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The New Normal

With snow blanketing most of North America and Northern Europe last week, its no wonder so many international home buyers from such wintry places as Canada, Germany, the U.K. and Scandinavia are already on the ground in Southwest Florida. The great thaw in our property market is underway; and in numbers that suddenly recall much healthier times, they’re lining up early in the season—alongside domestic buyers—to take advantage of the lowest home prices in over a decade.

Confidence that now is the right time to buy in Southwest Florida is not only being borne out by monthly sales that show our market edging closer to normalcy—especially in the lower price ranges—but also by a strong resurgence in confidence that real estate with its corrected pricing is a better choice over the long haul than stocks.

A new national survey—conducted last month for Reecon Advisors—found that confidence in buying real estate is significantly higher than the stock market in spite of the two-year drop in property values. Or, more likely, because of it.

The survey, the first since the onset of the Great Recession, provides the latest gauge of buyer sentiment toward real estate versus stocks. By a margin of 53.7 to 30.8 percent, those surveyed believe that real estate is the wiser long-term alternative. And it’s starting to show, with buyers from all over eager to join the hunt for the best values in our region.

It is a generally accepted principal that a real estate market achieves balance when the number of homes for sale—based on the monthly rate of sales—approaches a six month supply. With closed sales across all price ranges up by 32.5% between November and December the overall supply of homes dropped from 11.7 to 8.8 months. Pendings likewise fell from 8.4 to 7.9 months. (Source: Trendgraphix)

The improvement in our market was even more dramatic for homes under $300,000, with sales in the segment up by 34.3% from November to December; and the months of available properties based on closed sales down from 8.9 to 6.6. The months of inventory based on pending sales was also down—from 6.2 to 6.0—a strong indicator that this trend will continue, as pendings portend of closed sales to come 60 to 90 days later.

In the price range below $500,000 the trend toward normalcy is also beginning to crystallize. Closed sales were up 32.3% between November and December, reducing the months of available properties from 10 to 7.5. For pending sales, the number dropped from 7.5 to 6.8 months.

Although one month’s improvement does not a trend make, even the market for properties under $1 million showed signs of life last month, with sales between November and December up by almost a third.

Sales of properties above $1 million were up by 53.8% between November and December; but still have a long way to go before balance in this segment is achieved. Still, the months of available properties was cut from 51.8 to 33.2 between November and December. To put this in a better perspective, in October it stood at 73.6.

The improvement in our market’s closed and pending sales present a strong case for a market in recovery. Anecdotal evidence on display throughout all our sales offices—from Bradenton to Burnt Store—is also indicative of a market on the mend. Appointments to show properties, as recorded daily by the MS&C Appointment Center, are among the highest levels in our 35-year history. With 9 out of 10 buyers using the Internet to launch their property search, domestic and international visits to michaelsaunders.com are off the charts; and walk-in traffic is keeping our floor representatives busier than they’ve been in six years.

Meanwhile, the number of homes being bound to contract throughout all price ranges is the best evidence yet that properties priced correctly are finding buyers in ever-decreasing time frames. The mood in the marketplace is decidedly upbeat, the energy level of our agents is soaring; and buyers are so taken by our region’s beauty, its cultural scene and international reputation for value that they are buying on their first visit.

Such, we’re very encouraged to say, appears to be the new normal.

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