Should you sell your home in today's market? (A look at the law of supply and demand)
Last month I talked about all the myths surrounding today's real estate market in Southwest Florida. This month I want to talk about simple economics. We all remember studying the law of supply and demand in school, right?
Well, let's look back at 2004. Hurricane Charley hit us smack dab in the eye in the Punta Gorda/Port Charlotte area and Arcadia. Parts of the Cape Haze Peninsula and North Port got a bit of wind damage, but nothing like the devastation that Port Charlotte, Punta Gorda and Arcadia experienced.
Housing shortage
What happened after Hurricane Charley and all the other named storms of 2004 and 2005? A housing shortage. So right after Charley, we experienced a boom of people seeking housing. I remember people from Port Charlotte and Punta Gorda living in Englewood, North Port, and Venice and as far north of Sarasota and Tampa. Why? Simply because there were no homes for them to live in near their jobs and schools. Rentals skyrocketed from an average $600 to $700 a month to $1000 and more.
I remember in the early days when I had to take my son to school at 6 a.m., so students from Port Charlotte could attend school at L.A. Ainger in the afternoon. We honestly had a shortage of livable homes.
Recovery building
A few months done the road, we started to recover. For those of us lucky enough to live in Englewood or North Port, our lives went on in a fairly normal way. I still know people who have not found suitable housing who lived in the FEMA trailer parks. Still in 2007, people are still whirling from a storm that blew away the lives they knew and cherished.
Law of Supply and Demand
The law of supply and demand comes in as the recovery moved forward. Builders built many homes to replace the damaged and blighted ones. Many homes were built in the bustling city of North Port (one of the few incorporated cities in the area). People like North Port because it is centrally located near Interstate 75 and U.S. 41 right between Fort Myers and Sarasota. These homes were priced in the 200s to 300s for basic three bedroom, two bath homes with garages on an average size lot. Areas of North Port that had never seen a bull dozer suddenly became neighborhoods. In surrounding towns including Englewood, Venice and other outlying area including the Cape Haze peninsula, homes sprung up in the form of single family dwellings, duplexes, condos, and luxury homes and villas.
(I guess they ignored the fact that there are very few large companies for people to work at nearby. The reality is that most jobs in this area are not high paying executive positions!)
In other words, people were buying these homes rapidly. As people moved out of Florida, others flocked in to get in on the hot property market. Some arrived too late to benefit, while others took the money and ran. Investor flippers bought, fixed a little and sold. You know the rest of the story.
Sellers woke up too late
Sometime in late 2005 and 2006, some very sleepy people woke up and saw that their neighbor made a bunch of money on their home by selling it. It was too late. Time had caught up to the booming real estate market and too many sellers put their homes on the market at the same time. This is where the law of supply and demand comes in. When there is a large supply, things become less expensive to buy. When there is a shortage, things become more expensive. So if this is a buyers market, it means there is too much inventory in the marketplace. How do you turn the tide a little? Don't sell unless you must! (Remember, we have a tax base. Properties can't fail below a certain amount.)
Should you sell your home?
So, here is my question to potential sellers: Do you really need to sell your home right now?
Before you jump into the frenzy of fear that your home will only be worth pennies on the dollar if you wait, step back and look at history. Real estate is land. There is only so much land available on the planet. Real estate is just that, real. It will always be there and the value will go up and down. Waterfront property is limited, especially waterfront with access to the bay and gulf.
STOP! Ask yourself some questions.
•1) Why am I selling now?
•2) What is my motivation to sell today?
Turn the page please...more from Tami Patzer
•3) How long can I wait to get the price I think I need? Or want?
•4) Ask yourself if you really need to sell or if you just need to refinance due to interest rates or other tangible reasons.
•5) Am I selling out of fear of losing my home?
•6) Did I pay too much?
•7) Will I make any money?
•8) What is the worst thing that will happen to me if I don't sell my home this month or this year?
•9) What are my options?
•10) Am I worried that I missed the boat and will lose my equity?
As you can read, there are myriad questions you can ask yourself about your reasons to sell your home. Of course, there a many valid reasons to sell your home. Maybe you want to move; maybe you are older and want to move in with your children or to an independent living facility; maybe you just don't want to own any more. Again, depending upon each person, the list is endless and only you can determine your personal reasons.
As a Realtor, I want to help both sellers and buyers do what they want to do for themselves. I can help a seller prepare for the emotional roller coaster of selling and I can help a buyer determine how much they can afford in a new home and help them find it.
Too many choices lead to no action
Have you ever wondered why our buyers seem to be so far and few between right now? I was thinking about this the other day. I remembered when I was a child and my father took me into a fancy candy store. He said," You can have anything you want!" Well, of course, there were hundreds of bins of sugar candies, licorice, chocolates, and nuts...everything imaginable. Do you know that I walked out of the candy store empty-handed? Why? I couldn't make up my mind because I had too many choices. This is exactly what is happening today. Buyers want to buy, but they have too many choices. And with so many choices, they stop in their tracks because they, too, have fears. They fear that if they choose a certain home, a better deal, a better floor plan, a better something might be just around the corner tomorrow, so they don't buy anything at all. Think about it. An associate of mine had buyers look at 53 homes before they placed an offer! If I were thinking about selling my house in this market, I definitely would sit down and write a pro and con list about my reasons to sell now or wait. If one side of my list outweighs the other, I would use this tool to make a decision that is right for me personally.
This applies to buyers, too. Sit down and write out every single thing you can think of related to your dream home. Now is the perfect time to get that dream home because your choices are endless. With that said, if you are focused in designing your dream home on paper, a Realtor can then help you find only the homes that match your criteria. It's that simple. Write it down and see it manifest.
Comments(2)