Existing Home Sales Down in the 4th Quarter
According to CNBC, October was a slower month overall with a 3.2% drop in existing home sales month over month. It’s also taking a little longer to sell a home with the average being 54 days up from 50 days in June. On the west side of the country prices have surged and inventory is down 7.1%. The Midwest is down 1.6% on inventory, the South, including Florida, is down 1.9% and the Northeast is down 2.9%. What’s the culprit? Home affordability. The median home price in October was up 12.7% over last year and $199,500 nationally. Median income has only surged 3%.
First-time homebuyers are also declining. 28% of homebuyers were first-timers as opposed to 31% just a year ago. A typical market is about 40%. Not surprisingly, cash homebuyers are taking up about one third of the market. Most price increases are usually due to demand but the pricing increases around the country are actually due to supply. Typical existing sales are down because there’s just not that many homes for sale on the market. It’s a snowball effect; home owners may still be underwater and homebuyers cannot move up if there’s not enough first-time homebuyers coming onto the market to purchase those existing homes.
In addition new construction is extremely low which experts predict that the spring will bring the more construction hence more move-up buyers and first-time buyers onto the market. As we stated before, developers and home builders are rushing to keep up with supply and demand for new homes.
The Estero area has many new home construction developments and subdivisions in the works one of which is the Esplanade that is set to open next year.
