Sales: According to the Lee County Association of Realtors Multiple Listing Service, Lee County residential sales totaled 114 units during January, an increase of 10 units or 9.6 percent from the same month in 2017. Existing single-family homes accounted for 47 percent of all residential sales for the month, while condos were 26 percent and new construction represented the remaining 27 percent. Two more resources to review: Quarterly Report and Annual Report.
Forecast: January sales in Lee County were 11 units or 10.7 percent above ACRE’s monthly forecast. ACRE projected 103 closed transactions for the month, while there were 114 actual closed sales. ACRE forecasts a total of 2,035 sales for the area during 2018. There were 1,867 actual sales in Lee County during 2017.
Supply: The Lee County housing inventory in January was 485 units, an increase of 27.3 percent from January 2017 and a 65.2 percent decrease from the 10-year January inventory peak in 2011 (1,393 units). January inventory in Lee County was unchanged from December. Historical data indicate that January inventory on average (2013-17) decreases from December by 0.4 percent.
Demand: January residential sales decreased 17.4 percent from December. This direction is consistent with historical data indicating that January sales on average (2013-17) decrease 20.5 percent from December. Homes selling in January averaged 63 days on the market, a decrease of 48.4 percent from last year. The five-year days-on-the-market (DOM) average for Lee County during January is 159 days.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. The market is considered to be in balance at approximately 6 months. The inventory-to-sales ratio in January was 4.3 months of housing supply, up from 3.7 months one year ago.
Pricing: The Lee County median sales price during January was $231,859, up 3.6 percent from January 2017. The January median sales price was up 5.9 percent compared to the December median sales price. Historical data (2013-17) indicate that the January median sales price on average increases from the December price by 3.1 percent. Pricing can fluctuate from month to month as the sample size of data (closed transactions) is subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional to discuss the latest pricing trends.
Industry perspective: The recent headlines in the real estate world have revolved around rising interest rates. As of Jan. 31, the interest rate on a 30-year fixed-rate mortgage was 4.38 percent. This is up from 4.18 percent on Jan. 10 and up from 4.08 percent on Dec. 6, 2017. The stock market has rebounded somewhat from its large selloff on Friday, Feb. 2, and Monday, Feb. 5, as investors adjust from an accommodating monetary policy to one with some inflation and higher interest rates. The recent market decline is a signal of a return to normalcy and higher debt costs. Rising interest rates, however, do not cause housing activity to come to a halt, in the same way that rising rates do not cause businesses to go into hibernation. In the spring of 2006, the Federal Reserve stopped raising interest rates after raising rates 16 times over a three-year period. The economy was performing well during this time (2004-2005) of rising interest rates. The Great Recession happened, interestingly enough, at a time when interest rate increases were halted.
Home ownership rates increased to 64.2 percent during 2017 after falling to a post-1965 low of 62.9 percent in 2016. Not surprisingly, home ownership rates peaked during 2005 at approximately 69 percent. Millennial home ownership rates are also on the rise as their employment situations continue to improve. Millennials, in fact, have been recently credited with an improvement in suburban housing markets as not all are city dwellers. This rise in home ownership was highlighted recently at the annual TrendLines 2018 program in Washington, D.C., with an analysis of Census Bureau housing data presented by Sage Policy Group, Delta Associates and Transwestern. The following excerpt is from the closing paragraph from the home ownership report, and is encouraging news for residential real estate markets across the nation:
“This year, the most common age in America will be 26 years old. There is also an abundance of 25- and 27-year-olds. All of these people are millennials, America’s largest and most educated generation. As more of this demographic block marches into their 30s, demand for ownership opportunities will rise. While there may be downturns that occasionally suspend these demographics, the next decade stands to emerge as a period of rapidly expanding home ownership and single-family homebuilding in America.
Click here to generate more graphs from the Lee County January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.