How is the Real estate market today?
As I was reading the market stats for July 2019, published by NEFAR (North East Florida Association of Realtors), I was wondering if most of you (home owners/buyers/sellers) know what they really mean and how they translate to YOU. I know before I became a Realtor I didn’t. So here’s a (not so) quick breakdown of July’s market stats:
“In July, the U.S. economic expansion that began in June 2009 became the longest in the nation's history, marking 121 straight months of gross domestic product growth and surpassing the 120-month expansion from 1991 to 2001. The average rate of growth during this expansion has been a milder 2.3 percent per year compared to 3.6 percent during the 1990s. Although the economy should continue to perform well for the rest of 2019, most economists see a mild recession on the horizon”: The GDP growth rate measures how fast the economy is growing. It does this by comparing one quarter of the country's gross domestic product to the previous quarter. GDP measures the economic output of a nation, and government spending is the third driver of growth, but our GDP is growing at a slower rate than it was, an even though it’s supposed to continue its growth, there might be a mild recession in the country.
“New Listings in the Northeast Florida region decreased 6.3 percent to 3,593”: Compared to July 2018, less houses were listed for sale during Juy 2019.
“Pending Sales were up 6.0 percent to 2,983. Inventory levels fell 7.4 percent to 9,173 units”: A pending sale means the seller has an offer but hasn’t closed yet. A property is placed in pending status the minute a contract is executed (signed by both ends). So, even though less new houses were up for sale, the number of houses SOON to be sold increased.
“Inventory levels fell 7.4 percent to 9,173 units”: Inventory represents the active supply of properties on the market. Any time a seller lists a property, it is considered to be part of inventory. So this means there afe less options for buyers to choose from; in July 2018 there were 9,905 active properties in the market, vs 9,173 in July 2019
“Prices continued to gain traction. The Median Sales Price increased 5.2 percent to $242,000”: Keep in mind that median means "in the middle". So, with regard to List Price, this means exactly half of homes listed are above this price and exactly half are below.
“Days on Market was up 5.0 percent to 63 days”: Days on market is a measurement of the age of a real estate listing, in July 2018 houses were on the market for 60 days, this July? 63 days, so there’s a small difference.
“Buyers felt empowered as Months Supply of Inventory was down 12.5 percent to 3.5 months.” : This number tells you how many months it would take for all the current homes for sale on the market to sell, given a monthly sales volume. Four to five months of supply is average. A lower number means that buyers are dominating the market and there are relatively few sellers; a higher number means there are more sellers than buyers.
“During the record-setting 121-month economic expansion, the unemployment rate has dropped from 10.0 percent in 2009 to 3.7 percent, yet many consumers continue to struggle financially”: Increasing employment is good news for potential homebuyers, but climbing prices have still kept homes unaffordable, according to Realtor.com Chief economist Danielle Hale. According to experts, in order to fix this situation the housing industry will need to see an increase in both inventory and affordability to entice home sales.
“Low mortgage interest rates have helped offset low housing affordability, but high home prices are outpacing median household income growth. In a move to stoke continued economic prosperity, the Federal Reserve reduced the benchmark interest rate by a quarter point to about 2.25 percent, marking the first reduction in more than a decade”: This means the prices are growing faster than the median household income, and even though we can get a mortgage with a lower interest rate today, the housing affordability index is still low.
NOTE: The Monthly Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent monthly price and income data.
This blog post turned out to be longer than I expected but hopefully you’ll find it useful when making your real estate decisions (should I buy/sell/invest today?).
Sincerely,
Dany Amparano
PHOTO CREDIT/SOURCE: iStock and Pixabay