With the highest medium and average sales prices that we have seen in over a year and inventory weighing in at record lows, April 2021 rang in an unprecedented time in real estate. A surefire indicator of market conditions, 6-9 months of inventory is considered a balanced market. Under 6 makes for a Seller’s market, and over 6, a Buyer’s market. The average inventory in Florida today across all price points is 1.8. That’s right, a mere 1.8! Never fear, however, hope isn’t lost for the motivated buyer in Florida.
Whether you’re a buyer or seller, this market calls for strategy. To approach real estate with a recipe for success, you must account for the ingredients at hand.
Here’s the bread and butter of it: cash sales are up significantly in Palm Beach County, according to the April 2021 Florida Realtors report. It’s important to remember “cash sales” doesn’t always mean green: but instead, that the transaction was not contingent upon financing.
So, for our seller’s out there: you’ve got high probabilities of a cash offer coming your way. Now, does this mean you shouldn’t accept a finance offer? Not in the least! It means that Sellers are empowered to “demand” certain elements should you accept a mortgage. Such as a quicker loan commitment— meaning the contingency for finance ends faster (including appraisal and loan conditions). You can also weigh your options on whether to allow an appraisal contingency— for the right buyer, omitting this step may suit just fine, and the finance offer can move forward.
As for buyers? It’ll be key to keep in mind that you’re competing against cash offers— so offers need to be written aggressively, and with the least amount of contingencies. That said, it’s important to ensure you’re protected as well; and in that, a good agent will make all the difference.
Now factors aren’t the same across all price points. April’s market sweet spot is the $400-599k price point. In this turf, homes are selling in a stunning 8 days. That, compared to the 1,000,000 plus market, which is an average of 27 days to contract. So if you’re selling a home at $500,000, your price is right, the place is properly staged, and sports curb appeal? Well, you’d better start packing!
Buyers—I’m sure you’ve read your fair share of stories on scarcity, that homes just can’t be found. We’re here to tell you that they absolutely can! Simply put, you’ll need three tricks to compete in this market: an aggressive offer, the preparation to write it quickly, and a partnership with the right agent who has your back and your interests in mind.
Sellers— are you scared to sell because you haven’t yet pinned down where you’ll go next? Not to worry, we have a plan for that. Let’s partner up to sell your home and gain you the most we can, while holding space for a strategy that allows you time to find the right home for your needs. It’s a Seller’s market out there, and you’re in the driver’s seat for both your sale AND your purchase. Sit down with Noreen and I of the All About Florida Homes team of Lang Realty, and we’ll put the priorities of you and your family front and center to build you a strategy that feels the perfect fit.
“Some buyers were waiting for the next recession, thinking home prices would fall again – but recessions aren’t created equal. The latest downturn exposed those myths.”- FloridaRealtors.orgBy: Russ Wiles
NEW YORK – The current economic downtown has been odd in so many ways. Why shouldn’t it expose some economic myths and misconceptions as unreliable, if not outright untrue?
When it comes to understanding the relationships involving home prices, bank deposits, interest rates and unemployment, many disconnects arise. Here are a few:
High unemployment and home prices
You might think that as the nation’s unemployment rate has spiked during this social-distancing recession, that would put pressure on home prices, forcing some owners to miss payments and discouraging buyers.
So far, that hasn’t been apparent. Home prices were up 2.5% on average this year through April, according to S&P CoreLogic Case-Shiller.
Low interest rates, which make homes more affordable, are one factor supporting prices. Also, stimulus and other government payments have enabled millions of Americans to meet their obligations. Plus, the economic slump has lasted only about four months so far, so the full impact may not have been felt yet. If the economy recovers strongly from here, negative housing fallout might not materialize in a big way.
Still, it does seem like the other shoe could drop. Fitch Ratings, the credit-rating agency, currently sees home prices nationally as 6.1% overvalued based on recent price increases, heightened unemployment and the possibility of lower incomes and rents. Values are most frothy in Nevada, Idaho, North Dakota, Texas and Arizona, Fitch said.
The degree to which housing might become more overvalued depends on the future path of unemployment and personal incomes, said Suzanne Mistretta, a Fitch senior director.
The company sees the U.S. unemployment rate easing to 7.8% next year from an average 10.3% in 2020. Though not approaching overvaluation levels of 20%-plus from 2005 to 2007, housing still could reach its highest level of overvaluation in a decade, Fitch warned.
Federal deficits and interest rates
Many people used to assume widening federal deficits would exert a crowding-out effect, pushing interest rates higher as the supply of debt mushroomed and private savings were siphoned from other investments. Few people seem to be focused on this connection anymore, given that interest rates keep dropping while Washington’s borrowing needs continue unabated.
One explanation for why the link doesn’t seem to work is the lack of inflation, as inflation and long-term interest rates tend to move together.
Another is the preference among investors for owning government bonds, which carry high credit ratings, during periods of heightened uncertainty. When things get tough, investors get nervous. They snap up government bonds with preservation of capital, not yield, as the primary goal.
As the Tax Foundation noted in a 2016 report, some economists had been suggesting that budget deficits reduce economic growth by boosting interest rates and diverting private saving toward the purchase of government debt. But in practice, “It has been hard to find an empirical link between deficits and increased interest rates or reduced investment,” the group concluded.
Rates are even lower, and deficits higher, today.
Low yields and deposit accounts
You would think that with bank deposit accounts, money-market mutual funds and other risk-averse instruments yielding next to nothing, investors would be ready to move their money elsewhere. But so far, millions of people are willing to accept virtually no yield so long as their assets remain safe.
Bank deposits spiked by $1.2 trillion in the first quarter, the most recent figure tracked by the Federal Deposit Insurance Corp. That was nearly four times the size of any other quarterly deposit gain over the past decade. Americans also have been flocking to money-market funds and other risk-averse instruments. Money-fund assets are up more than $1 trillion so far this year, reports Money Fund Intelligence newsletter.
It’s not like risky stock-market investments have been faring all that poorly. The broad market was up roughly 43% from its recent low in late March through July 9. But for a lot of people, safety reigns supreme – and they’re willing to pay a price for it, in low returns.
College graduates and layoffs
Before the recession, the vast majority of people with bachelor’s degrees who wanted jobs could get them. As recently as March, the national unemployment rate for college graduates was 2.5%. That was well below comparable figures for less-educated Americans, such as the 4.4% rate for people with only a high school diploma.
College graduates also typically earn more – $1,248 a week on average for holders of bachelor’s degrees only, compared with $746 for those with a high school diploma only, according to a May update by the Bureau of Labor Statistics.
However, that picture has changed a bit amid this coronavirus-induced economic slump. The unemployment rate for college grads more than tripled overnight to 8.4% in April and 7.4% in May before easing to 6.9% in June, according to the Department of Labor.
That’s still well below comparable rates for less-educated groups, such as the 12.1% June unemployment rate for high-school graduates. (The department also tracks workers based on whether they have some high school attainment and some college.)
Still, it lays to rest, at least temporarily, the notion that college graduates are immune from layoffs or other career bumps, especially amid an economic backdrop as strange as this one has been.
Saving money during recessions
You might think now would be a tough time to save money. During recessions and other periods of high unemployment, more people are financially stressed, the reasoning goes. It would be the time for many individuals to lean on their savings to help make ends meet.
That might be the case for a lot of people, but it certainly doesn’t tell the whole story. The nation’s savings rate often has climbed during recessions, and while real-time numbers aren’t available yet, that could be the case again.
Part of this might reflect a reluctance or lack of opportunity to spend money. Think how much you have saved in recent months by eating at home rather than at restaurants, not taking vacations and so on. Perhaps many people also are making a genuine effort to get their budgets under control by putting off various types of spending.
It’s not just individuals, either. A March survey of corporate finance officers conducted by the Association for Financial Professionals noted the largest increase in three years of businesses holding short-term investments at banks.
It is hard to say what our future will look like in real estate or for that matter anything in our world, post this pandemic. While there is a lot of “bad” to focus on, I am really trying to focus on any positives that may come out of this time. I am certain for many of us, the time at home with our children, has provided us with opportunities that we most definitely did not prioritize in the past. Realtors are constantly “on” – responding to clients, conducting searches, showing property, coordinating towards closings, educating ourselves, sharing information with our clients and prospects and so on. So, to “have” to slow down has been actually wonderful.
I am spending time doing things with my son that I just hadn’t found the time – we played checkers, twister and even taught him how to cook (even though it is most definitely not my forte).
As for business – when I slow my mind down and really pay attention to the calls we are receiving – I realize that our clients, friends, prospects DO rely on us for real estate guidance. I think this has always been there, but I just didn’t slow down to realize it.
Today a prospect called and asked us to list one of his homes for rent. He had been listed as for sale by owner and hadn’t received calls – the truth is for this one, I analyzed how he was marketing the home and his price point and gave him guidance rather than taking the listing. Why? Because his margins are very tight and I felt that I could help him without his having to pay an agent for this rental – so he reduced to the number I suggested based upon comps and I had him reorder his photos, remove some photos, alter his write up and voila – the phone started ringing.
We are here to help – give guidance, be supportive, educate and be a resource for all. As a thank you for helping him with his rental listing…. And unbeknownst to me…he has another property that he wants us to put up for sale.
For my fellow Realtors, be a trusted resource, offer guidance, continue your education so you can continue to be an expert. Now is the time when you can create some blogs, record videos, etc. and work to share your knowledge.
By: Amy Snook
“Families that can barely afford rent find it challenging to pay a security deposit and moving costs. As a result, fewer landlords are requiring an upfront deposit.” “NEW YORK – Renters find that fewer places charge a security deposit – good news for tenants but a source of stress for landlords. Security deposits have traditionally […]
We received this excellent question recently:
Our house has been on the market for awhile and now we have an offer.
But, it’s contingent upon the sale of the buyer’s home. What does this mean? Should we accept it? It’s the first offer we’ve had in a few months, so I’m thinking yes. Help!
Our advice would certainly depend on a lot of factors, but it’s a maybe!
If your home has been on the market for awhile and it’s not a seller’s market in your home’s price bracket, you don’t want to unilaterally just pass on this – it could be a great opportunity.
We’d want to ask some more questions… Can we work with that buyereir offer to a place that works for both parties? Also, is their home on the market? Is their home under contract? If so, we’d want to look at that contract. We would need to understand how strong their offer is.
There are times that we’ve represented buyers that came forth with an offer like this. It wasn’t our listing, and guess what? We got to the closing table – because we know how to get our buyers to the closing table. In this case, the agent on the other side needs to be helpful, too. So, we also look at who that agent is… because that does make a difference, and we are often familiar with that agent.
There’s a particular clause in the contracts here in Florida called a “kick-out clause.” If it’s a buyer’s market, you as a seller may or may not want to consider that. Basically this clause says,
“I’ll take your offer and it’s contingent upon the sale of the home, but I’m leaving it active. I’m taking backup offers, and when I get an offer you’re going to get first right of refusal. If you still want this house, then okay, the contingency’s gone, this house is yours.”
This can be helpful, as it gives the buyer some protection. If she or he is not in a position to own both homes, this offer can be accepted, subject to the above – a win-win for a buyer and a seller.
The most important thing to know is that every scenario is different, so you want to be sure you are working with the right Realtor… a team that can give you guidance and help you make the right decision for your specific situation. There are a lot of factors to come together to create the right deal! (That’s the part that we love! It’s the the fun part!)
We’d love the opportunity to help you through scenarios such as this, and to get you to the closing table. Contact us at (561) 571-2289 for a no-obligation consultation!
A social media friend sent us a question recently. He wrote:
We’re going to sell our Boynton Beach home soon. I’ve been hearing recently that sometimes home owners who plan to sell pay for a pre-listing home inspection. What is the benefit? If we sell our home, do I need one?
I will answer this question the way we answer a lot of our questions lately – with “It depends.” Here’s why:
In a perfect world, we’d always like to see a pre-listing inspection so we know what issues may exist. It can be incredibly helpful.
If you, the seller, are the first to know of any items that may show up in inspection, you can work with us to develop a strategy around how to handle those issues. We can decide what we want to fix in advance. We can learn the costs needed to repair some of the bigger, more complicated items. Being informed helps us to better negotiate.
Ideally, the issues do not end up impacting the listing price or the selling price. But it’s good to be prepared and pre-think whether we are open to offering a credit, and/or if we plan to make repairs.
In a scenario in which you have an older home that maybe needs a lot of work – or when we know we’re going to have inspection issues – it’s actually imperative so we know what we are actually dealing with.
But, it’s not realistic to have a pre-listing inspection in every scenario. We look at our clients’ needs on an individual case-by-case basis. To help you make a decision about this, we look at factors like the home’s age and condition (as mentioned), the price point, the hyper-local market conditions, and your personal timeline and goals.
We often begin to discuss this in a pre-listing consultation appointment. We’d love the opportunity to work with you and help guide you through the process of listing and selling your home. Please call us anytime – Amy and Noreen, All About Florida Homes, Keller Williams Realty – at (561) 571-2289.
And, if you’d like us to provide you with a free, on-obligation home value estimate, head here to request it:
Why does the All About Florida Homes Team invest in professional real estate photography? The answer is simple. We are professional real estate marketers, and we understand how buyers search for homes.
Also, we know that:
90% of buyers start their home searches online. (National Association of Realtors)
Buyers spend 60% of their time looking at listing photos, 20% on the listing description and 20% on the agent description. (The Wall Street Journal)
Homes with professional photos get 61% more views online. (Redfin)
Listings with professional photographs sell 32% faster, spending only 89 days on the market compared to 123 for other homes. (PR Newswire)
According to MLS statistics, properties photographed by drones (aerial images) sold 68% faster. (RIS Media)
Now you understand a little about the buyer’s online home shopping experience, and about how pro photos help us sell homes faster and for higher prices. So, would you want a Realtor to use amateur photos to market your home? (Nope!)
Call us today at (561) 571-2289 if you’d like to learn more about how we will market your home if you list with us!
Or you’re just curious about what your home is worth today – you can request a no-obligation home value assessment here.
A client asked Noreen and Amy, “How do I choose a Realtor to sell my home?” In this short video, Amy provides some guidance on what to look for and what the dynamic should be like between you and a seller’s agent.
A few highlights:
- Meet with a potential agent face-to-face so you can get an idea of the chemistry. It’s important. You’ll be spending a lot of time together and there needs to be trust.
- Choose someone with expertise selling homes in your community, your city, and your neighborhood.
- Choose someone who clearly will work hard for you and has a plan to market your home… Open houses, follow up calls, relationships with other agents… all of these are good signs.
Watch for the details! (And, to learn more about us – to see if we are a good fit for you – click here!)
Why does the All About Florida Homes Team invest in professional real estate photography?
The answer is simple. We are professional real estate marketers. We understand how buyers search for homes. We are on top of trends in real estate and we put all the best practices to work for our sellers.
Consider the following impactful stats:
- 90% of buyers start their home searches online. (National Association of Realtors)
- Buyers spend 60% of their time looking at listing photos, 20% on the listing description and 20% on the agent description. (The Wall Street Journal)
- Homes with professional photos get 61% more views online. (Redfin)
- Listings with professional photographs sell 32% faster, spending only 89 days on the market compared to 123 for other homes. (PR Newswire)
- According to MLS statistics, properties photographed by drones (aerial images) sold 68% faster. (RIS Media)
Take a look at the two photos below. It’s hard to believe they are of the same home, right? Photo 1 was taken by one of our team members. It’s a good amateur shot, but it’s nothing like the professional photo (Photo 2) of the same home (courtesy of Picture It Sold Photography, our go-to vendor for photographing our listings in Palm Beach County).
Now you understand a little about the buyer’s online home shopping experience – and about how pro photos help us sell homes faster and for higher prices. So, which photo would you want your Realtor to use to market your home?
Call us today at 561-571-2289 (or contact us here) if you’d like to lear more about how we will market your home if you list with us!
AMY STARK SNOOK,
Phone | 561-571-2289
Amy and Noreen Real Estate