Doom & Gloom or Puppies & Daisies?
Last week CNNMoney.com reported that area housing would drop another 26 percent. It got a lot of attention and started some chatter. The biggest question people have when they see reports are if they’re true or not. Seriously, is it possible that housing values can drop further and by a figure as large as twenty six percent?
The confusion with a large portion of real estate market reports is that the source of the data that’s used often isn’t divulged. On top of that, there will be eye catching headlines like one that came through a Google alert last week: “Real estate up eighty percent.” Could that headline be more vague? What was up eighty percent, the price of the real estate or the number of units sold?
The fact of the matter is that anyone can make a market report and even a projection of what will happen to the real estate market in the next year. There is no death penalty for being wrong and except for the few “copy and paster” lurkers on newspaper websites most readers don’t remember how many times the fortune tellers are wrong or right.
The truth about the local market is in the local numbers; the current inventory and the rate of sales. Will real estate go down twenty six percent in Naples or even Southwest Florida? You can bet that somewhere, someone’s will. Will all real estate go down 26%? Probably not.
What’s been going on locally for the last several months is a sell off of entry level priced homes. According to Sunshine MLS, the month of October 2009 showed that nearly 80 percent of the real estate that sold in Southwest Florida, and even that broad expanse of Naples, was priced $400,000 and under.
Essentially, those of you selling real estate priced between $400,000 and $23,000,000 have the remaining 20 percent of the market share to wrestle over. Not everyone in that price range is going to take a beating but it’s a good bet that someone’s going to need some smelling salts when that match is over.
The value decrease or increase in real estate is about supply and demand. We currently still have an ample supply and in some price points there is an excessive supply. Real estate priced $600,000-$1M has been a slower moving price point and currently has over 30 months of inventory. That’s the broad brush. In different neighborhoods the inventory and rate of sale will be different.
If you have real estate for sale you need to find out what sort of inventory levels and sales rates you’re dealing with in order to determine if you’re priced effectively, in the price point with a greater rate of sales or if you’re wrestling for a piece of that 20 percent priced over $400,000.
You won’t get individual neighborhood or price point specific information from CNNmoney.com. You have to get it locally. Find out if your real estate is in a price point that’s selling and get a neighborhood and price specific absorption rate from your real estate agent. Then figure out your own reality and whether you may or may not be in the group that could be going down 26 percent.
###
Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area. Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor. If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.
You can subscribe to a weekly email newsletter by visiting www.LifeInBonitaSprings.com and entering your email in the subscription area on the left pane of the web page or by adding us to your reader by subscribing to this blog. Oh, and if you’re reading this content anywhere else but www.LifeInBonitaSprings.com or Naples Daily News it is probably stolen.