| Special to the Herald-Tribune
Our final 2020 market numbers are in – and frankly, they’re shocking. In the year since U.S. lockdowns first went into effect, we’ve seen an enormous drop in the number of homes for sale (total local homes for sale are down 45% from this time last year) and a huge increase in the total number of sales (up almost 12% across both counties). This huge demand and inadequate supply have caused local home prices to appreciate, on average, a full 1% per month.
One would think, looking in from the outside, that we shouldn’t be seeing numbers like these. After all, if people are spending more time at home than ever and we’re in the midst of a recession – not to mention a global pandemic – then what could possibly be bringing such heat to southwest Florida? And are we in a housing bubble?
The answer to the first question, of course, is that this ‘heat’ started long ago. Waves of retiring baby boomers, drawn from the frigid north to our beaches, climate and friendly tax outlook, will continue to hit us for years to come. Home prices here are still low compared to other areas in the country. Interest rates are the lowest they’ve ever been. Many builders are limiting the number of contracts they’re writing, creating constant price increases for new homes – homes that often won’t be completed for an entire year. These supply side factors aren’t going to change anytime soon.
This has created an incredible opportunity for sellers.
People everywhere have equity in their homes, and they’re putting it to good use by reinvesting it as a down payment for their dream home (secured by the same cheap rates that brought them qualified buyers in the first place). Real estate marketing has pivoted to COVID-safe techniques with 3D virtual home tours, online open houses and more. Owners can often pick and choose their best buyers from multiple offers.
The old rules still apply, of course; the homes that are in the best condition, marketed in the best ways possible, and priced according to the market fetch the best prices in the shortest amount of time. Realtors still net significantly higher returns for owners than owners get for themselves (an average of $77,000 more, in fact), and homes marketed by Realtors are typically selling in under three weeks.
Does this mean we’re in a bubble? Absolutely not. Remember that our sales activity is way up, but the number of homes available for purchase are almost half of what they were a year ago. We could dramatically increase the number of homes for sale and we still wouldn’t make a dent in the demand. This is one of those very quirky times when it’s good to be a buyer – but it’s great to be a seller.
Alex Krumm is the President of the REALTOR Association of Sarasota and Manatee