Happy Monday, July 20, 2020
In June 2020, the Hillsborough County single-family housing market favored Sellers.
Homes For Sale fell 41% from June 2019 and 17% from May 2020. Homes Sold declined 4.2% year over year but jumped 35% month over month. Homes Under Contract climbed 11.3% compared to May 2020 and 22.9% compared to June 2019.
The Months of Inventory based on Closed Sales was 1.2 months, down 40.1% from the previous June.
The Average Sold Price per Square Footage rose 6.5% compared to May of this year and 5.1% compared to June of last year. The Median Sold Price increased 1.1% from May 2020. The Average Sold Price climbed 7.3% from during the same period.
The Average Days on Market jumped 5.8% compared to June 2019. The ratio of Sold Price vs. Original List Price of 96% stayed the same as June 2019.
In June 2020, single-family home sales fell 4.2% from 2115 in June 2019 to 2027 in June of 2019. The number of sales rose 35% from the 1501 sales in May 2020.
Current Inventory of Homes (For Sale)
In June 2020, for sale listings climbed 1728 units or 41% from June 2019. June 2020 inventory dropped 17% compared to the May 2019.
Homes Under Contract (Pending)
In June 2020, homes under contract increased 11.3% compared to May 2020 and 22.9% compared to June 2019.
The Average Sold Price per Square Foot shows the direction of home prices. Median Sold Price and Average Sold Price can sometimes be skewed by outliers that sell for a really high or low price. So the Average Sold Price per Square Footage is a more normalized indicator of home values. The June 2020 Average Sold Price per Square Footage of $164 rose 6.5% from $154 in May 2020 and 5.1% from $156 in June of last year.
The Days The Average Days on Market Shows Neutral Trend
The average Days on Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM trends to indicate a move towards more of a Buyer’s market, a downward trend indicates a move towards more of a Seller’s market. The DOM for June 2020 of 55 days increased 1.9% from 54 days in May of this year and 5.8% from 52 days in June of last year.
The Sold/Original List Price is Rising
The Sold Price vs. Original List Price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market. This month Sold Price vs. Original List Price of 96% held steady compared to June 2019.
The Average For Sale Price is Appreciating
The Average For Sale Price in June was $575,000, up 19.8% from $480,000 in June 2019 and 8.5% from $530,000 in May 2020.
The Average Sold Price is Appreciating
The Average Sold Price in June was $353,000, up 6% from $333,000 in June 2019 and 7.3% from $329,000 in May 2020.
The Median Sold Price is Appreciating
The Median Sold Price in June was $275,000, up 4.6% from $263,000 in June 2019 and 1.1% from $272,000 in May 2020.
June 2020 was a Seller’s Market*
A comparatively lower Months of Inventory benefits sellers while a higher Months of Inventory favors buyers.
*Buyer’s market: more than 6 months of inventory
Seller’s market: less than 3 months of inventory
Neutral market: 3 – 6 months of inventory
Months of Inventory based on Closed Sales
The June 2020 Months of Inventory based on Closed Sales of 1.2 months dropped 40.1% compared to June 2019 and 40.1% compared to May 2020.
Absorption Rate measures what percentage of the current active listings are being absorbed each month.
*Buyer’s market: 16.67% and below
Seller’s market: 33.33% and above
Neutral market: 16.67% – 33.33%
Absorption Rate based on Closed Sales
The June 2020 Absorption Rate based on Closed Sales of 81.4 jumped 62.2% compared to June 2019 and 62.5% compared to May 2020.
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Over the past several weeks, Freddie Mac has reported the average 30-year fixed mortgage rate dropping to record lows, all the way down to 3.03%. Last week’s reported rate reached the lowest point in the history of the survey, which dates back to 1971 (See graph below):
What does this mean for buyers?
This is huge for homebuyers. Those currently taking advantage of the increasing affordability that comes with historically low interest rates are winning big. According to Sam Khater, Chief Economist at Freddie Mac:
“The summer is heating up as record low mortgage rates continue to spur homebuyer demand.”
In addition, move.com notes:
“Summer home buying season is off to a roaring start. As buyers flooded into the market, realtor.com® monthly traffic hit an all-time high of 86 million unique users in June 2020, breaking May’s record of 85 million unique users. Realtor.com® daily traffic also hit its highest level ever of 7 million unique users on June 25, signaling that despite the global pandemic buyers are ready to make a purchase.”
Clearly, buyers are capitalizing on today’s low rates. As shown in the chart below, the average monthly mortgage payment decreases significantly when rates are as low as they are today.A lower monthly payment means savings that can add up significantly over the life of a home loan. It also means that qualified buyers may be able to purchase more home for their money. Maybe that’s a bigger home than what they’d be able to afford at a higher rate, an increasingly desirable option considering the amount of time families are now spending at home given today’s health crisis.
If you’re in a position to buy a home this year, let’s connect to initiate the process while mortgage rates are historically low.
Inventory is arguably the biggest challenge for buyers in today’s housing market. There are simply more buyers actively looking for homes to purchase than there are sellers selling them, so the scale is tipped in favor of the sellers.
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), total housing inventory is down 18.8% from one year ago. Inventory is well below what was available last year, and the houses that do come to the market are selling very quickly.
Sam Khater, Chief Economist at Freddie Mac notes:
“Simply put, new housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year. More than half of all states have a housing shortage.”
Why is inventory so low?
There are many reasons why it’s hard to find a home to buy today, stemming from an undersupply of newly constructed homes to sellers pressing pause on their moving plans due to the current health pandemic. One of the key factors making it even more challenging, however, is the amount of time current homeowners are staying in their homes. There has truly been a fundamental shift in the market that started about 10 years ago: people are staying put longer, and it’s contributing to the shortage of houses for sale.
In the 2019 Profile of Home Buyers and Sellers, NAR explained:
“In 2019, the median tenure for sellers was 10 years…After 2008, the median tenure in the home began to increase by one year each year. By 2011, the median tenure reached nine years, where it remained for three consecutive years, and jumped up again in 2014 to 10 years.”
As shown in the graph below, historical data indicates that staying in a home for 5-7 years used to be the norm, until the housing bubble burst. Since 2010, that length of time has trended upward, toward 9-10 years, largely due to homeowners aiming to recoup their equity:Thankfully, with the strength the market has gained over the last 10 years, today’s homeowners are in a much better equity position. Now is a fantastic time for homeowners who are ready to make a move to break the 10-year trend and sell their houses, especially while buyer demand is so high and inventory is so low. It’s a prime time to sell.
In addition, with today’s historically low interest rates, there’s an opportunity for sellers to maintain a low monthly payment while getting more house for their money. Think: move-up opportunity, more square footage, or finding the features they’re really looking for rather than doing costly renovations. With more new homes poised to enter the market this year, homeowners ready to make a move may have a golden opportunity to do so right now.
There are simply not enough houses for sale today. If you’re ready to leverage your equity and sell your house, let’s connect today. It’s a great time to move while demand for homes to buy is extremely high.
July 16, 2020
Mortgage rates fell below 3 percent for the first time in 50 years. The drop has led to increased homebuyer demand and, these low rates have been capitalized into asset prices in support of the financial markets. However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.
Thanks for reading Tampa Market Monday. We’d love to help you buy or sell your home, so please get in touch! You can reach me, Doug Bohannon or Dale Bohannon at 813-979-4963 or by completing this contact form.
Have a Fantastic Day!
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Thanks for taking time to read the Tampa Market Monthly! If you want to buy or sell a home or find out your home’s value please let us know. We’d love to work with you. You can reach me, Doug Bohannon or Dale Bohannon at 813-979-4963 or by completing this contact form. You can search all Tampa area homes for sale at www.teambohannon.com.
Have a Fantastic week!