As a Realtor, I get asked a lot of questions about Real Estate… Which I do love, so keep asking. However, do you know the #1 question I am asked? You guessed it, “James, how’s the market?”
The reality is the market is constantly changing, and to know what is happening, I look at the data and reflect on my recent negotiations and experiences. The data used to determine the real estate market is a lagging indicator, so the data we will discuss today is based on closed sales in December. However, the experience of what is happening is based on our current market experiences.
Let’s talk Pinellas County. Currently, there are 2.9 months of inventory. Despite what the news might be saying, we are still in a strong seller’s market. For reference, a market with 7+ months of inventory is considered a buyers market.
How long until we are in a buyer’s market? Although interest rates have put the breaks on many buyers’ plans, there are still plenty of buyers who need to place to live or are fed up with the ridiculous hikes in rental rates. The higher interest rates have also stopped a lot of current homeowners from moving around, which has caused a new restraint on fresh inventory hitting the market. At the end of the day, real estate is a basic supply and demand-driven industry, and until we see more inventory, the sellers’ market will remain.
What about prices? In December 2022, we saw a median price of $375,000 with a 92% list price-to-sales ratio. Therefore, if we were to consider that equation, a home that sold for $375,000 would have been listed at $407,500. However, the median in December 2021 was $350,000, resulting in a 7.1% increase in median values year over year. So what is happening? It’s simply the market is adjusting, prices are leveling out, and we are seeing a more realistic rate of appreciation. Have values decreased? Well, compared to the frenzy of the spring market, yes, but then again, was that realistic? The simple answer is no. However, many sellers are still listing high and hoping for a bidding war, which in today’s market results in homes sitting on the market longer. The median days on the market in December 2022 was 31 days. That is 288% up from December 2021.
So if you plan to sell this year, putting your best foot forward is essential. The property’s condition, the marketing, and the representation you hire matter. We’re negotiating again, and the more savvy and experienced your agent is, the better you will be fair. No longer can you list your house as $25,000 higher than the most recent sale that sold for $25,000 above its initial list price. The desperation of buyers willing to give you the shirt off their back is gone because a seller around the block is asking a fair price for a better-quality home.
My takeaway advice for buyers and sellers in today’s market. Be realistic. If you want to sell, you must be willing to list at a price representing the home’s condition, location, and most recent sales. If you are looking to buy, be picky, you finally have some room to negotiate and put together a deal you feel comfortable with. We expect a similar trend throughout the year, and according to the experts’ interests, rates are expected to ease up a little as we move into spring and summer. When that happens, we will probably see more buyers get off the beach, but we will continue to struggle to find the inventory to meet the buyer demand.
If you’re interested in seeing December’s full Market Report, let me know, and I will send it over!