Single family home activity has been sedate with a total of ten homes closed since New Years Day. Median selling price was $925,000 with a median time on market of ten days. There are a total of 34 houses for sale this morning in the two cities plus another three offered pre-construction. Median asking price of all homes is $980,000 with a median time on market of 60 days.
We are just now entering the busiest season of the year for visitors and real estate activity. In March we have a crowded confluence of snowbirds, school baseball teams with families in tow and a sprinkling of lost spring breakers. Some of those visitors will use their time here to look for a property and several will find one and go under contract. Should we expect anything to be different this year?
Maybe. The substantial increase in condo fees has been reflected in rising rental rates. Snowbird rental prices have been steadily increasing in recent years with extra large increases the last two. There are modest 2/2 oceanfront units commanding $6000 a month rent this season that rented for $3500 just three years ago. The specific units in my example are paying over $20,000 annually just for property taxes and condo fees when those expenses were just $10,800 in 2020. The snowbird who may have thought about buying one of these units this year will be looking at a $600,000 purchase price and monthly expenses of around $2000 a month before any mortgage payment. Does it make sense to own with those numbers rather than pay $18,000 rent for a three month stay? Add to that the risk of further depreciation as selling prices in our example complex have pulled back substantially in the last two years. I don't know the answer but the math is likely to exclude some from our pool of potential buyers. Maybe dropping prices will pull those reluctant buyers back in.
How about the market at large? Sales volume remains in line with historical volume for this time of year so any concerns about higher carrying costs, if any, are subdued. Even so, I don't think the market will continue to shrug off higher taxes, insurance and condo fees without some compensating pull back in selling prices. I will be surprised not to see a decline in most condo selling prices similar to the pull back in my example above. Many smaller complexes have not had any recent sales so owners in those complexes have been unaffected and unaware of the declines in other bigger complexes. The next sale in those buildings might reveal that the decline has metastasized.
Single family homes, resilient in their scarcity, do not appear to be as affected by increasing costs as the condo market. That market is far smaller and responding to a different dynamic. Insurance costs have accelerated at a similar rate to condos but with no apparent effect, yet. Perhaps the always-low inventory will continue to support that segment of our market. We shall see as the season unfolds.
"The fact that some people can't distinguish between etymology and entomology bugs me in ways I can't put into words." _Gemma Amor
