West Volusia Real Estate Market Update October 2022November 10, 2022 | By Chuck Shaver
What’s REALLY happening in our LOCAL real estate market today? I mean, who cares what’s happening in LA, Phoenix, or New York City? I don’t live there. I get it, it doesn’t matter to me either. As such, I’ll be taking just a few minutes to review the data and discuss what’s actually happening in our LOCAL real estate market of Deland, Deltona, Debary, Orange City and Lake Helen, Florida at the end of October 2022. Towards the end of this blog I’ll be providing some insight about what action YOU should be taking today, so be sure to read through!
Median sale price
The median sale price at the end of October was $325,000, that’s actually up about $6,000 from last month, down about a grand in the last 3 months, and up almost $50,000 in the last year. This increase surprises me as it honestly doesn’t feel like it. Perhaps its just the previous month’s closings coming through, but everyone I talk to is addressing price DECREASES, not INCREASES. However, for those of you that have been watching for some time, you’ve have been hearing me preach about the LONG term, and this long-term increase is good news for the equity in your home.
Selling price to listing price ratio
The selling price to listing price ratio has down below 100% for a few months now. At the end of October it was actually up almost one percent, to 98.2%. Now, let’s be real, 98.2% is still very close to 100%. August was the first time since…I don’t even know when that it dipped below 100%. The only reason I even mention it is because its further evidence of the balance of power that shifting from the seller’s side over to the buyer’s side. As I meet with sellers today my tone is very different than it was back in, say, June when we were able to bully buyers around. I’m very blunt with them about the reality of their home sitting if they want to continue raising their prices from what they were back in, say, May or June.
Days to contract
Speaking of sitting homes, at the end of October, it was taking a median of 17 days for West Volusia sellers to get an acceptable contract. We went from 5 days in June to 8 days in July, up to 11 in August, and it’s now 17 days for September and October. That’s over 3 times as long to sell homes right here in Deland, Deltona, Debary, Orange City, and Lake Helen, and that doesn’t take into account the contract fatalities related to higher interest rates, which aren’t even reflected here. Does that mean our market is crashing? Well, let’s dig a little deeper before we go there.
Let’s take a look at home inventory, or how many homes are available for buyers to buy. At the end of October, there were 963 homes available. Now, you may be thinking that it doesn’t seem like a lot of homes, but when you consider the laws of supply and demand and consider that we now have over TWICE AS MANY homes that we had back in April, you might understand how this market is different than it was back then. Do you think I’m seeing the changes in supply and demand with my sellers? You BET I am! More homes is translating into lower prices, which I believe we’ll see in next month’s market update, especially when coupled with changing interest rates.
Speaking of interest rates, we all know that interest rates are rising, but does that matter to OUR market? Yes, at the end of October, Freddie Mac’s interest rate was just under 7.1%. Now, before you go freaking out, keep in mind that rates around 7% are still historically good. When considering how inflation, the cause of these higher rates, is somewhere around 8 ½ percent, or something like that, the cost to borrow money is still relatively inexpensive. I’m not trying to sugar coat this or bs anyone. August wasn’t that long ago, and buyers were paying under 5%, so it’s still quite a big jump in a SHORT period of time.
What’s impacting our local market?
Inflation impacts all of us, no matter where we live, and it’s impacting us right here in the West Volusia area, too. The Fed, the institution responsible for ensuring that inflation remains under control, is battling inflation by raising interest rates. It’s a crazy system, but by raising interest rates and charging you and I more for the money we borrow, inflation is corralled. Until inflation is under control, interest rates are expected to rise. Some doom and gloomers out there are saying that we’ll see rates over 10%, while others say they won’t rise too much further. The truth is that nobody knows for certain. Other factors, like employment and inventory, which, believe it or not, is still generally low, are keeping our local real estate market pretty solid.
Where is the market heading?
I believe we’ll continue to see more of what we’ve been seeing, but I don’t believe we’ll see a real estate market “crash” per se. I don’t buy the doom and gloom that the media often sells, but I do believe that things will get worse before they get better. I believe interest rates will rise before they fall and that inventory levels will continue to increase. The higher interest rates will make it more difficult for buyers; however, I believe that will be offset, at least to some degree, by an increase in inventory and a balancing market. Buyers are again asking sellers for help with paying their closing costs and they’re asking them to help pay down their interest rates, too. Of course, sellers don’t like this, but it something that they MUST consider, or they’ll sit on the sidelines while sellers that are up with the times move on with their lives and take what the market is giving.
What should I be doing today?
You hear all the doom and gloom about the falling sky, and I hear that same stuff. One day I believe it and the next day I don’t. Remember that the real estate market is VERY different than the stock market. For most of us, excepting investors, we should be buying and selling when we NEED to be doing so. Acting on emotion for our HOMES is a dangerous idea and it can lead to financial ruin. Historically, real estate has an appreciation of somewhere around 4%. Don’t worry about short-term gains and losses and, in the end, you’ll be just fine. If you want to invest, speculate on mutual funds in an IRA or gamble on tech stocks, or the S & P if that’s your thing.
If you have addition questions or comments, please let me know.