realtors which reported that May’s national home sales were 5.43 million of previously owned homes compared with 5.6 million in May of last year. In addition, so far this year sales are 2 percent below last year’s pace, despite a strong job market and increased household incomes.
There are all kinds of opinions about this unusual phenomenon, ranging from new homes not being built to higher interest rates. And, of course, the new tax plan, which caps state and local tax deductions and places some limits on mortgage interest deductions, could also be reducing buyer incentives.
But is it really? If interest rates and tax deductions were the reason, housing prices would fall and inventory would be higher, neither of which is happening nationally or right here in Manatee County. Nationally, the median sale price for an existing single-family home in May was $264,800 versus $252,500 in April. So here are the Manatee County May statistics:
The median sale price for single-family homes in Manatee County for May was $305,000, up 2 percent from May of last year. The average sale price was $405,029, up 1.8 percent from last year. The listing to closing price is holding at about 95.5 percent and the median time to sell was 98 days compared to 92 days last year.
Condo numbers were both up and down for May. The median sale price was $183,750, down 1.3 percent from last year, but the average sale price was up 11.3 percent to $234,256 from last May. Listing to sale was 94.1 percent with the median time to sell at 93 days, pretty consistent from last year for both condos and single-family homes.
What’s also unfortunately consistent is the supply of properties for sale, which is approximately 4.5 months for both condos and single-family homes, remaining essentially unchanged from last year. Nationally, the month’s supply is about the same, which is way down from a decade ago where it stood at between 5 and 6 months, the level economists consider healthy.
Swirling around all of this talk about the softening of the housing market is the effect of the new tax plan on mortgage interest deductibility as stated above. Homeowners are sharpening their pencils and attempting to determine if paying off or buying down their mortgage is advantageous for them.
Everyone’s tax position is unique to them and needs to be calculated by a professional, especially as it relates to doubling the standard deductions, capping the state and local taxes and possibly losing interest deductions for some high-end mortgages. And don’t forget your home equity loan interest, which cannot be deducted unless you can justify the funds were used to buy, build or improve your home.
Somehow, all of these serious changes are having an impact on the market, if for no other reason than to force buyers and more importantly sellers to step back and wait for the dust to settle. Don’t hold your breath waiting for it to happen any time soon. I think we need to get through at least another tax year before we see any movement.