Buyers express frustration as housing inventory tightens
Homes in Central Florida are a little harder to come by as we head into the spring/summer selling season.
Although the trend of reduced inventory has become a refrain commonly repeated by Realtors to prepare buyers for the competitiveness of the local housing market, it seems inventory has been depleting since last year. The Orlando Regional Realtor Association reports that there was an 11% decrease in available homes from January 2017 to January 2018. Adding to buyer’s anxieties, the median price has continued to rise at a rate of 13% year over year as of January. A total of 2,225 homes were sold by Orlando area Realtors in January 2018 versus 2,213 in January 2017. Demand remains strong — much to the delight of sellers looking to move up into newer and larger homes.
My answer to these questions: Buyers can still compete, and it is highly unlikely that Central Florida’s home values will plummet the way the did starting in 2006 and 2007.
DEMAND WILL REMAIN
In terms of what to expect if you are planning to purchase a home in 2018: You can safely anticipate that demand for housing in Orlando and surrounding areas will remain robust.
Lawrence Yun, the National Association Of Realtor’s chief economist, addressed the issue of low housing supply across America in February: “Even though contract signings were down, Realtors indicated that buyer traffic in most areas was up January compared to a year ago.”
Yun went on to note that to improve the amount of homes available to buy, new home starts need to continue to increase, and institutional investors must start to release their portfolio of single-family homes into the market. Also helpful would be some hesitant homeowners making the move to place their properties for sale and abandoning the wait-and-see philosophy. Even with the occasional hurricane, Florida boasts enviable weather and Central Florida offers proximity to beaches, the theme parks and a growing cultural and sports scene — all facets of a desirable place to live that aren’t changing.
So, demand isn’t going anywhere, especially not anytime soon.
Another factor to prepare for if you plan on becoming a Central Florida homeowner is the rise of interest rates. According to Jason Zeigler, senior loan officer with Waterstone Mortgage, interest rates have climbed from the high-3% range to the low- to mid-4% range in the past three months. They are projected to climb to 5%, if not slightly more, by the end of 2018. This means rate increases three and possibly four times in 2017.
If you are on the bubble of affording the house that you want, a rising rate will impact your bottom line by increasing your payments, even if slightly so. It all adds up in the end so decisiveness in today’s real-estate market is key. If you are ready, willing and able to buy, don’t wait another six months thinking an inventory surplus or drastic price reduction is coming. It isn’t.
Frequently, buyers will remark they are not in a hurry to buy. That’s great for buyers to stay emotionally neutral and not pressure themselves into purchasing a home before they are ready. It’s equally important as a buyer to understand that right now, waiting and hoping for a dramatic market shift in buyer’s favor is unwise and will result in ending up with higher interest rates and possibly higher prices, too. Being willing to wait in a seller’s market does not make you more competitive when you do make an offer — other than preventing you from making a hurried purchase you wouldn’t have otherwise made.
If you are making the move to buy a home, now it is possible to secure a home you love and be competitive in terms of submitting your contract in multiple offer scenarios.
The first thing is to look at the neighborhood sales in the last 90 to 180 days. What are similar homes selling for, and what makes the home you love special? Your Realtor can consult with you to come up with a viable contract price and terms based on demand and data.
And buyers will do well to remember that price isn’t the only factor that a seller is considering, terms matter, too. Most sellers want a quick close, so pick a lender that can help you with that and also one that is willing to answer the phone with a listing agent calls. Many agents, myself included, will call the loan officer on a buyer’s pre-approval letter to verify that the lender has in fact taken the steps necessary to conclude a buyers creditworthiness.
Another way to stand out from the crowd when placing an offer is to provide full documentation to your lender such as W2s, pay stubs, tax returns and bank statements to get an automated underwriting approval. The more a lender has procured from you in terms of documents, the better they are able to demonstrate that you are a solid buyer, and that the seller will not be surprised by any buying side hiccups that could prevent a closing.
Plan on a healthy and competitive housing market to persist in the Orlando and Central Florida areas. If you are buying, act quickly and with precision. If you are selling, call a Realtor and get the champagne ready — now is your time.