A big challenge facing the housing industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.
The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.
In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.
Going into March of this year, the supply in Broward County stood at 5 months for Single Family Homes (sellers' market) and 6 months for Condos/Co-Op's/Townhomes (normal market). With decreasing buyer demand during the pandemic these numbers changed to 6.5 months for Single Family Homes and 10 months for Condos/Co-Op's/Townhomes in April.
More interestingly though is the steady sales price. We have seen a continuous rise in sales price per SQ FT and this trend continues, more for Single Family homes then for Condos, which generally tend to be more volatile throughout the year. According to a recent NAR survey of real estate agents from across the country 72% said their sellers have not lowered prices to attract buyers during this health crisis.
Bottom line: If you’re a buyer in today’s market, you might not see many sellers lowering their prices. If you’re a seller and don’t want to lower your price, you’re not alone.
If you have questions on how to price your home,
call me today to discuss your needs and next steps.
Lawrence Yun, Chief Economist at NAR:
“The housing market faced an inventory shortage before the pandemic. Given that there are even fewer new listings during the pandemic, home sellers are taking a calm approach and appear unwilling to lower prices to attract buyers during the temporary disruptions to the economy.”