Model home in Mediterra, Naples, Florida
This spring buying season is off to a strong start—in fact, prices are going up faster than they were just a few months ago, according to nearly every recent metric. So does that mean we’re in a bubble?
Nope, that’s just what happens when demand increases faster than supply. After all, existing-home sales were up 9% year over year in March, according to the National Association of Realtors®. Inventory is also increasing, but not as fast as sales, resulting in a tight supply getting even tighter.
An equilibrium level of supply on the market is considered to be six to seven months; supply has been under five months since December. Looking at every quarter since 1988, when supply was under five months, prices rose 8% year over year on average. When supply was in the equilibrium range, prices went up only 4% on average.
The median existing home price in March was $212,100, up 8% over last year, according to the NAR. The median list price in March on realtor.com® was $220,000, which was up 11% over last year.
During the peak years of the housing bubble, from 2003 to 2005, the data on supply versus price appreciation looked very similar to what we are seeing now. But there are key differences, which is why I’m confident that on the national level, this is no bubble.
Here’s why, this time, the price increases should stick:
The level of the current price appreciation is not like the bubble. Prices went up 7% and 12% in 2012 and 2013, respectively, as the market corrected for too-severe price declines in the prior years. Last year, the appreciation level moderated. Even factoring in the one-time bounce from the prior overcorrection, median prices have grown less than 8% on a compounded annual basis over the past three years. Median prices, by comparison, grew 10% on a compounded annual basis from 2002 to 2005, without any bounce from a prior decline. On an inflation-adjusted basis, we are 30% beneath the peak set in 2005.
Likewise, relative to rents or incomes, median home prices are not “unhinged” from long-term averages. The price-to-rent ratio is similar to the rate in the mid-1990s. It was 35% higher in 2005. The price-to-income ratio is now where it was in 2001, and it was about 30% higher in 2005.
During the housing bubble, we saw both prices and sales grow to historical levels fueled by a rapid expansion in mortgage financing. We are clearly not experiencing record sales or record mortgage originations now.
As a result, we are not seeing vacancies increase like they did at the end of the bubble. In 2005, vacancies started to rise before sales and prices reached their peak as a result of flipping activity and overleveraged speculative investing. On the contrary now, vacancies have slowly trended back to more normal levels.
So, today’s higher prices are only to be expected as the economy improves and first-time buyers gradually return to the market. Eventually, those higher prices should encourage more owners to list their homes and builders to start construction on new housing—which in turn should solve the problem of supply.
As chief economist of realtor.com®, Jonathan Smoke leads its efforts to develop and translate real estate data and trends into accurate and relevant consumer and industry insights on housing.
Real Estate News | Apr 24, 2015 | By: Jonathan Smoke
Altaira, high-rise homes in Bonita Springs, Florida
In the (Bonita Springs-Estero) single-family home (sales) market, closed sale units increased by 12 percent compared to March 2014 and almost doubled in sold units from just last month. The average sale price increased again this month year-over-year by 28.4 percent. The median days on market continues to decrease year-over-year, with a slight decrease of 6 percent compared to March 2014. Pending inventory also decreased by 7.7 percent year-over-year, as did inventory (active listings) by 7. 3 percent. The months’ supply of inventory increased again this month (year-over year) by 30.7 percent compared to March 2014.
In the condominium/townhome market, closed sale units decreased year-over year by 15.1 percent. The average sale price showed a decrease over March 2014 by 7. 1 percent, while inventory (active listings) also had a decrease of 31.2 percent. Pending sales decreased year-over-year by 14.8 percent; the months’ supply of inventory, which stands at 4.1 months as of March 31, 2015, decreased by 1.9 percent year-over-year.
BEAR reports monthly real estate statistics on home listings and sales within Bonita Springs and Estero combined market.
The highlights of the March 2015 report include the following: Single-family homes, as compared to March 2014 year over- year: Closed Sales: 103 units — 12 percent increase; New Pending Sales: 156 units — 3.3 percent increase; New Listings: 161 units — 16.7 percent increase; Average Sale Price: $603,206 — 28.4 percent increase; Median Days on Market: 47 — 6 percent decrease; Inventory of Active Listings: 467 units — 7. 3 percent decrease; and Month’s Supply of Inventory: 5.3 units — 30.7 percent increase.
Condominiums/Townhomes, as compared to March 2014 year-over-year: Closed sales: 107 units — 15.1 percent decrease; New Pending Sales 153 units — 6.7 percent decrease; New Listings: 133 units — 0.7 percent decrease; Average Sale Price: $256,851 — 7.1 percent decrease; Median Days on Market: 36 — 20.0 percent decrease; Inventory of Active Listings: 358 units — 31.2 percent decrease; and Month’s Supply of Inventory: 4.1 units — 1.9 percent decrease.
To see the March 2015 market reports, visit BonitaEsteroRealtors.com
Submitted by WBN Marketing | Bonita Springs— The Bonita Springs-Estero Association of Realtors (BEAR) has posted the March 2015 Monthly Real Estate Market Detail.
Naples Real Estate Market – NABOR Report February 2015 Real Estate Transactions | NABOR Report Indicates Healthy Market Trends Continue
Naples Area Board of REALTORS® compiles and publishes monthly, quarterly and annual Naples real estate market statistics. Calculations are based on Naples real estate property listings that exist within the Southwest Florida MLS. Only properties in Collier County, excluding Marco Island, are included.
Release Date: Friday, March 20, 2015
- Pending Sales decreased 14% in the $0-$300K price category and increased 12% in the $300K-$500K price category 12-months ending 02/2015
- Closed Sales increased 14% in the $1M-$2M price category and 13% in the $2M+ price category 12-months ending 02/2015
- Median Closed Price increased 20% in the $2M+ price category 12-months ending 02/2015
- Inventory decreased 24% in the $0-$300K price category and increased 15% in the $300K-$500K price category 12-months ending 02/2015
RISMEDIA, Monday, March 02, 2015
Improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013, according to the National Association of REALTORS®. All major regions except for the Midwest saw gains in activity in January.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.7 percent to 104.2 in January from an upwardly revised 102.5 in December and is now 8.4 percent above January 2014 (96.1). This marks the fifth consecutive month of year-over-year gains with each month accelerating the previous month’s gain.
Lawrence Yun, NAR chief economist, says for the most part buyers in January were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today’s market. “Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he says. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”
Yun also points to more favorable conditions for traditional buyers entering the market. All-cash sales and sales to investors are both down from a year ago, creating less competition and some relief for buyers who still face the challenge of limited homes available for sale.
“All indications point to modest sales gains as we head into the spring buying season,” says Yun. “However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn’t healthy or sustainable in the current economic environment.”
The PHSI in the Northeast inched 0.1 percent to 84.9 in January, and is now 6.9 percent above a year ago. In the Midwest the index decreased 0.7 percent to 99.3 in January, but is 4.2 percent above January 2014.
Pending home sales experienced the largest increase in the South, up 3.2 percent to an index of 121.9 in January (highest since April 2010) and are 9.7 percent above last January. The index in the West rose 2.2 percent in January to 96.4 and is 11.4 percent above a year ago.
Total existing-homes sales in 2015 are forecast to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for all of this year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.
… and 600 Closed Sales in January
Naples, Fla. (February 20, 2015) – The Naples area housing market is off to a solid start according to broker analysts who evaluated the January 2015 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island). Inventory declined a moderate 5 percent from 4,776 homes in January 2014 to 4,515 homes in January 2015, and overall closed sales in every price category above $300,000 increased by double digits in the 12-months ending January 2015. Overall median closed price increased 13 percent to $273,000 in the 12-months ending January 2015 from $242,000 in the 12-months ending January 2014.
As typically seen during the first three months of the year, cash sales are also on the rise. In January, the 394 cash sales reported accounted for 70 percent of home sales transactions in the Naples area. The report also showed sales of foreclosed homes in January were at their lowest – 64 – since NABOR® began reporting home sales activity in July 2009 when foreclosures numbered 240.
According to the report, pending sales, based on signed real estate contracts, for single family homes in the $1 to $2 million category increased 53 percent from 36 pending sales in January 2014 to 55 in January 2015, while in the same price category in the condominium market, pending sales decreased 22 percent from 36 in January 2014 to 28 pending sales in January 2015. Not surprisingly, the inventory for condominiums in this $1 million to $2 million category had the largest decline too at 26 percent.
As pointed out by several broker analysts during NABOR®’s 2014 annual media conference on January 16th, buyers looking for single family homes in 2015 will be pleased. In fact, according to Cindy Carroll, SRA, with the real estate appraisal and consultancy firm of Carroll & Carroll, Inc., affordable single-family homes are not appreciating out of control, as often speculated. “The median closed price for single-family homes in the $300,000 and below category increased 16 percent from January 2013 to January 2014. Yet the January report showed an increase of only 8 percent from $178,000 in January 2014 to $193,000 in January 2015.”
The NABOR® January 2015 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. The NABOR® January 2015 sales statistics are presented in chart format, including these overall (single-family and condominium) findings:
- Overall pending sales decreased 1 percent from 1,117 in January 2014 to 1,103 in January 2015.
- Pending sales for single-family homes increased 5 percent from 510 in January 2014 to 536 in January 2015.
- Pending sales for condominiums in the $300,000 to $500,000 category increased 51 percent from 82 in January 2014 to 124 in January 2015.
- Overall closed sales decreased 1 percent from 9,835 in the 12-months ending January 2014 to 9,759 in the 12-months ending January 2015.
- Overall closed sales for single-family homes in the $2 million and above category increased 37 percent from 213 in the 12-months ending January 2014 to 292 in the 12-months ending January 2015.
- Overall median closed price increased 13 percent from $242,000 in the 12-months ending January 2014 to $273,000 in the 12-months ending January 2015.
- Overall inventory decreased 5 percent from 4,776 homes in January 2014 to 4,515 homes in January 2015.
- Average days on market for January 2015 were 85.
According to the report, the inventory of homes for sale in the $300,000 and below category in January 2015 encompassed about 33 percent of the market at 1,479 units. And while overall inventory fell 5 percent from 4,776 in January 2014 to 4,515 in January 2015, the $300,000 and below category experienced the largest drop in inventory (-24%) from 1,938 in January 2014 to 1,479 in January 2015. Despite a sinking of inventory in the $300,000 and below price category, there were increases in inventory in three other price categories: $330,000 to $500,000 increased 15 percent; $500,000 to $1 million increased 8 percent; and $2 million and above increased 12 percent from January 2014 to January 2015.
Nabor Market Report | A service from the Naples Area Board of REALTORS®
Naples, Fla. (January 16, 2015)
Overall closed sales for homes in every price category above $300,000 saw double digit increases in 2014. As a result, broker analysts contend that 2014 was one of the best years in Naples real estate history for closed sales. According to the Annual 2014 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), inventory increased 16 percent for homes in the $2 million and above price category from 394 in 2013 to 457 in 2014. The report also showed that overall closed sales in this luxury market price category increased 33 percent from 299 homes in 2013 to 399 homes in 2014, yet the overall median home price in this price category held steady year over year at $2,950,000.
While closed sales stood firm at a 3 percent increase for condominiums in 2014, inventory in the condominium market did not fare as well as single family home inventory in 2014. The report indicated a 14 percent decrease in condominium inventory from 2,354 in 2013 to 2,030 in 2014. The only price category that experienced an increase in inventory was the $300,000 to $500,000 price category. It increased 13 percent from 408 condominiums in 2013 to 462 condominiums in 2014. Broker analysts indicate that this increase in inventory may be due, in part, to bracket creep, which is what happens when a home’s value increases to a point that it surpasses its current category’s threshold and advances into the price category above it. The fact that inventory for condominiums in the $300,000 and below price category decreased 23 percent is further evidence of the bracket creep.
The NABOR® Annual 2014 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. The NABOR® Annual 2014 sales statistics are presented in chart format, including these overall (single-family and condominium) findings:
- Overall pending sales decreased 5 percent from 11,065 in 2013 to 10,494 in 2014.
- Pending sales for single family homes in the $2 million and above price category increased 28 percent from 249 in 2013 to 319 in 2014.
- Pending sales for condominiums in the $1 million to $2 million category increased 11 percent from 262 in 2013 to 292 in 2014.
- Overall closed sales increased 1 percent from 9,723 in 2013 to 9,826 in 2014.
- Overall closed sales for homes in the $1 million to $2 million category increased 21 percent from 516 in 2013 to 623 in 2014.
- Overall closed sales for homes in the $2 million and above category increased 33 percent from 299 in 2013 to 399 in 2014.
- Overall median closed price increased 13 percent from $240,000 in 2013 to $270,000 in 2014.
- Overall inventory decreased 6 percent from 4,614 homes in 2013 to 4,351 homes in 2014.
- Average days on market for 2014 was at 82.
The term REALTOR® is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribe to its strict Code of Ethics.
