Happy Monday, March 9, 2020
In February 2020, the New Tampa Single-Family Housing Market favored Sellers.
Homes for Sale fell 25.9% from February 2019 and 11.1% from January 2020. Homes Sold jumped 45% year over year and 23.4% month over month. Homes Under Contract climbed 54.8% compared to January of this year and 71.2% compared to February of last year.
The Months of Inventory based on Closed Sales of 2.8 months dropped 48.1% from February 2019.
The Average Sold Price per Square Footage stayed flat compared to January 2020. It ticked up 0.7% compared to February 2019. The Median Sold Price increased 4.3% from January 2020. The Average Sold Price decreased 3.6% during the same time period.
The Average Days on Market fell 15.4% compared to February 2019. The ratio of Sold Price vs. Original List Price of 96% rose 2.1% during the same timeframe.
Home Sales (Sold)
In February 2019, 58 single-family homes sold in New Tampa, a 45% jump from February of 2019 when 40 homes sold. It was 23.4% higher than the 47 sales in January of this year.
Current Inventory of Homes (For Sale)
In February 2020, single-family homes for sale fell 56 units or 25.9% from February 2019. February 2020 inventory dropped 11.1% compared to January 2020.
Homes Under Contract (Pending)
Homes Under Contract climbed 54.8% in February 2020, with 113 single-family homes pending versus 73 in January 2020. That was 71.2% higher than February 2019.
The Average Sold Price per Square Footage indicates which direction home prices are headed. 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 February 2020 Average Sold Price per Square Footage of $135 held steady from January 2020 and ticked up 0.7% from $134 in February 2019.
The Days on Market Showed Neutral Trend
The Average Days on Market (DOM) shows how many days the average home is on the market before it sells. An upward trend in DOM indicates 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 February 2020 of 77 days increased 2.7% from 75 days in January 2020 but decreased 15.4% from 91 days in February 2019.
The Sold/Original List Price Ratio Remains Steady
The Sold Price vs. Original List Price reveals the average amount that sellers are agreeing to decrease 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. February’s Sold Price vs. Original List Price of 96% rose 12.9% from January of this year and 2.1% from February of last year.
The Average For Sale Price is Neutral
The Average For Sale Price in February was $437,000, down 7% from $470,000 in February 2019 and up 0.7% from $434,000 in January 2020.
The Average Sold Price is Neutral
The Average Sold Price in February was $371,000, up 0.8% from $368,000 in February 2019 and down 3.6% from $385,000 in January 2020.
The Median Sold Price is Neutral
The Median Sold Price in February was $340,000, down 1.7% from $346,000 in February 2019 and up 4.3% from $326,000 in January 2020.
February 2020 was 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 February 2020 Months of Inventory based on Closed Sales of 2.8 months fell 48.1% compared to last February and 26.1% compared to this January.
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 February 2020 Absorption Rate based on Closed Sales of 36.3 climbed 96.1% compared to February 2019 and 39.1% compared to January 2020.
From the Blog:
Spring is right around the corner, so flowers are starting to bloom, and many potential homebuyers are getting ready to step into the market. If you’re thinking of buying this season, here’s how mortgage interest rates are working in your favor.
Freddie Mac explains:
“If you’re in the market to buy a home, today’s average mortgage rates are something to celebrate compared to almost any year since 1971…
Mortgage rates change frequently. Over the last 45 years, they have ranged from a high of 18.63% (1981) to a low of 3.31% (2012). While it’s not likely that the average 30-year fixed mortgage rate will return to its record low, the current average rate of 3.45% is pretty close — all to your advantage.”
To put this in perspective, the following chart from the same article shows how average mortgage rates by decade have impacted the approximate monthly payment of a $200,000 home over time:Clearly, when rates are low – like they are today – qualified buyers can benefit significantly over time.
Keep in mind, if interest rates go up, this can push many potential homebuyers out of the market. The National Association of Home Builders (NAHB) notes:
“Prospective home buyers are also adversely affected when interest rates rise. NAHB’s priced-out estimates show that, depending on the starting rate, a quarter-point increase in the rate of 3.75% on a 30-year fixed rate mortgage can price over 1.3 million U.S. households out of the market for the median-priced new home.”
You certainly don’t want to be priced out of the market this year, and waiting may mean a significant change in your potential mortgage payment should rates start to rise. If your financial situation allows, now may be a great time to lock in at a low mortgage rate to benefit greatly over the lifetime of your loan.
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Unlike last year, the residential real estate market kicked off 2020 with a bang! In their latest Monthly Mortgage Monitor, Black Knight proclaimed:
“The housing market is heating entering 2020 and recent rate declines could continue that trend, a sharp contrast to the strong cooling that was seen at this same time last year.”
Zillow revealed they’re also seeing a robust beginning to the year. Jeff Tucker, Zillow Economist, said:
“Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over…homes for sale.”
Buying demand is very strong. The latest Showing Index from ShowingTime reported a 20.2% year-over-year increase in purchaser traffic across the country, the sixth consecutive month of nationwide growth, and the largest increase in the history of the index.
The even better news is that buyers are not just looking. The latest Existing Home Sales Report from the National Association of Realtors (NAR) showed that closed sales increased 9.6% from a year ago.
This increase in overall activity has caused Zelman & Associates to increase their projection for home price appreciation in 2020 from 3.7% to 4.7%.
Are we headed for another housing crash like we had last decade?
Whenever price appreciation begins to accelerate, the fear of the last housing boom and bust creeps into the minds of the American population. The pain felt during the last housing crash scarred us deeply, and understandably so. The crash led us into the Great Recession of 2008.
If we take a closer look, however, we can see the current situation is nothing like it was in the last decade. As an example, let’s look at price appreciation for the six years prior to the last boom (2006) and compare it to the last six years:There’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did leading up to the housing crash.
Today, the strength of the housing market is actually helping prevent a setback in the overall economy. In a recent post, Odeta Kushi, Deputy Chief Economist for First American explained:
“While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980. With the exception of the Great Recession, house price appreciation hardly skipped a beat and year-over-year existing-home sales growth barely declined in all the other previous recessions in the last 40 years…In 2020, we argue the housing market is more likely poised to help stave off recession than fall victim to it.”
The year has started off very nicely for the residential housing market. If you’re thinking of buying or selling, now may be the time to get together to discuss your options.
March 5, 2020
The average 30-year fixed-rate mortgage hit a record 3.29 percent this week, the lowest level in its nearly 50-year history. Meanwhile, mortgage applications increased 10 percent last week from one year ago and show no signs of slowing down. Given these strong indicators in rates and sales, as well as recent increases in new construction, it’s clear the housing market continues to be a positive force for the broader economy.
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.
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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!