To some people, our national real estate market is downright awful, but to others, it may be the best of real estate times. It’s all in the eye of the beholder.
Don’t believe everything you read and, believe me, I read it all. Yes, it’s true that buyers, especially first-time buyers, are having a terrible time finding an affordable house. Yes, indeed, sellers aren’t moving out of their 1,200-square-foot starter house because they have a 3% mortgage. But it’s also true that sellers who want to sell are in a pretty darn good financial position and they’re as happy as can be.
Home prices were declining for five consecutive months but all of that has reversed itself quicker than the housing economists expected. The surprisingly quick recovery suggests that the residential real estate downturn is turning out to be shorter than many housing economists expected. Even if the number of sales keeps going down, sale prices are unlikely to fall significantly. In popular regions, including Florida, bidding wars are breaking out again, reliving the insanity of the 2021 market.
A byproduct of higher selling prices and fewer sales is, of course, the fear of low appraisals. If the buyer is planning on obtaining a mortgage based on the contract price the lender will be looking for a satisfactory appraisal for at least the purchase price. If the appraisal comes in too low, that will affect the loan-to-value ratio and could easily sink the transaction.
Sellers in today’s competitive market may remove the appraisal contingency from the contract. This means that no matter the amount of the appraisal, the buyer is legally bound to complete the transaction and better have the additional cash available.
Facing a low appraisal in an escalating market is not uncommon and can be a shock to buyers. Again, they will need to come up with more cash to close the gap to proceed with the transaction. Parties to the transaction like the broker and/or attorney can ask for consideration on the appraisal if they determine that one or more of the comparable properties were not valid, however, getting appraisers to change appraisals is nearly impossible.
Time to look at Manatee County’s August sales as reported by the Realtor Association of Sarasota and Manatee for the month of August:
Single-family homes closed 6.9% more than last August. The median sale price was $525,000, the same as last August. The average sale price was $715,711, up 9.2% from last year. The median time to contract was 33 days, compared to 13 days last year. The month’s supply of properties was 2.8 months, compared to 2.5 last year.
Condos closed 0.8% less than last August. The median sale price was $358,990, up 1.8% from last year. The average sale price was $393,727, down 2.6% from last year. The median time to contract was 50 days, compared to 13 last year. The month’s supply of properties was 3.3 months, compared to 1.8 months.
The Realtor Association feels that our prices are steady, and Florida is enduring in its desirability among out-of-staters. The fact that new listings and pending inventory are up for both single-family and condos is encouraging. Single-family had 8.6% new listings and 8.4% pending inventory. Condos had 18% new listings and pending inventory at 16.1%.
My eye beholds further adjustments, not a downturn, and once buyers get comfortable with 7.5% interest rates, they will forget all about the 3% their friends have. This is the way the economy rolls; it can’t be timed, it can only be faced head-on.
