ACTIVE SELLING SEASON on the HORIZON
If the past month is a precursor of coming month’s activity, we should anticipate a very active selling season. New listings, pending sales and closings are all trending upwards. Sold prices have firmed up and are showing signs of very modest advance, in accordance with historical standards. The inventory of homes available for sale remains low.
Homes for Sale — As of October 31, 2012, there were 649 homes for sale, 3.7% more than the 626 homes for sale last month — and as it should be as we enter the traditional “selling season”. However, indicative of low inventory levels, one year ago at this time there were 862 homes for sale, 25% more homes available for sale than now.
Pending Sales – Pending sales, under contract but not closed, are generally a reliable indicator of sold activity and market inventory for the next couple of months. As we enter the selling season, there’s been a significant spike in pending sales, month over month; as of October 31st, there were 189 pending sales, on September 30th there were only 117 — that’s a whopping 61.5% jump. Further, it’s 43.2% more than the 132 pending sales one year ago at this time. Recognizing that sales activity was strong last year, this continues to harbor well for this coming season.
Sold Homes — Likewise, homes sold in October, 124, was almost 13% greater than the 110 homes sold last month, and strikingly, 44% greater than the 86 homes sold in October 2011.
Sold Prices. — The lower end of the market, where rentals are more prevalent, has seen greater price increases due to competitive bidding from investors seeking greater rates of return than currently available through non-real estate related assets such as securities. On the other hand, the overall market, and in particular the mid-level to upper tier saw a boost from the same time last year, but, since the first of the year has seen a leveling of sold prices. The average price per square foot held constant, September through October 2012 at $119 per square foot. Further, at a year to date square foot average sold price of $117.50, prices have increased, on average, only 1.3% year to date. This supports what I have stated in prior posts that prices have firmed up in Venice at 2003 levels, housing is on the mend, but the recovery will be slow and steady at a 2-3% annual appreciation rate.
Sold % vs. List Price % — As I have stated time and again, regardless of market conditions, the statistical fact remains that a home will generally not sell until such time as the list price is within 10% of the sale price. If it is greater than 10%, buyers simply won’t bother with it, will watch it slowly go into free-fall with price reductions, and will use it as a basis to justify the purchase of another property. True to form, in October there was a 6% difference between final list price and sold price; in September it was 7%; and the year to date average, 6.5%.
Inventory — The months of inventory based on closed sales was at 5.2 months at October’s end; 8% less than the 5.7 months in September. This also bodes well for an active selling season, considering there was a 10 month inventory for the same month last year, and last year more homes sold than in any year since the housing bust of 2007. What is particularly compelling are the months of inventory based on pending sales, since pending sales are a reliable indicator of future months activity. Due to the high number of homes under contract but not yet closed (189), there is only a 3.4 month supply of inventory based on pending sales. It hasn’t been that low since the height of last season, March 2011.
Prices are in alignment with current value, interest rates are low and our foreign and northern feeder markets are drawn to the greater Sarasota area. If a home is properly priced and shows well, I can report from personal experience that a buyer will quickly emerge, and in many instances spark multiple offers.
By: Robert Goldman, PA, JD, REALTOR®