Home sellers are finding it harder than they thought selling their properties.
Here are three separate scenarios to help you understand why.
* In talking with other realtors there’s a common thread we see: the rise in the number of mediocre quality homes that are misaligned with their value. In other words, most of the “good” inventory has already been sold leaving less quality supply on the market.
These homes have a lot of deferred maintenance. Yet, these owners are pricing their homes at the same values the good quality homes were. This is a big mistake home sellers are making.
Home sellers need to look closer at the product they’re selling and see how it compares to others nearby. Then, with the help of their realtor, strategize so that the prices reflects market demand. Remember, home sellers have a key window of opportunity in the first 14-20 days to capture eager eyeballs. Beyond that, your listing goes stale.
* Good home inventory is being mis-priced. How do I know this? Price drops and Days on Market (DOM).
For example in Fort Lauderdale the average price drop (from original list price) for sold homes in the last year was 8.1% or $88,000. And their DOM is now 89. In Boca Raton and Delray Beach the average price drop of sold homes was 8.1% and 8.8% respectively… and DOM for Boca and Delray is 67 and 76.
Have a look at the DOM and percentage of price drops/dollar amount. This consider 66,675 sold properties in 2024 in South Florida real estate
* For home sellers of rental income property, prices are tough to analyze.
Investors buy rental properties based on CAP Rates or Gross Rent Multiplier (GRM) formulas. The results come from how we look at income and expenses of a building. But today, owners are pricing them as if they are homes: total square feet, price per square foot and location.
This is creating Cap Rates that are too low (low returns) and GRM’s that are too high (prices too high). Or, the returns don’t make sense for investors as they can put their money in other income producing assets with less work and high returns (I’ll break this down in a future essay).
The end result of these three scenarios: a LOT more inventory lingering on the market as you can see in my Supply Update below.
For home sellers in the Delray Beach and surrounding areas, have a look at my initial sellers guide. After you’ve glance at this, call me so we can set up a 60-minute consultation and review more details that you’ll find of value.
As far as things go for homebuyers, today, in addition to more supply options, the Federal Reserve will spill the beans on a potential rate cut this afternoon. Yesterday’s 30-yr fixed mortgage rate hovered around 6.14%. For context, one year ago today it was 7.28%.
In recent times, mortgage rates have followed, almost in lockstep, to what The Fed does. Historically, mortgages are more aligned with the 10-yr treasury note. But these aren’t “normal” times. So keep a close eye on what the Fed does today. If they lower the Federal Funds rate, that could have a direct lowering effect on mortgage rates sooner than later.
Lower rates are good news for home sellers and buyers. At least both side can agree to that.
(Main Photo: Stunning single level Lake Ida property – so Florida)
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*** In my latest video I give you a tour of a stunning Luxury Townhome that generates big seasonal rental income
*** Real estate brokerage and industry data guru, Redfin, reported 50% of those who plan to move in the next year are relocating because of extreme temperatures or natural disasters. If you want to geek-out on some great climate data, click here
*** A Delray Beach restaurant chain just filed for bankruptcy…
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*** South Florida’s Surging Supply Update ***
* This morning’s Inventory is 48,489 *
* Last week supply was 48,949 *
That’s a 540 unit Increase in one week
Since September 1st, supply is up 1,380 units
