Mixed signals, but overall a strong year. That is what the chief economist of the National Association of Realtors predicted for 2016 at the NAR’s annual convention a week ago in San Diego.
In his market and economic outlook, Lawrence Yun said home sales will increase, but at a slower rate than this year. Home prices will go up by 5 percent, but that is a decrease from a 6 percent gain this year. He also expects interest rates for a 30-year, fixed-rate conventional mortgage to go from 3.8 percent now to 4.5 percent as the Federal Reserve raises its rates.
And the homeownership rate will go down to a 50-year low, he predicted. Among buyers 35 and younger, it is the lowest it has ever been, at 32 percent of the buyer pool. Playing into that is a three-fold increase in student-loan debt in the past decade; the average grad now has $25,000 to pay back to the government.
Meanwhile, sales are up an average of 15 percent in price points of $100,000 or more, and sales of homes priced below $100,000 are down by 5 percent. To make matters worse for householders who find it difficult to own homes, rents are rising and the vacancy rate for rentals is falling.
So the market is good, or not so good, depending on whose wallet is being shredded.
“The only thing a report like that does for me is maybe take a temperature for a national tone,” said Roger Pettingell of Coldwell Banker Previews on Longboat Key. “A lot of people might read that story in The New York Times, and what they don’t realize is how local real estate is. It may or may not be relevant. But it sets a tone.”
Pettingell works in a different world than most Realtors. He has often led all Sarasota Realtors in annual sales volume by selling high-end waterfront homes.
“One trend I see: The smart money feels it is OK to be a seller now,” Pettingell said. “We had years of those people holding back. The $5 million plus, the real upper end, which is already a thin market in our area – a lot of those sellers were ‘have-to’ sellers. But other people who might have wanted to be sellers – they appropriately waited for the market to get healthier, and for confidence to come back into the markets. Now I say, follow the smart money.
“I have three $7 million listings whose sellers were, calculatedly, waiting for times to be better for sellers. Underneath that group of people, I have 100 percent more sellers in the $2.5 million to $4 million range than I would in past years.
“A lot of A-plus listings are coming available to the market,” Pettingell said. “When people come back this year, there definitely are going to be some good choices.”
I can hear you now. “What about where the real people live?” Robert Goldman of Michael Saunders & Co. addresses that question, at least for the Venice market.
Goldman says for-sale inventory dropped significantly in October over the same month in 2014, by 20 percent. But the 152 Venice closings was just one fewer than in 2014. And 6.7 percent more homes went under contract – 174 of them.
“Think about that. Notwithstanding fewer homes for sale, more homes were gobbled up by buyers. That’s a seller’s market,” Goldman said in his newsletter.
“The result is that prices continue to rise. In October, the average sold price per square foot was $155. That’s 6.3 percent higher than last month, and 18.5 percent higher than one year ago in October. Likewise, in October the average sold price was $252,000, 7.7 percent, 24.8 percent higher than the same month last year.”
Clarification
Regarding my recent article in the Business section on a proposal to redevelop The Colony resort on Longboat Key after a years-long dispute over the property, Katie Klauber Moulton advises me that the Klauber hotel operation filed for bankruptcy only as a “strategic move that would have allowed there to be continuing mediation and settlement conferences between the groups to try to save the resort. It was a contract dispute” with condominium association, she said.
