What does a real estate recession look like?
There are signs that this could take place in the Tampa Bay area in the next year. But how will you know it got here. Here are some things to look for and some ideas to help if this does happen in the next year or two.
What the signs of a recession or slow up look like:
In many areas of the country, the appreciation rate for real estate has been running in the double digits. San Francisco, New York, and Seattle have all had tremendous gains. Locally, the beaches and South Tampa have all had average appreciation rates over 10% in the last year and in some areas almost a 15% increase in price. In Northwest Tampa, my specialization area, the rate of appreciation has ranged from 4% to 10%, depending on the area. The current rate of appreciation in the main urban areas are starting to slow to 6-7%. In South Tampa it may drop to 5% for the year over year appreciation and possibly lower for areas in Northwest Tampa.
There has been a slight buildup of inventory of homes for sale. As of the last report there are over 4,500 homes for sale in Hillsborough County and the average market time is 67 days on the market. The current rate of closings is 1,774/per month. My company Coldwell Banker, releases these reports every month. An important thing to look at is total inventory vs. sales per month and days on the market. If the inventory increases and the average units sold decreases, that will be the first telling sign.
How will this affect you if you are selling a home?
What I have been finding is that homes that have been upgraded with new kitchens, baths, flooring, paint, etc. bring the most money and sell very quickly. The homes that need updating or work done to them sell for a discount to top quality homes of 15-20%. As an example, one home I closed recently went for $600,000 which was $125,000 more than the next closed home in the neighborhood in the last year. This home did not have any upgrades done and only brought $475,000. The lesser expensive home sold for $117/sq. ft. The home that was upgraded brought $189/sq. ft.
The point above illustrates a great tactic. In a softer market, the pricing and staging of a home becomes critical. The expensive home was very well done and sold for top dollar. The other home was not upgraded but was priced aggressively and because of this, it sold within a short period of time. It is very important to understand the market and know the strengths and weaknesses of the home you are selling. This is where someone like myself, who specializes in an area can help. I am able to look at a home and help you determine the actual value. Looking at the example above the lesser expensive home could have been priced like the higher one and stayed on the market for a very long time.
Licensed Real Estate Agent