Just a few less "For Sale" signs around: Falling Inventory and what it means for YOU
An article titled "As inventory falls, agents' hopes rise" made for an eye-catching headline in the Herald Tribune a few days ago and managed to stir some opinions and emotions.
The article cites plenty of statistical figures (which, they admit, could be slightly skewed data due to the morphing MLS system) that show the number of homes on the market are declining steadily. The article is quick to point out, however, that this is not due entirely to sales, but a combination of sales and withdrawn listings. What is happening is that people who don't really NEED to sell their home are taking their home off the market until the situation improves. They are simply not getting the offers they were hoping for, so they're deciding to wait it out.
Generally speaking, this is a good thing. Simple economics and the law of supply and demand will tell us that fewer homes on the market means prices will steadily increase and the market level will be back where it needs to be. According to the aforementioned article, this process has begun.
It doesn't seem like this droop in the economy has been any good for anyone, but in fact there IS an upside. As the Herald Tribune's article points out, there are plenty of people who could not afford to buy a home before the market slump now living in cute 3 bedroom homes in a safer community. This is why an upside-down marketplace is sometimes helpful, even though it hurts just as many as it helps.
The downside, as is obvious, is the steady flow of foreclosures. Foreclosures are no fun, but they are a much needed way of getting rid of some of the extra inventory. Once the foreclosures slow down, a spike in home prices are certain. The saturation of foreclosures on the market is one of the things that has been keeping the home prices so low to begin with; a 3/2/2 being sold normally can't compete with a 3/2/2 in foreclosure - the banks are almost giving away some of these homes just to get rid of them.
What does this mean for someone wanting to buy a home?
I know that EVERYONE (Aunt Sally, your boss, television ads) has been telling you "Now is the time to buy" for quite some time, and if you've been waiting to see the market hit bottom, your wait may be over. In southwest Florida, the numbers SHOW inventory figures falling. Numbers don't lie, and these numbers mean that increased prices are around the corner. Another thing that will increase prices is when more and more buyers recognize that this IS the time to buy, and start buying! This will add to your competition. Prices now may be as low as they go, but you just never know...
What does this mean for someone wanting to sell a home?
It means that there's a light at the end of the tunnel. If you don't HAVE to sell your home right now, take it off the market to hasten the market's already declining inventory. Give it 6 or 8 months, and conditions will have improved, even if only a little. If you do have to sell your home right away, take heart; there may be relief from the low-ball offers soon as homes are steadily sold or withdrawn from the market. It is possible that in another 12 to 14 months, home prices are back to "normal".
Assuming that the statistics in the article were correct, I think that we will see a turnaround quicker than we initially expected. This is great news for real estate agents, Floridians, and the U.S. in general!
Roxanne & Shannon Moore are a mother-daughter team selling real estate in Charlotte and Sarasota Counties including-North Port, Port Charlotte, Englewood, Venice, Osprey, Nokomis, Sarasota, Punta Gorda and Boca Grande. Please visit our website at www.TropicalFloridaProperty.com