Posted on Friday, January 06, 2012
Buyers and Sellers. They need to get together in the marketplace to make a deal go. Supply and demand impacts the picture, but the main thing is one buyer and one seller need to come to terms on each property for a sale. Earlier in the month we reported “inventory looks good but we could use some sales volume growth” – what’s going on with volume in the Naples real estate market? Let’s take a look at this and also review national trends.
We know supply and demand tends to drive prices and he have seen a nice drop in supply (inventory) this year – HOORAH. The supply demand balance looks good right now in Naples real estate at 9.9 months (In the Sunshine MLS we have 10,272 properties for sale and 12,453 were sold in the last twelve months). Anything below twelve months is a good sign for price support, some neighborhoods are at six months. Naples neighborhood inventories differ widely so know your market and ask your Realtor.
But here is the catch to the glowing inventory level, going forward from this point properties still need to trade. Buyers and sellers still need to reach agreement and buy/sell else all we have is a good inventory report. Demand needs to continue.
So what’s the worry? Sometimes I think there is a tendency in a recovery for the “best deals” to sell rapidly and the “most aggressive buyers” (like our flippers from yesterday’s blog Real Estate Flippers Catch A Short Reprieve) to run in and make it happen. But what happens next after these folks have made their contracts? Are we left with higher priced properties in the inventory matched by more reluctant buyers? Maybe.
A look at Naples real estate volumes will tell you something is afoot. In the past ninety days (from this morning) sales volumes, the actual transaction count, is down 3.3% from the same period last year. Not much of a drop really but certainly not growth and a sign our buyers and sellers are not matching up as well. We would expect a positive volume growth number in a recovery.
Well what about the prior ninety days you might ask? Better, with volumes up 5.2% so maybe the last ninety days was an aberration on the way to a better market – maybe. Something else maybe going on as well.
Florida Realtors and Housing Wire reported on Tuesday this week “While buyers are feeling good about the housing market and saying it’s a great time to buy, seller sentiment is falling to a record low, a new report by the Mortgage Bankers Association shows. Sellers say they’re unhappy because they can’t snag the prices for the home that they want.”
Interesting, and exactly our point. It could be the easy middle of the market competed their business (aggressive buyers and well priced homes) – but what we may be left with is the tough part – more reluctant buyers and higher priced homes. Something has to give.
The report from Housing Wire and Florida Realtors goes on to say “The MBA (Mortgage Bankers Association) report finds a large sentiment gap between home buying and home selling that isn’t expected to narrow for at least five quarters. SO WATCH VOLUMES … One reason why: About 20 percent of homeowners nationwide are considered ‘underwater,’ owing more on their mortgage than their home is currently worth. Also, some sellers realize there may be a benefit in waiting to sell or keeping the home on the market to hold out for a higher price, says the author of the report, Gary Engelhardt, a Syracuse economics professor. ‘This (trend) could hold prices high enough to drive a substantial wedge between the existing buyer and seller,’ Engelhardt says. ‘And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this.’ Source: “Buyers, Sellers Continue to Butt Heads on Home Prices,” HousingWire (Dec. 29, 2011).’
Well a “wedge” between buyers and sellers is not what we want to see. Going forward a lot of things could happen. On the plus side sellers, motivated sellers, will not wait forever. They will drop the price or improve their property to sell or both. Motivated buyers will raise their offering price. New buyers and new sellers will enter the market and keep it moving. BUT, watch volumes. Inventory can sit and grow again, prices could fall, and our recovery could slow. Supply and demand looks great – but watch the volumes.
“Somethings gotta give” – and we will be right here, in the local Naples Real Estate market, helping you understand it. Stay tuned.
No legal or investment advice or suggestions are being given in this Blog. Actual real estate price and sales results are subject to market forces and are not completely predictable. Please consult a lawyer or investment advisor for such legal and investment advice. The writings of this Blog are intended for the sole use of our clients.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
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