Let's take a look at the recent trends in Real Estate and put some pieces of the puzzle together to see what the impact is for Sellers and Buyers.
I will use some data from my local market of Lee County, Florida.
Homes are selling faster than last year.
When we look at the March 2107 compared to March 2018 we find that Median Time to Contract decreased by 11.9%. In 2017 Median days to contract was 67, but in 2018 it is 59 days.
What does this mean for the Seller?
1. A shorter time on the market could mean a higher sale price.
2. Reduced pressure on the seller who is under time constraints and needs a fast sale.
3. Improved negotiation power. The longer a home stays on the market the ability to have a strong point of negotiations decreases.
What is the Affect on Buyers?
Buyers will face more challenges:
1. More competition in the market. This may result in the buyer needing to revise their list of desires in a home.
2. Need to be better prepared with your financial picture. Instead of looking for the least amount of money for a down payment, it might be wise to consider a 10-20% down to show the seller that you are a serious contender as the new owner of their home.
3. "Shopping" time will be reduced. Browsing can cost you a chance to purchase a home that would have been ideal.
This means that buyers will need to be more specific in what they are looking for, more focused and not just looking around in hopes of seeing a listing that might pop up.
4. Making sure you are working with a knowledgeable professional real estate agent who can guide you through the market and save you from delays.
Home Prices are Rising.
In Lee County the Median Sale Price rose by 2.0% from March 2017 to March 2018. From $255,000 to $260,000,
In addition we find that the Median % of Original List Price received rose 0.3% from 95.5% to 95.8%.
What is the Affect on Sellers?
Potential for higher profit from the sale of their home increases.
What are the Consequences for Buyers?
1. It is Critical to know what your home purchase Budget is.
Pre-Approval is necessary before you start your home search. Most sellers will not entertain an offer if not accompanied by a Pre-Approval Letter.
2. Know your financial purchase limit and reduce your search time. You waste time and face the possibility of losing the right home when you are spending time looking at listings that are above your budget price.
3. Be prepared to alter your Wish List.
So many buyers think they can get every criteria they have in mind.
But the reality of the current market may not support that thinking.
There are 3 Main Factors in selecting your home:
A. Location: Resale property is where it is. The location can not be changed.
B. Fit/Finish: This is the size and condition of the home. That can be upgraded if your budget allows. If the home is too large there is not much you can do about that.
C. Price: You can try to negotiate on the price, but market conditions may limit your ability to make much of a change.
So, When searching for your home you may have to make search adjustments in one or more of the 3 factors.
When interest rates rise, and they have gone up about 1% in the last year, the purchasing power of the buyer decreases. Add that to the rise in home prices and many buyers may even lose their ability to buy a home at close to their dream ideas.
So, we can conclude that the real estate market is changing and depending on whether you are a buyer or seller the effects are going to be different.
What would I suggest to Sellers and Buyers,
Now is a good time to sell or buy.
Waiting could be costly, especially for buyer.
If you are looking for a home in Southwest Florida, Lee County, take a look at the homes that are currently on the market Find Your South Florida Home.