I challenge you to enter a room with at least four adult homeowners and not hear the conversation eventually gravitating to the price of homes.
Some of the conversation centers on fear that what their home is worth is just a moment in time and will completely disappear, others think they caused the high value of their home because they’re so smart and others probably think who cares, I’ll worry about it when it’s time to sell. Wherever you are in this conversation, the effect of home prices will have a major influence on your future.
According to a recent analysis by ResiClub of the Case-Shiller National Home Price Index, home prices have surged 47.1% since the start of 2020, easily outstripping the gains seen in recent decades. By comparison, home prices in the 1990s and 2010s grew a respective 30.1% and 44.7%.
In addition, home price growth so far this decade is on the verge of surpassing all the growth seen in the 2000s. During that period, housing prices skyrocketed 47.3%, including an 80% spike before the 2007 housing market crash.
There are several driving forces behind the spike in prices. Some of the reasons are underbuilding because of a rapid rise in mortgage rates and expensive construction materials. Available home supply remains down 34.3% from the typical amount before the COVID-19 pandemic in early 2020. Remember these are national profiles; what happens locally and especially in Florida does not always follow the national trend.
All of this is complicated by sellers who are locked into record-low mortgage rates and are reluctant to sell, further limiting the available supply of properties. Currently, about 80% of mortgage holders have a rate below 5%. That’s a lot of people who don’t want to move.
Nevertheless, prices continue to increase and, per the National Association of Realtors, the median single-family home price grew 5% from a year ago. This increase was confirmed in 93% of the metro areas in the country during the first quarter.
Two of the fastest-growing markets in the country, Texas and Florida, may be starting to see a softening of prices. Again, all real estate is local, so let’s see what the April sales statistics for Manatee County reported by the Realtor Association of Sarasota and Manatee look like.
Single-family homes closed 3.5% more properties compared to last year and condos closed 7.8% more properties compared to last year. Keep in mind these are lagging numbers for contracts probably written a couple of months before.
The median sale price for single-family homes was $530,000, down 7.0%, and the median sale price for condos was $352,420, down 7.5%. The average sale price for single-family homes was $718,603, down 2.3%, and the average sale price for condos was $435,292, down 3.7%.
The median time to contract for single-family homes was 44 days compared to 28 days last year, and for condos, it was almost the same at 44 days this year compared to 27 last year. New listings are up for both single-family at 17.1% and condos at 24.2%. Finally, the months’ supply of available properties is up to 3.9 months for single-family and 6.3 months for condos.
You don’t have to be a mathematician to see that inventory has surged, resulting in a more competitive market and longer selling periods. Selling prices are already down and could be further impacted because of the additional competition.
The best way to discuss what your homes are worth among friends is probably not to. No one gets the credit for it and no one will get the blame if prices start to level off. I’m with the guy who says, “I’ll worry about it when it’s time to sell.”
