Sellers seeing phenomenal results
As I’ve pondered the topic for my latest column I’ve come back to the same theme over and over, the rising prices and lowered inventory here in the greater Orlando, Winter Park and Maitland areas. What are the effects of said conditions on local homeowners and would-be buyers? As the market heats up will homeowners get burned? Although I’m confident we will not see another bubble like the Great Recession of recent years, it’s important to take note of the current conditions and make smarter more responsible decisions this time around. Let’s take a look at the current market conditions, what impacts them and how to navigate today’s real estate climate.
Recently the National Association of Realtors upgraded their sales forecast to reflect an increase of 3 percent in home sales over last year nationwide. Pending sales hit their highest levels in more than 10 years.
Rates continue to be surprisingly low, yet another contributing factor to the rising sales and prices. The only thing that seems to be holding growth back is the suppressed inventory of available homes. Inventory is down 11 percent from April 2015 with approximately three and a half months of inventory currently up for grabs. Meanwhile the median sales price of homes in the Orlando area is up almost 10 percent over April 2015. Fewer homes, higher prices, low interest rates, multiple contracts and record-setting sales in neighborhoods across Orlando and Winter Park – is this a bubble waiting to happen?
I don’t think we are in a bubble and I don’t think the sky is falling. I do think we need to remember some of the things that happened the last time the market was this hot and try to avoid making those same mistakes again. Lenders have made significant changes since the market crash, with accountability being increased for all parties involved in the purchase of a home. Buyers have to show more proof of their ability to buy as well as a strong history of creditworthiness. Lenders and appraisers themselves are more careful too and steps have been taken to reduce the possibility of influence when properties are being appraised. True appraisal values, and lenders holding themselves and their buyers accountable, are the two “major keys” to keeping a housing bubble from occurring again. Wages are another factor in the housing market as well. While the U.S. added 38,000 jobs in May and unemployment dropped from 5 percent to 4.7 percent, there is another side to the story. Wages are not increasing at the same rate as home values in all areas, and so they are a factor not to be ignored. Prices can only rise so high, as buyers have to be able to actually afford them this time around. Creative financing is great, but lets not get too creative!
Buyers also hold some control as a home is only worth what someone is willing to pay for it. Right now, buyers are willing to pay fair market value for a home if it’s in the school district they want or has an overall good condition and location. So as always location is key to most purchasers whether looking for an investment, primary residence or a vacation home. In today’s market, however hot, buyers are making a more careful analysis of a home's worth based on sales history of the area and factors that might contribute to growth such as proximity to shopping, schools and entertainment. An upgraded backsplash, however pretty, might fetch a seller a few dollars more but wont create a bidding war that can’t be justified based on facts and figures, which is a good thing.
That leaves us with home sellers. I’m seeing some really phenomenal results for people selling homes lately. Investors are making larger returns than I would have thought possible a year ago when making the right upgrades to their flips, and buyers are happy to pay their price if they can be assured they are getting a quality home in a desirable location. Primary residence sales are strong too, with homeowners who’ve maintained their homes and made good choices in upgrades and fixes getting the money they put into their homes back and then some.
Again, surprisingly, I’m even seeing homes in need of pretty substantial repairs, such as termite or structural, sell for close to their asking price. So as a seller it’s a pretty fantastic time, especially if you are below $1 million. Cross that marker and things take a turn for more of a buyers’ market, and the pool of potential buyers narrows some as well. But those million and multi-million dollar luxury estates are selling too, albeit perhaps not as quickly. New homes are very popular right now especially for those looking to move up or relocate to the Central Florida area. I personally love a new home. What’s not to love after all, it’s new!
As an agent who was around during the housing boom, I can remember some pretty “creative” sales techniques by builders such as lotteries and the promotion of risky finance programs. Although most builders who utilized those types of methods simply aren’t in business anymore it’s still important to take a Realtor with you when you buy a new home. While I know many quality sales agents and homebuilders, it pays to have a dedicated Realtor representing you in the process of buying a new home. They can share their knowledge and experience with you and be the “bad cop” when needed. Most builders recognize the importance of a homebuyer’s ability to refer friends and family and keep their companies going. Some, however, are so taken with the hot market that they aren’t too keen to go the extra mile, after all someone else is right around the corner waiting to buy.
Which brings me to my last point; treat others as you would be treated, no matter how sizzling the market. People do remember which builder, agent or lender treated them well, and it pays to do the ethical thing. As for sellers it’s only fair they would want the absolute most money for their homes and to ask for it. Just remember to be honest and forthcoming about the condition of the property for sale. The golden rule should be everyone’s gold standard as we move forward in the last half of 2016 and beyond. Don’t be scared of the rising prices and burgeoning housing market! Let due diligence, common sense and ethics be your guide, and you’re sure to be a successful whether buying or selling.
Christina Rordam is a licensed Realtor and Central Florida native with 10 years experience helping Orlando area buyers and sellers achieve their real estate dreams. She is a member of the Orlando Regional Realtor Associations Top Producer Club and holds the CDPE, CNE and CSP designations. Do you have any questions or a topic of interest that you’d like to read about? Contact Christina at 407-928-8294, [email protected]. View homes online at ChristinaSellsOrlando.com.