As if 2020 couldn't get any weirder
we have been dealing with an absolutely
insane housing market here in the Tampa
Bay area for the last couple of months
and so have a lot of other markets
around the country so what the heck is
going
on and how do buyers figure out if now
is the right time to buy
we will explore these perplexing
questions next
hey everybody Melanie Atkinson realtor
with Smith & Associates in beautiful Tampa
Bay florida
stress and uncertainty seems to be a
theme here in 2020 and that's what
current home buyers are feeling
do you take advantage of the
ridiculously low interest rates right
now or do you wait till there's more
inventory
will those interest rates still be low
when there is more inventory
what about another housing market crash
what if i buy now then it becomes 2010
again and the values plummet
lots to get to here so let's start at
the beginning of 2020 for a little bit
of perspective
at the beginning of this year before we
ever said the word COVID
we were already dealing with low
inventory here in the tampa bay area
lower interest rates along with the fact
that a lot of sellers were just not
moving created a lot more demand than we
had supply of homes to sell
the economy was strong and people were
looking for second homes or investment
homes or looking to move up on their
primary home
we were expecting a very brisk spring
and summer selling season
and then maybe we would see a little bit
of a dip in the market around the late
fall around the election time because
it's pretty normal for the housing
market to slow down
during major elections well obviously
that is not what's happened so far this
year
mid-march came and sellers took their
homes off the market
buyers couldn't come down to view homes
and the housing market slowed
dramatically
but that was only for a couple of months
let's take a look at the numbers so you
can see what happened
the number of closings of single-family
homes townhouses condos villas
in the tampa bay area including
hillsborough pinellas and pasco counties
in the month of april was 4559 closings
in may it was 4271 closings
but in june it jumped to 6207 closings
and what happened july it jumped even
more to 6780 closings
there were over 2 500 more closings in
july
than in may of this year in comparison
in 2019 there were only 300 more
closings
in july than in may so basically
everyone descended on the area at the
same time
wanting to buy a house that huge
increase in demand meant that we had
multiple offers on properties
we had housing prices rising and there
was a franticness in the market that was
making buyers want to pull their hair
out so why is this happening
and is it sustainable whenever i talk to
people who aren't in the market to buy
and i tell them that the housing market
is crazy
they usually look at me very confused
and then they
follow it up with two questions aren't
there a lot of unemployed people out
there right now
and how can people afford to buy houses
well yes unfortunately there are a lot
of unemployed people out there right now
but there are also
a lot of people out there who haven't
lost their jobs
in fact there are a lot of people out
there who have had their jobs
restructured
so now they're working primarily from
home and their homes have taken on
an even more important meaning and if
their job has gone fully remote
that means they can move wherever they
want and a lot of people are looking to
move to less expensive states to keep
their costs of living down
and that explains why i've received so
many calls from people in states like
new york and new jersey
california and illinois we are now past
what is typically our peak summer
selling months and going into the slower
august september markets but we still
have a tremendous amount of buyers just
waiting on the sideline for their
perfect house to come on the market
needless to say i'm not seeing a decline
in demand
and until demand decreases and our
inventory
increases we won't see an end to that
franticness that's going on in the
market right now
houses that are priced right look great
and are in desirable areas will continue
to sell
quickly so how long can this go on for
prices can't just keep going up at this
rate forever right
logically the answer to that question is
no the housing market goes up and down
just like every other market
because it wasn't that long ago people
are really afraid that if we see housing
prices go down
it will be a huge decrease like what we
saw in 2008 to 2011.
now i think it's great that people have
a healthy fear of the 2008
housing market crash that says to me
that people are paying attention
and don't want it to happen again and
trust me it's the last thing i want to i
still have nightmares about it
but just because there is a recession
doesn't mean
that there's automatically going to be a
housing market crash
historically housing has been one of the
most stable investments that you can
make
but what about those people who lost
their jobs won't they lose their house
to foreclosure
some of them unfortunately will lose
their house to foreclosure
but that doesn't necessarily mean that
the market is going to be instantly
flooded with foreclosures
banks are going to try to work with
homeowners now they're going to want
them to stay in their
homes banks make more money if people
pay their mortgages
not by foreclosing on homes and also
there's enough equity in most homes that
people
if they're having financial trouble
right now should be able to sell their
home without having to short sell it
even if the foreclosure numbers do start
going up keep in mind that it takes
years for the entire foreclosure process
to happen there's a lot of steps
necessary including going through the
court system
that the bank has to take before they
can repossess a house and then sell it
on the open market
as a foreclosure so for all of you out
there waiting for there to be a 50
sale on florida homes i don't see that
happening in the foreseeable future
i do know that basic economics tells me
that eventually the demand
and supply will balance out and prices
will level out
but i don't have a crystal ball letting
me know exactly when that's going to
happen
now let's talk about the number one
reason that the housing market has gone
so crazy this
summer and that's historically low
interest rates
in august we saw interest rates for
30-year fixed
loans go under 3 that is insane
everybody's buying power has gone up
because barring money just got cheaper
when interest rates were at four percent
which we thought was really low
your principal and interest payment for
a four hundred thousand dollar loan
was one thousand nine hundred and ten
dollars at a three percent interest rate
you can now have a four hundred and
fifty thousand dollar
loan for eighteen hundred and ninety
seven dollars per month
that's thirteen dollars less per month
for a more expensive house
and that's why people are suddenly
stretching their budgets
to afford more house because their
budgets
just got stretchier that's the great
news for all of you buyers out there but
keep in mind everybody's in the same
boat
so housing prices are going to go up as
people start
offering more in multiple offer
situations now based on the actions that
the fed has continued to take
to keep interest rates lower i don't see
the interest rates going up anytime
soon in fact there's a lot of people out
there predicting that interest rates
could even go down
closer to two percent the interest rates
continuing to be low is good news for
all of you buyers out there
it lets you be a little bit more patient
while waiting for that perfect house to
come on the market
let's talk inventory in the last decade
the average amount of time that people
in the tampa bay area are staying in
their homes has gone up by
three years and if people don't move as
much
then there aren't as many houses to buy
that makes us rely on new
construction for a major portion of our
inventory
builders have been building at a very
fast pace here for several years but
it's still hard to keep up with
demand they have to deal with counties
and permitting
labor shortages and supply shortages
they can only build so much
moving forward i think it'll be really
interesting to see what happens in the
next decade to see if people stay in
their house even longer
a lot of people are buying big houses
that they can grow into
and the interest rates being as low as
they are if interest rates happen to go
up they're not going to want to sell
that house with the low interest rate to
buy a different one with a high interest
rate so let's recap real quick
interest rates are at historical lows
creating a demand for buyers to purchase
houses so they can lock in those
interest rates
and buyers are able to afford more
because the money is cheaper to borrow
number two people who already own homes
are staying in them longer
thus creating less inventory for people
to buy number three
lots of people have not lost their jobs
and a lot of jobs have been restructured
so people are working full-time from
home that's allowing people to move
wherever they want
and a lot of people are choosing to move
to states that are less expensive than
the current state that they live in
and they also want to get away from the
cold winters number four
even if there is a prolonged recession
that doesn't necessarily mean that the
housing market is going to crash like
what we saw in 2008.
there were some factors back then that
are just not the same
now historically housing has always been
one of the most stable investments you
can make
and five will supply eventually catch up
with demand
and balance out the housing market of
course it will
but when will that happen i wish i knew
now i know what a lot of you out there
are thinking
she's a real estate agent of course
she's going to encourage people to buy
homes
the market's going to crash and all of
those people are going to lose all of
their money
and to you i say i never encourage
people to buy houses that don't
already want or need to buy houses and
people have
lots of different reasons as to why they
need or want to buy a house
even in the depths of the great
recession people were still buying
houses
because life continues to happen babies
were being born kids were going off to
college
people were getting married people were
getting divorced even in the worst
economic times
life continues to happen and people's
housing needs
change i encourage all of my buyers to
take a very close look at their
financial picture
and their personal situation to
determine if buying a house right now
is the right thing for them regardless
of what happens with the economy
some of my buyers are choosing to wait
and some of them are choosing to jump
head first into this craziness
either way i'm happy to talk it over
with anybody who's thinking about buying
or selling the Tampa Bay area
i hope this episode gave you some good
information and got you thinking
if you're looking for something else to
watch on this channel check out the
video that i did at the beginning of the
coved times with a lender friend of mine
and we talked about interest rates and
why
they were so low thank you all for
watching i'll see you next time with
love Melanie
