You might have heard that it’s a hot seller’s market in Central Florida. Our agents in Tampa say they’ve never seen the market like it is now, and it’s not uncommon to receive 20-30 offers on one home. Median home prices in the Orlando area are now at their highest since the local realtor’s association began tracking sales data. Here in Gainesville, the Months Supply of Inventory hit another record-low of 1.2 months.
For sellers, a competitive market creates many advantages. You know you’re likely to have more interested buyers, better offers, and a quicker sale than you’d otherwise have. But just because it’s a tight market doesn’t mean the fundamentals of home pricing don’t apply. Several factors besides inventory go into the price of a home, including local market conditions, buyer preferences, time of year, mortgage rates versus inventory, and having the right real estate agent. Let’s take a look at each of these factors in a little more depth.
Local Market Conditions
With several of the fastest growing cities and town in the US, Central Florida is undoubtedly a hot real estate market on the whole, but could your neighborhood be in a micro buyer’s market? The fact is, there isn’t a single housing market. There are multiple markets in different areas, and even those markets are made up of “micro markets” at the neighborhood or subdivision level.
It’s at the micro market level where actual pricing and purchasing decisions are made. Strong micro markets are typically characterized by accessibility to good schools, jobs, and amenities; in more urban enclaves, walkability is a big plus.
A hyper local market analysis will take into consideration tangible things like comparative sales (comps), inventory, days on market, what public schools the neighborhood is zoned for, as well as intangibles relating to desirability.
Speaking of desirability, buyer preferences are going to affect price regardless of market conditions, and those preferences change with the times. For example, the fact that many people are working from home now is influencing which features buyers want in a home.
At the top of the list is a dedicated home office. Outdoor living and entertaining areas, up-to-date kitchens, and delivery shelters for all those Amazon packages are also in demand right now.
Time of Year
Seasonality has always been a factor in home pricing, with home sales historically cresting in spring and summer months and slowing in late fall and winter. 2020 was an exceptional year due to the pandemic, with strong home sales extending into late fall and early winter.
Home shopping activity trends up in the summer months because kids are out of school and mobility rates are at their highest. That said, seasonality varies from region to region. Markets in the Northeast and Midwest peak more markedly in the summer than markets in the South and West, according to the National Association of Realtors and, you know, common sense.
Caveat: the winter holiday is a good time to sell. Inventory is low and buyers tend to be more serious during the holidays.
Mortgage Rates and Inventory
With mortgage rates at historic lows homeownership should be more affordable for more buyers, right? Yes and no. Record low interest rates have in fact increased the purchasing power of buyers (by 6.9%, according to Redfin), but lack of inventory has driven up home prices. Redfin found that a homebuyer on a $2,500 monthly budget could afford $33,000 more with low mortgage rates, but higher home prices have effectively cancelled out this increase in purchasing power.
Sellers should keep in mind that despite bigger budgets, buyers have fewer options in many metros. Here in Florida, Jacksonville and Orlando became more affordable with the cutting of interest rates during the pandemic, while Tampa became slightly less affordable. But remember, it’s at the micro market level where pricing and purchasing decision are made.
Bottom line: Even when market conditions favor sellers, there are quite a few factors that can advantage buyers at any given time. Do your own market research at the neighborhood level, put yourself in the shoes of buyers, and, in consultation with the right real estate agent, be prepared to make adjustments.
Contact a Knowledgeable Seller’s Agent
The knowledgeable seller’s agents at Rabell Real Estate service Gainesville and Alachua County, Ocala and Marion County, Tampa and surrounding areas, and Saint Augustine. Get in touch today for assistance in selling your home.