As April draws to a close and we make our way through the spring market, it's evident that we've transitioned away from the pandemic market that characterized previous years. Currently, the market appears somewhat disjointed, with the predominant trend being a strong preference for newer or updated homes. Properties with older roofs or mechanical systems, those in need of work or updating, tend to linger on the market until they're priced attractively enough to entice buyers.
However, it's worth noting that well-priced homes, particularly those significantly below the expected sale price, often spark multiple offers, driving prices back up to market expectations.
One of the primary challenges we're facing is sellers adjusting to current market conditions and accepting that they may have missed the peak pricing seen in 2021 and 2022. Many sellers are initially overpricing their homes, leading to extended market stays and, eventually, price reductions. This frequently results in a lower final sale price compared to those homes correctly priced from the outset.
The current market is heavily influenced by two key factors: interest rates and insurance. Average interest rates, which began the year in the mid-6% range, have steadily increased back to the mid-7% range. This rise is making affordability more challenging for homebuyers, especially first-time buyers with lower down payments. Though an increase in interest rates may further slow the market, it's important to note that approximately 40% of buyers are cash buyers, limiting the impact to slightly more than half of the market.
Another significant concern is insurance costs, which have seen dramatic increases, further exacerbating affordability challenges. While the hope is for a calmer hurricane season and the return of more insurance providers to Florida to help lower premiums, a strong storm season could lead to additional increases, according to my insurance brokers.
In Pinellas County, we continue to see condo inventory build, with March numbers reaching 2891 condos for sale, a stark contrast to the 428 condos available in April 2022. Sellers and buyers in the condo market should pay close attention to market nuances, as quick sales are generally seen in newer buildings, updated units, or those with low risk regarding milestone inspections due by year-end.
Single-family home inventory is also on the rise in Pinellas, as it is in Hillsborough. In Hillsborough County, single-family home inventory has surged to 3257 homes for sale, nearly returning to pre-pandemic levels (January 2020: 3684 homes). While condo inventory is less prevalent in Hillsborough, the buildings tend to be newer than those in Pinellas, mitigating volatility and potential milestone inspection issues.
As we approach summer, selling some homes may prove more challenging for those unfamiliar with navigating this market. If you have any questions about a specific property, neighborhood, or the market in general, please don't hesitate to reach out.
Stay cool!
Geoff
