It’s evident in South Florida, as well as other areas of the country, that houses are moving faster, and inventory is decreasing. In fact, inventory levels are down to less than an 8 month supply. Home sales have increased for the fourth month in a row. Barring a barrage of foreclosure dumping by banks, we are seeing a leveling out of prices.
What’s also notable is that we are seeing a tougher stance on the part of sellers. According to MLS figures that contrast list and selling prices, sellers are conceding less and less on the purchase price. It may be a buyer’s market, but there are sufficient numbers of buyers making their desires known to those who own homes and want to sell them at the best possible price.
As a result, average concession prices in the South Florida real estate market are typically averaging from 7% down to 3%. For those up north who were expecting a 15-20% concession, based on gloomy forecasts, those days are over for now in terms of homes in the under $300 range. Another reason for sellers to hang tougher is because the Case Shiller Index of home prices suggests that the price deflation is slowing to a trickle. In essence, sellers believe, based on what they read, that the bottom is close or has arrived. This gives sellers confidence that their homes have worth and will sell.
Despite this increased demand, for homes in South Florida that are selling above $300,000 to about $750,000., concessions are still likely to average closer to 10%. And in luxury homes, from $900,000 to infinity, a seller’s concession limit has not yet been established. It all depends upon how eager a buyer is to purchase the home and the current financial state of the seller.
For those looking for lower cost homes, and willing to live farther up the east coast in Florida, there are still bargains to be had in Vero Beach, where the median concession was around 10% off asking price. On the west coast up in Sarasota, 8% or so is still the norm.
One reason demand at this time is so strong is due to low mortgage rates. Today, they were below 5.1% on a 30 year fixed loan; also the $8,000 tax credit still looms large in the minds of potential purchasers. But more important is that prices have fallen to levels they were at in 2002, which was time when people still considered Florida homes affordable.
And while the economy may be weak, consider the reality that 10% unemployment still means that 90% of the work force is still employed, and many of those people understand that they will never see a market like this again during their lifetime. Also, giving a modest nod to our fair state, the desirability of South Florida’s climate does not diminish; the sun always shines here, whether we’re living in high or low economic times.
What is also driving down seller concessions is that most homeowners have become acclimated to the reality of the current real estate market place. They understand that the prices that homes commanded in 2006 are now merely part of real estate folklore. As a result, real estate agents encourage homeowners to price realistically.
There’s an old real estate adage that says if you price a house correctly, it will sell quickly. In South Florida, that lesson has become the mantra of most real estate agents. Those of us who make our living helping people buy and sell homes know the realities and values of our neighborhoods. If home sellers take the advice of savvy local realtors, they will price correctly. The result is that their homes will sell relatively quickly, and they will not need to concede more than 3-5% on price for the foreseeable future
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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