2015 YEAR IN REVIEW
2015 Market improved in every sector in comparison to 2014, in spite of the media’s latest doom and gloom report. This study, however, is specific to the Tampa Bay market.
Strength of the market is measured by its months supply of inventory. Based on the absorption rate (# of sales to close each month), if time stood still and no other homes went on the market, how long would it take to deplete all inventory? The answer is the months supply of inventory. We broke it down county by county:
Hillsborough: 3.1 Month Supply
Pinellas: 3.1 Month Supply
Pasco: 3.5 Month Supply
Sarasota: 3.9 Month Supply
Manatee: 4 Month Supply
Polk: 5 Month Supply
- 6 Month Supply is a Balance between a seller’s market and a buyer’s market
The following studies reflect Hillsborough, Pinellas & Pasco counties as an aggregate, with a margin of error of less than 1%.
When the media talks about “sales are up” or “sales are down”, they are actually talking about the NUMBER of sales, not price. Furthermore, year over year analysis is the only accurate measure, as the market is cyclical. Number of sales pick up in the spring, and taper off after school starts. We can predict the future just by a month to month comparison. Recent reports reveal a steep decline in sales for the month of November (compared to October).
This nationwide decline is not consistent with the Tampa Bay area. Number of sales are up 18.4% year over year, and up 11% in November 2015 vs same period 2014. January 2015 sales were up 30% compared to same period 2014. However, December was only up 1% in comparison to same period 2014.
Tampa Bay enjoyed a price appreciation of 5.3% year over year. (GDP is 2.3%)
2015 Days till Contract: 33 Days / 2014 Days till Contract: 38.3 Days (3-6 months is a balance)
SALE-TO-LIST PRICE RATIO:
2015: 97.7% / 2014: 97%. This means that homes are selling for only 2.3% less than list price
DISTRESSED SALE MARKET:
We’re seeing vast improvement on the distressed sale market.
4.3% of the market is Short Sales, compared to 7% in 2014
18.7% of the market is REO (Bank Foreclosure Sales), compared to 23% in 2014
77% of traditional arms-length sales compared to 70% in 2014
Raise in interest rates are inevitable. Although unusual in an election year, rates have already begun to increase by approximately ¼%. Rising interest rates will not deter buyers from buying, or sellers from selling and purchasing another property. However, it will affect the loan amount in which they qualify. For example, on a $200,000 purchase, at 4% interest rate amortized over 30 years, the monthly payment is $955. For every ¼% increase in rate, the monthly payment increased by $29.
TOM BRUBAKER’S PREDICTION FOR 2016:
Election years are historically economically strong, including the real estate market. However, the Federal Reserve is raising interest rates. I’m predicting that the number of sales will be down slightly, yet property values will continue to appreciate at a rate of 5% to 6%. Foreclosures and Short Sales will continue to diminish, and have an even lesser impact on the overall market.