Sarasota Housing Statistics – Months of Inventory

I had the opportunity to review the Sarasota housing statistics in more detail yesterday.  As I reported about a week ago in my May 2009 Sarasota Housing Statistics article, according to the numbers released by the Sarasota Association of Realtors, overall, there is currently a 14.3 month supply of single family homes. This number is steadily decreasing, which is a great sign. It is to be noted however that a 6 month supply of homes is considered a normal balanced market, so we still  have a “ways to go” to be balanced.  As I will discuss here, some price ranges are fairly balanced right now, and others are FAR from it. It is also great to see that the news is now starting to report the trends that full-time active professional Realtors have seen for many months now.  Just as I felt the market slowing in June 2005, and negative housing news lagged behind by several months, the same holds true now in the opposite. Positive numbers are now being reported which is great, but the uneducated seller (or buyer) can make some big mistakes if they are not working with an agent watching the numbers closely.

I received a call from a person that was having no luck selling their home. It had been on the market for over a year, and they had reduced the price several times. It was a 2400 sq ft home, and was originally priced in the 500′s, they were at 375k when the listing was taken off the market. They asked to meet with me, which I was thankful for the call.

The home was nice, the price was average for the market,  small details needed to be completed to make the home “show ready” for success.  After I reviewed the comparable sales, the sellers said “I want to raise the price, because nobody bought at the lower number, and the news seems to be indicating more activity”.

This was an interesting take on the market.  I explained that Sellers do not dictate the market, they need to come to the market.  I reviewed the months of inventory based on price ranges of homes to give the seller a clear picture of what market they are dealing with currently. “Months of Inventory” means how many months would it take to sell all the homes in a certain price category based on the level of sales we have experienced and the current inventory (assuming no other homes are added to the market!)

Here were the results as of yesterday:

As you can see, the 0-250K price range is actually almost a completely balanced market! This is the lowest this number has been in a LONG time! Most activity is happening in this price range, and really, the “steals of the century” for buyers are probably already in the past. This is a VERY important number to know if you are a seller selling in that price range, and also an important number to know as a buyer. If the home is priced well for the market, and in this price range, it will NOT be around very long!   Some buyers fail to understand this, and think nobody is buying anything (which is understandable if you were a newspaper reader!)  They may miss out on the perfect home for them because they didn’t understand the market activity for that particular price range.

Now, if you are like the seller in my example, you need to have a completely different attitude!  In the 251k to 500k price range, there is a 24.7 month supply of homes!   If that sellers home is priced average, and the home is in average condition with no negative location issues, it will take take 2 years to sell based on sales activity! (on average)  Now, does that pricing strategy of raising the price make much sense now? Knowing the numbers is extremely important.   That seller needed to make some repairs to get the home in top notch shape, and price the home BELOW the competitors in order to sell. Average market list price isn’t going to cut it unless the seller has 2 years to sell! Pricing in this category of homes is the absolute most important factor. Period!

Now, if you are a seller in the 3.1-5 million range, bunker down for a 15 YEAR market time! Is pricing important when only 1 home has sold in that price range since Jan 1? (37 added sine the same date) As Sarah Palin would answer, “You bectha”!   If the home is 5 million+, how long will it take to sell?  No one actaully knows!

If you are a potential seller and would like to meet and discuss your home, or a buyer that would like to meet and discuss your needs, contact me direct at 941-376-2455 or fill out the short form below. I will be in touch by the end of the day!

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