*Though I am making commentary on many things, I am not a psychic and cannot predict the future. Nor am I giving any legal "advice" or telling anyone what to do with their money. These are just thoughts and ideas I'm sharing with you the reader.*
Wow things have been crazy lately haven't they? I'm not just talking real estate, I mean across the board things have just been nutty. Civil unrest, presidential regime changes, the stock market vs. bitcoin, the stock market vs. Game Stop, COVID-19 continues to be a massive problem, and Dr. Pepper finally released Dr. Pepper Zero (which is amazing)... it's almost too much to keep on top of.
Real estate is definitely included in this craziness. If you could go back in time and tell folks at the beginning of the COVID-19 shut downs a year ago how the market would look today they'd look at you like you were addicted to a controlled substance. The market is active beyond anything anyone could've anticipated, prices have SKYROCKETED, and the lack of inventory is astonishing. Not to mention the condition of financing (low rates & difficulty of obtaining funds). I've been noticing some common questions lately amongst clients, perspective clients, and friends that I thought I'd address in the hopes of clearing up some of the confusion.
Let's begin with some Market Stats shall we? Below is how the greater Port Charlotte/ Punta Gorda area is performing with the most up to date stats fed directly by the MLS.
As you can see we are significantly higher in Closed Sales compared to the five year trend, significantly lower in active listings compared to the five year trend, and also significantly lower in Months of Supply compared to the five year trend as well (only 1 month vs. 3.6 months on average). If this surprises you, just wait until you see the next stat...
Yes you're reading that correctly. February 2021 median Listing Price is $300,00, the average over 5 years is $260,960. That's $39,040 over the 5 year average, or a 14.96% (ish) increase. Even nuttier, the median Sold Price in February 2021 is $233,000, with a 5 year average $201,600. That is a $31,400 increase, or 15.58% (ish) increase!
In short: we are deep Deep DEEP in a seller's market, with a small amount of inventory, and prices have increased over the 5 year average by roughly 15%. Being as last year at this time everyone was predicting a market collapse, I'd say this is a pleasant surprise to be sure. So, why aren't we in a market collapse right now? How did we get here? Will we see a market collapse like '08?
First I want to lightly touch on the '08 crash that crippled our economy, destroyed people's finances, and generally sucked all around. It was a completely different problem at a completely different time. Real estate was "the problem" (or at least one of the big ones) at that time. Bad "no doc" loans were being made by the thousands, ARM loans were the soup du jour, and appraisals were magically always coming back almost exactly at where contracts were written. It was kind of a "wild west" time for real estate. Eventually as with all things this came to an end, in this case a train wreck. Fun new legislation like the Dodd-Frank act was passed, property values plummeted then finally corrected itself, and we moved on.
How did we get where we are? Real estate is not the problem this time (for now). A global pandemic the likes of which virtually no one alive has ever seen has crippled the economy in many ways, but real estate is not broken. When the shut downs started in earnest a little more than a year ago people panicked, including property sellers. There was a ton of withdrawals from the market at this time, and then even more folks that would've listed decided not to. This almost immediately created scarcity in the market, which started to drive up market prices. Because of the craziness I eluded to at the beginning of the article, this has kept many people from selling properties they'd normally want to part with.
It is a strange thing in many ways right? Prices are through the roof in most areas, in particular ours, yet we haven't had the flood of listings that must exist according to historical data. I can tell you from experience it's a great time to list right now. Why? Let me elaborate....
I work with both buyers and sellers. I enjoy both processes and it gives me what I consider to be a more accurate view on how the market is going than someone who only works with buyers, or sellers. From the listing side it's amazing the amount of attention any listing is getting right now. Even if it's just a land lot. I listed a house (4391 Mundella) on 3/5, and within 72 hours we had more than 20 showings, and we've dealt with multiple offers. I also listed a land lot (20224 Lorette), and within 4 days I had 6 offers, 3 of which at full price cash. Dang. Suffice it to say both are Pending currently with happy sellers.
How are things going from a buyer's point of view? Let's just go with "crazy-pants" as our descriptor. I currently have probably 15 buyers on deck, all of which are on permanent watch with an itchy trigger finger ready to get hold of me if they see something come on the market they want to see. Generally if the listing is even close to properly priced and not a train wreck, you have maybe 48 hours to view and get an offer submitted. At this point I've been recommending paying for title work to all my buyers in order to get their offers noticed and accepted. What about pricing?
That's right kids. 5 year average Original List to Average Sale price ratio 94.2%, currently at 97.1%. Almost as shocking is that the properties are appraising by and large, even with the new safety protocols in place. While I would never tell someone an exact amount to offer (it's their cash and financial future after all), this is a stat you should know while you're hunting for properties in this market. Again, dang. 🤯
This shouldn't scare anyone off by the way. It's simply how the market is currently. As always regardless of the market conditions if you need to buy or sell, you need to buy or sell. "The market of the moment" as we say in the industry.
So where are we going? What are we going to see in the market 6 months, a year, two years from now? Honestly I couldn't tell you if I wanted to. As stated at the beginning of my little article NO ONE could've predicted what has occurred a year ago. From my perspective it appears prices will continue to climb and inventory will continue to be scarce for a minimum of the next 6 months to a year. COVID-19 continues to be a problem, and "returning to normal" is continuing to be a moving target with the best of predictions.
Will there be a "bubble burst"? In my opinion no, not anytime soon. Every market (real estate or otherwise) has it's ups and downs, so eventually there will be what I believe will be a "soft deflation" most likely around 2-3 years from now. That said I don't believe it will be the nutso crash everyone is paranoid about. Honestly I'm not entirely convinced it will be a high single digit dip.
The fact is if you want to live in Florida you still have to move to Florida. We have the boat access, great fishing, cotton candy sunsets, excellent food, reasonable taxes, etc. regardless of how real estate is doing around the country. Our real estate isn't dependent on how a specific company is doing, or if a factory is deciding to hang around. To be completely honest if you want to live the Florida life and not just come here for Orlando, my little slice of heaven is the best place in the state.
Regardless of what you need I'm always happy to help, so feel free to call/text/email me at 941-202-1995 or email@example.com. Whether you're looking to buy, sell, plan, or ask me about the market I'm always happy to talk.