May's home sales figures spur rebound talk

For some in the real estate industry, the existing home-sale numbers for May are validation for what they have been saying for months: the market has hit bottom and is on the way up. For others, it is just a blip in the market caused by seasonality and other factors.

According to numbers from the Florida Association of Realtors, 993 single-family homes were sold in Realtor-assisted sales in Lee County in May, down 24 percent from a year before. Median sales price — where half the homes are above that price and half the homes below — was $286,500, up 5 percent from $273,500 year ago and also up from last month’s $280,500.

Statewide sales of homes continued to slow down, with a total of 18,680 existing single-family homes sold last month, down 24 percent from 24,523 a year ago and 31 percent less than in April.

Median price for the state was $256,400, up from $249,700 last month and from $232,000 a year ago. Nationally, the median sales price for existing single-family homes was $222,700 in April, up 4.3 percent from a year earlier, according to the National Association of Realtors.

But while sales may have slowed statewide and even nationally, for Lee County the number of homes sold were up compared with last month, pointed out Brett Ellis with The Ellis Team/ReMax Realty.

“Prices are holding steady and the number of sales are picking up a little bit. I have been saying it for two months now,” Ellis said. “Everyone has been saying the market is going to go down, but it’s just not true. It has leveled.”

Even inventory levels have started to stabilize, he said. Last year, 11,150 single-family homes and 6,255 condos were sold. Right now, there are 11,838 single-family homes on the market with 1,426 pending sales, and 7,414 condos and 644 pending sales.

That is a 12.74 month inventory compared with 12.78 months in May 2005.

Before this, inventory levels had been rising every month by several months’ worth, Ellis said.

But others in the industry continue to disagree with Ellis’ view.

“Overall the market is continuing to look for a level that would be more normal. Buyers and sellers are still trying to determine where the price is,” said Tom Flood, senior vice president and regional manager for HomeBanc Mortgage. “Even though Florida in itself is good housing territory, there is some seasonality in the numbers and I think the increase in sales is an anomaly.”

Some of the increase may have to do with the hundreds of price reductions every week in the Multiple Listing System, said Bill Barnes, managing broker for Coldwell Banker Real Estate in Estero and Fort Myers.

“I can’t tell what is causing the blip but it is definitely an anomaly,” Barnes said. “I still think the market is going to slow down until prices start to come down.”

Plus there is the extra impact of increasing interest rates and what it does to affordability, Barnes said.

Ellis disagrees with both their views of a continued slowdown but does admit that the two wild cards are interest rates and insurance.

Interest rates are close to 6.75 percent and the Federal Reserve continues to hike them up, he said. Every percent increase cuts about $30,000 of buying power.

“That is what is going to put a cap in price increase if anything. It will also increase marketing time,” Ellis said. “Especially in the lower- to mid-range market because those buyers are more price sensitive. It take buyers out of the market.”

On the plus side, a lot of investors who were looking to dump their properties are now renting them out instead and people who were trying to sell a house just to cash out have decided to wait.

“In the last six months, I have seen a lot of expired listings and not all of them are re-listing,” he said. “And as long as interest rates stay at about 7.5, the market will be steady. If they get to 8, 9, 10 percent, the market is going to slow down. But no one expects that to happen.”

The other major influence on the market, Flood said, is insurance.

“Insurance costs are also crimping buying power and whether the market continues its recovery depends on those two wild cards,” Ellis said. “Insurance and interest rates could affect the balance of the market.”