WASHINGTON – Oct. 24, 2014 – A drop in single-family home sales – both new homes and existing homes – over the past few years equates to a real estate market that is at least 700,000 shy in annual home sales, according to estimates by David Crowe, the chief economist for the National Association of Home Builders.
He arrived at that estimate by taking into account historical market averages in the late 1990s and early 2000s, which showed home sales at about 5.6 million per year – made up of 900,000 new-home sales and 4.7 million in existing-home sales.
But the latest loss in sales can largely be attributed to a drop in new-home sales, Crowe notes. Single-family new-home sales peaked in 2005 at 1.3 million, but plunged by 77 percent to 300,000 in 2011. It's slowly been regaining. Meanwhile, existing-home sales – heavily lifted by distressed sales to investors in recent years – dropped 40 percent from peak to trough, Crowe notes.
"As demand for more homes dried up, households lost their owned homes through foreclosure, and the number of newly formed households shrank, the existing supply of homes was more than sufficient to satisfy demand," Crowe says. "Adding more inventory to a saturated market made little sense" at the time.
First-time buyers will be key to making up for the loss in sales, Crowe says. Sales of existing-homes to first-time buyers are more likely to result in the seller buying a new home, he notes.
"First-time buyers expand the need for more homes even if they aren't the primary purchasers of those new homes," Crowe notes. "First-time buying was 40 percent of the existing market and 30 percent of the new-home market in in more stable periods. Those shares, of a smaller market, have dropped to 27 percent and 16 percent, respectively. …
"First-time home buyers continue to struggle with their own financial limitations but as the economy expands and jobs become more available and better paying, the core 25- to 34-year-old first-time buyers will come back."
Friday, October 17, 2014
3rd Quarter Inventory Remains Tight
Naples, Fla. (October 17, 2014) - Limited inventory continues to be the story of the Naples area real estate market, according to the third quarter report released by the Naples Area Board of REALTORS® (NABOR®). Inventory of existing homes decreased 9 percent from 4,080 homes available in the 3rd quarter of 2013 to 3,702 homes in the 3rd quarter of 2014. This tight inventory affected sales activity as demonstrated by a 10 percent decrease in pending sales from 2,548 in 3rd quarter 2013 to 2,304 pending sales in 3rd quarter 2014; and an 11 percent decrease in closed sales from 2,339 in 3rd quarter 2013 to 2,093 closed sales in 3rd quarter 2014.
Contrary to the reduction of pending and closed sales in the 3rd quarter of 2014, real estate agents across Collier County reported being very busy keeping up with the growing demand. This anomaly, as confirmed by a panel of brokers analyzing the NABOR® 3rd Quarter 2014 Naples area market statistics, is likely a result of the market experiencing an influx of new home construction that, while not reported in the Southwest Florida MLS, has replenished the void resulting from a decreased inventory in the resale market.
"I don't think the market need has changed," said Steve Barker, Advising Broker for Equity Realty. "Agents are showing homes every day because the new construction market has finally caught up to the demand. But the resale market is still desirable as location continues to be a factor for many new home buyers and the new construction market can't be everywhere."
Pat Pitocchi, NABOR® president and corporate trainer at Downing-Frye Realty said, "The market report does a good job at showing us a big picture view of how the resale market in Collier is behaving in general. However, it does not report all new homes sales, which appears to be a considerable segment of the current market activity according to reports from local brokers."
Wes Kunkle, a commercial broker at Kunkle Realty, pointed out that the 21 percent decrease in overall pending sales in the $300,000 and below market drove the overall 10 percent decrease. "Overall pending sales in every price segment over $300,000 increased in the third quarter 2014. Overall closed sales increased in two of the five price segments, $300,000 to $500,000 and $1 million to $2 million, as well."
The NABOR® 3rd Quarter 2014 Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. The NABOR® 3rd Quarter 2014 sales statistics are presented in chart format, including these overall (single-family and condominium) findings:
- Pending sales of single family homes over $2 million increased 26 percent from 43 in 3rd quarter 2013 to 54 3rd quarter 2014.
- Pending sales of condominiums between $1 million and $2 million increased 29 percent from 38 in 3rd quarter 2013 to 49 in 3rd quarter 2014.
- Overall closed sales in the $300,000 to $500,000 category increased 13 percent from 398 in 3rd quarter 2013 to 451 in 3rd quarter 2014.
- Overall closed sales in the $1 million to $2 million category increased 14 percent from 91 in 3rd quarter 2013 to 104 in 3rd quarter 2014.
- Overall median closed price increased 13 percent from $234,000 in 3rd quarter 2013 to $265,000 in 3rd quarter 2014.
- Overall median home price of homes over $300,000 decreased 7 percent from $530,000 in 3rd quarter 2013 to $493,000 in 3rd quarter 2014.
- Overall inventory decreased 9 percent from 4,080 homes in 3rd quarter 2013 to 3,702 homes in the 3rd quarter of 2014.
- Overall inventory of single family homes in the $300,000 to $500,000 market increased 15 percent from 422 in 3rd quarter 2013 to 487 in 3rd quarter 2014.
According to Kathy Zorn, broker/owner at Florida Home Realty, "Homes priced under $300,000 may make up over 60 percent of our market but this is not our entire market. In fact, the 3rd quarter report showed an increase in inventory of single family homes in the combined price categories above $300,000, which accounts for 1,564 homes or 42% of the overall 3rd quarter inventory.
NABOR® also released its September 2014 Market Report, which revealed the following:
- Overall pending sales increased 2 percent from 810 in September 2013 to 829 pending in September 2014.
- Overall closed sales decreased 3 percent from 9,919 in the 12-months ending September 2013 to 9,585 closed sales in the 12-months ending September 2014.
- Overall median closed price increased 14 percent from $230,000 in the 12-months ending September 2013 to $262,000 in the 12-months ending September 2014.
- Overall inventory decreased 9 percent from 4,080 in September 2013 to 3,702 in September 2014.
Broker analysts agree that new construction within the last year is a welcome addition to the Collier County housing market.