Last month I said — “There has never been a better time to sell a home”. It begs the question. If prices are at all-time historic levels (which they are), why aren’t more homeowners selling?
The number of homes for sale continues to shrink, with 40% less single family homes for sale this past month compared to February 2021; a 2 week supply based on pending sales. As more buyers continue to chase fewer listings, prices continue to escalate, 25% year over year. This past month the median sold price was $450,000. Last year it was $360,000. And as even the most casual observer knows, homes continue to sell quickly, on average within 3 weeks, commonly within days, with multiple offers, and over list price.
Inflation is at a 40 year high. Gas prices, food costs, wages, housing, etc., all up. On March 10th the Bureau of Labor Statistics reported that over the past 12 months the Consumer Price Index advanced 7.9%, continuing its monthly spiraling trend. The labor market is hot, 3.8% unemployment rate, virtually full employment. Rents are inflating at an even faster pace than home prices, almost 40% in Sarasota County this past year.
Mortgage rates, which have been on a downward trend for 40 years, have been showing signs of volatility. As of March 10th, the weekly average was 3.85%. I expect mortgage rates to continue to rise over the ensuing months (pulling and pushing, some back and forth) in the 4% range as inflation broadens and shortages increase, further exacerbated by the uncertainty from the war in Ukraine. However, even if mortgage rates rise to the mid to high 4% range, they will still be historically low, and materially below the rate of inflation. It is the reason housing remains a great hedge against inflation. And for the comfortable homeowner it provides little incentive to move. This is particularly so if the homeowner has refinanced at rates under 3%, or, as is prevalent in our retiree market, no mortgage at all. Barring health, family, work, upsizing, downsizing or lifestyle changes, it is the reason many homeowners in Sarasota County are not selling their homes, leaving the few who do, to have supersized gains.