Inventory levels throughout the north county area continue to shrink and this continued reduction is certainly having its effect on sales. We have seen sales levels drop over the past couple months and from my perspective this has more to do with fewer selections than fewer buyers. Todays buyers are still strongly driven by price, looking for the proverbial “deal” and they are harder and harder to find. We still have overpriced inventory with some sellers refusing to let go of visions of 2005 prices.
Much of the talk on the street among real estate professionals surrounds shadow inventory; how much is there and what really is shadow inventory? Shadow inventory refers to the inventory of homes not yet for sale but that will come to the market at some point in the near future. Most definitions would also require that these are properties that have already been foreclosed on and in the control of the lender and investors. Is the shadow inventory significant; absolutely it is and many feel banks are holding back release in order to assist in preventing further price erosion but the cost of holding is also significant. Besides having the property on their books with costs for utilities, property taxes, association fees, etc adding up daily the longer they hold the more they potentially lose.
We track foreclosure auctions weekly and there has been a huge slow down in Palm Beach County; foreclosure levels down about 50% over the past 4 months. Are the banks holding back at the courthouse to keep the inventory on their books lower for the time being? Some reports I have read say banks have only released about 30% of their current inventory. Here at “Results Driven Real Estate” we are working on a blog taking a unique look at the shadow inventory issue so keep your eyes open for that.
Last month in Tequesta inventory levels continue to go lower and this marks the 7th straight decline and another new record low. The net inventory of real estate currently for sale on our local Multiple Listing Service (MLS) in Tequesta now stands at 247 down 11 units from the August 1st level. Inventory levels are now lower by about 27% from our annual high which is a very significant move. Net inventory is defined as all of the property actively being marketed that does not have a contract outstanding either as a contingent or pending listing.
As we see inventory levels decrease buyers have fewer choices and typically pricing pressure will be to the upside. Each home is different and has it’s own set of specific metrics that need to be explored when determining current market value. That being said, buyer’s have 11 fewer choices today than they did a month ago so it is a great time to take advantage of a great combination on inventory and interest rates which are still at remarkably low levels after hitting another new low last week.
We take great pride here at “Results Driven Real Estate” in providing our clients the very highest level of service available in the industry. If we can be of assistance in any way with questions you may have about your real estate goals throughout Palm Beach and Martin Counties please feel free to contact me at either 561 308-0175 or [email protected] for a complimentary consultation.