Inventory remains tight for current real estate market conditions in southeast Volusia County. Rising mortgage rates and high inflation are starting to affect some existing home sales in the area. New listings are coming on the market, improving the inventory for buyers. Buyers still need to be prepared to act quickly as median time on market across all inventory, single family homes, condos and townhomes is averaging only seven days.
Volusia County is still deep in a seller’s market territory. All inventory remains at a historically very low level. Single family home inventory shows improvement from only a one month supply in April rising to a one and a half month supply into May, meaning new listings are coming on the market. The condo and townhome inventory does not show much improvement month to month, but compared to this time last year, the inventory is inching up.
According to the market statistics report published by the New Smyrna Beach Board of Realtors (NSBBOR) for May 2022, median sales price for single family homes in southeast Volusia is up from $359,000 to $382,900 compared to May 2021. The median is the midpoint; half of the homes sold for more, half for less. Median sales price for condos and townhomes in southeast Volusia rose from $314,000 to $425,000, up 35 percent compared to sales last year. As more inventory continues to come on, prices will start to show signs of a moderation in their rate of growth.
According to Florida Realtors chief economist, Brad O’Connor, rising mortgage rates will start to depress sales of existing homes. O’Connor also adds that the current level of sales is more comparable to pre-pandemic years of 2018 and 2019 than sales in 2021. There is some progress across the state heading towards a more balanced market.
Mid-June of this year, the Federal Reserve (Fed) intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point – its largest hike in nearly three decades – and signaling more large rate increases to come that would raise the risk of another recession. The benchmark short-term rate affects many consumer and business loans. This move could bring lower prices to the housing market, but unfortunately is paired with higher rates.
Borrowing costs have already risen sharply across much of the U.S. economy in response to the Fed’s moves, with the average 30-year fixed mortgage rate topping 6 percent, its highest level since before the 2008 financial crisis, up from just 3 percent at the start of the year. Even if a recession can be avoided, economists say it’s almost inevitable that the Fed will have to inflict some pain – most likely in the form of higher unemployment – as the price of defeating chronically high inflation.
According to the National Association of Realtors (NAR) chief economist, Lawerence Yun, “The impact of higher mortgage rates are not yet fully reflected in the data.” In a recent news release, NAR calculates purchasing a home is now, “Fifty-five percent more expensive than a year ago.” Rising mortgage rates and prices hurt affordability, and although wages are improving, Yun says they are “wiped away” due to inflation. He estimates, “Inflation will remain elevated for the next several months and that the market will see further monetary policy tightening through a series of rate hikes.”
For now, it is still a good time to sell property in Volusia County. Closed sales for single family homes in the coastal and inland communities are up. Median percent of original list price received across all inventory is 98 to 100 percent. Once a contract is received, the time to close is much faster compared to past years.
For a copy of local market conditions, connect with a local Realtor.