Not a day goes by when someone asks, “What’s going on with the real estate market?” I think everyone senses the market is off the pace of recent years when inventory was low, sellers could name their price, and concerns about rising taxes, interest rates and insurance premiums were not at the forefront of a buyer’s mind as they are today, and of course you can always factor in the upcoming election. Add the impact recent storms have had and the result is more inventory is coming on the market from those looking to relocate in addition to the uptick in listings we typically see this time of year when more sellers are looking to put their homes on the market in advance of the new season. From a buyer’s perspective, they are not only factoring in the projected costs related to taxes and insurance coverage, but the anticipated costs for remodeling that typically would be a cost a seller would not consider allowing for in the negotiation process. With more inventory coming on the market properties will stay on the market longer unless they are priced very competitively. For those whose streets and neighborhoods are showing the residual effects from these storms, they can either wait until their streets are in better condition with the hope they can list their homes closer to market averages, or they may need to price their homes more aggressively to overcome a buyer’s concern when seeing the potential storm affect that could impact them. However, with many areas recovering quickly and restaurants and businesses coming back on line, there is a community spirit that is contagious and could be a factor in making this a strong upcoming season
Q: How has this new “anti-trust suit” in Missouri impacted the way agents work with buyers and sellers?
A: For as long as most can remember, seller’s paid a commission to the listing agent, and that agent would then split the commission with the buyer’s agent, also known as the “selling agent.” With the decision that came down as a result of this lawsuit, commissions can no longer be posted on an MLS sheet for the buyer’s agent to view. That agent must now reach out to the listing agent to see if a commission to the buyer’s agent is going to be paid from the seller’s agent’s total commission, or from the seller him or herself. Any buyer wanting to view a home, must now sign a brokerage relationship disclosure by law with a buyer’s agent, or agent working in that capacity, prior to showing any property. That document will outline the commission the buyer’s agent is to receive and the length of time that representation is to last. In a rare case, if a seller decides he or she wants the buyer to pay his or her agent’s commission, then that brokerage relationship disclosure the buyer signed will come into play with the buyer having the responsibility to pay the commission.
I’ve often used the analogy of buying a car. You either get the discount off your trade-in or off the sticker price, but not both. Essentially you have two different paths to arrive at the same number and this is no different. Virtually all the sellers we know are looking to keep the terms as they have been, as a seller’s expense. The thought is it will increase the size of the number of agents who want to show their property. However, as we’ve shared with our sellers, should they decide they want the buyer to pay the commission, just like every other consideration the buyer is taking into account when making an offer on a property, that commission will now be factored in as well. The result could be an offer that is significantly lower than the commission percentage the buyer will now have to factor in. In short, while there is an extra step that may be involved for a buyer’s agent, we are seeing things pretty much remaining the same.
Reading the Real Estate Market “Tea Leaves”
Compared to the last couple of years, the real estate market may seem to be very quiet, but it is really just more of a return to the normal ebb and flow of the real estate market. Our busiest times of year have always been from January through March/April with September and October typically a bit more quiet. Compared with the Covid era, it is a stark comparison, but we are pretty much back to our normal market in terms of our out of state visitors. Since the beginning of the year, when compared to the same time from January through the end of August of the previous year, Charlotte County did experience over 15% fewer homes being sold, but those decreases only accounted for an approximate 5.00% decrease in the overall price of a home. On the other hand, condominiums prices in Charlotte County rose slightly by 2.70%.
In the boating and golf communities of Punta Gorda Isles and Burnt Store Isles, there were over 25% fewer homes sold through the end of August, but the average selling price only decreased by 6.00%. Condominiums in the same area also had fewer sales with the average selling price dropping by 10%.
While Sarasota County’s average selling prices stayed pretty consistent from the previous year, overall this year’s comparative figures are skewed by inflation and higher interest rates. Someone financing a home this year compared to interest rates during the pandemic are going to have significantly higher mortgage payments. With the “panic buying” that went on during the pandemic now being a thing of the past, buyers today are going to factor in the higher interest rates and costs involved in remodeling a home. The end result is list prices ae going to have to become more realistic to attract buyers, or sellers will have to be more willing to accept lower purchase offers than they did during the past few years.
Does this mean our market is in trouble? If you are looking for some encouraging news and take a look at all the large tracts of land being developed, and the big box stores continuing to expand their presence in the area. Coupled with the political climate and high cost of living up north, we may experience some market adjustments, but overall our cost of living and quality of life will insulate us from those downturns better than most.
Real Estate Update
You may be thinking, “What goes up, must come down,” and the real estate market is no different. However, unlike the stock market you still have your property which continues to have great value. When Hurricane Charley impacted the area, property prices skyrocketed due to investor interest and limited supply. A few years later many homeowners looking to sell complained that prices dropped. What they didn’t consider was unless they bought at the high, most still enjoyed increases in the valuation of their property that outpaced returns they were getting in the stock market. Now we are seeing the same thing. Prices rose due to what we perceived as panic buying that occurred during the pandemic, but with those fears subsiding, and travel being restored to more normalcy, we are seeing that buying frenzy abating. It started the end of July 2022, and with higher interest and insurance rates in addition to inflation and banking concerns for some, valuations have been trending lower. Single family home prices in Sarasota County dropped 9.6% in the month of April compared to the year before, dropping to an average of $650,789.00, while condominiums in Sarasota County fell by 3.3% to $640,583.00. Charlotte County saw a more significant decrease in the price of single family homes over the same time period falling 18.4% to $417,914.00 from a high of $511,939.00. Condominiums saw a 16.4% decrease from the previous year to $325,303.00. The boating communities of Punta Gorda Isles and Burnt Store Isles also saw single family homes selling for 20% less this April compared to April 2022, as the average selling price dropped from $1,043,625.00 to $835,166.00. Condominiums experienced a 13.25% drop as the average selling price adjusted from $422,510.00 to $383,854.00.
While the numbers may have adjusted, take heart. Most would agree the valuations of their homes are still significantly higher now than they were prior to the pandemic. For those who bought at the high during the pandemic, I would venture to say you are enjoying your lives here in Florida. For those looking to sell at this time, keep in mind the market isn’t the same as it was during the pandemic. Inventory is a bit higher and buyers are being more patient and looking for prices that aren’t as inflated. The good thing to consider is with the lower prices buyers are going to start reentering the market, but they are factoring in higher interest rates if they are financing, along with high costs association with insurance. With remodeling costs remaining high, these are the factors buyers are keeping in mind when purchasing a home. Homes are selling if they are being perceived to be competitively prices to others on the market when factoring in the cost to remodel along with the price to purchase the property.
Press Release: Cardillo is a Certified Luxury Home Marketing Specialist™
“Gary Cardillo with The Gary Cardillo Group of RE/MAX Harbor Realty Punta Gorda, FL has earned The Institute for Luxury Home Marketing’s Million Dollar GUILD™ recognition for experience, knowledge, and expertise in million-dollar and above residential properties.
Cardillo is a Certified Luxury Home Marketing Specialist™ (CLHMS), an exclusive group of real estate professionals who have completed The Institute’s training and have a proven performance in the upper-tier market.
“Agents who have earned the CLHMS designation are performing at the highest level in their community,” said Diane Hartley, president of The Institute. “It takes a superior level of service to be successful and consistently close sales at or above one million dollars. We want to recognize this performance, and give these elite professionals the earned distinction that they are the agent of choice for affluent buyers and sellers.”
The specialized training and ongoing membership with The Institute provide Cardillo with the knowledge and tools to better serve his clients. The GUILD recognition provides evidence of the successful commitment to service at the highest level. “I am always looking for ways to learn and better serve my clients,” said Gary.
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While most people would like to talk about themselves, Gary and Gail have always put their clients first, and their diverse backgrounds have provided their clients an unparalleled level of service and knowledge throughout the past years.