Sellers and buyers are experiencing very different market conditions compared to pre-pandemic years. Volusia’s current housing market is a strong seller’s market with fewer new listings and a very tight inventory (active listings), particularly for existing single-family homes. Sellers are taking advantage of the home price increases. Buyers are taking advantage of the historically low interest rates. Although each customer has advantages, the market is showing some tough realities.
Home price increases can be attributed to true home appreciation being driven by low mortgage interest rates inducing greater demand. When rates go down, prices are bid upward. So far in 2021, new listings of single-family homes have not kept up with their pace of 12 months ago. A small, but increasing, number of homeowners who have been thinking of selling their current home and buying another one, are starting to get turned off by the lack of available inventory and the rising prices resulting from it.
The New Smyrna Beach Board of Realtors (NSBBOR) published the monthly market housing data report for the month of April 2021. The report describes member activity in the multiple listing service (MLS) for southeast Volusia County across all inventory. The data shows that while April sales remained strong, the percent year-over-year figures are skewed because of the adverse impacts caused by the onset of COVID-19 pandemic one year ago.
According to Florida Realtors, the largest professional trade association and third-largest Realtor organization in the country, the most common practice when analyzing monthly housing market data is to compare the latest month’s statistics to their previous values from the same month of the prior year. Quantifying market trends in this way eliminates seasonal effects from the trend.
Sometimes Realtors can run into problems when using year-over-year figures, and over the next few months, that is unfortunately going to be the case for closed sales and a few other market metrics that were adversely impacted by pandemic. June of last year was the beginning of the recovery in sales.
Median sale price is one statistic, fortunately, where year-over-year figures can still be used to look at the trends since median sale price did not fluctuate anywhere near as much as the number of closed sales in the early stages of the pandemic. The NSBBOR report indicates that single family price points for April remain in an upward trend, with upper priced tiers ($400,000+) leading the way.
The market for condos and townhomes is still on fire as prospective buyers continue to look more seriously at attached units in the face of shortages of single-family homes in the more affordable end of the price spectrum. The NSBBOR report indicates that mid-level (under $400,000) and upper priced tiers ($600,000 – $1M) show an increase in sales.
For new construction, affordability factors are affecting new home sales. New construction can be a good option for first-time homebuyers, although completed homes that are listed frequently have bidding wars that price out young, prospective buyers. According to the National Association of Home Builders, a growing number of builders are limiting sales in order to manage supply chains, including access and cost factors associated with lumber, appliances and other building materials.
According to the National Association of Realtors chief economist, Lawrence Yun, real estate in 2021 offers plenty of reasons for optimism. Home sales are expected to rise, while home prices will rise more moderately allowing first-time homebuyers to enter the market. Mortgage rates will continue to be favorable, staying at near historic lows of three percent on average.