What a difference a year makes!

Q1 of 2023 was a surprise. After expecting a moribund market, we saw a surprisingly robust real estate market at all price points in Vero Beach Florida. 

Many predicted the same uptick in the first quarter of 2024. Looking back at January, were they right?

There are several key changes worth noting:

• The median list price is down to $1.499M compared to $1.722 in January. That’s a 13% drop. This could mean that sellers would rather modify their initial asking price than languish on the market and be forced to make price reductions in the future – a nod to the prevailing condition of fewer buyers in the market ready and willing to take their hands out of their pockets to write an offer.

• The percentage of homes taking price reductions in an effort to get an offer also reduced dramatically, with only 28% taking reductions, down 7% from last month. This stat could well be explained by the previous discussion of a reduction in initial list price – baking, in essence, the reduction into the starting list price.

• At 202 units, inventory of homes for sale on the barrier island is up 27% year over year. Before you head for the hills and scream that the sky is falling and pricing will collapse – hold on! Context here is KEY. Yes, inventory is up markedly over February 2022 when we had a mere 48 homes for sale on our barrier island. And up 54 units over the inventory of 148 units in February of last year. But hold on – pre-COVID, our inventory levels averaged around 382 units for sale. This means that at the current pace, it will take over THREE YEARS for our inventory to be where it was historically pre-pandemic. Let that sink in.  

What is the biggest challenge we see in our market right now?

Buyer hesitation. 

The VOLUME of sales is anemic. Why?  

While insurance and property condition certainly are factors, they are less of an issue than say 6 months ago. I just worked on several deals with 2004-era roofs that could bind insurance and did not impede those sellers' ability to sell their homes to ready and able buyers.

So what’s holding buyers back if more options are available than a year ago?  
Uncertainty. 

he majority of our buyers are elective buyers. With the whipsaw nature of the 10-year bond rates, the ups and downs of the S + P, a myriad of global worries, and the toxic nature of our upcoming presidential election cycle causing heartburn for many buyers, a big percentage of buyers interested and bullish on Vero are not yet bullish on the future. And with confidence a key driver to buyer action, many are saying “Let’s wait 6 months to see how things fare” to all of the above issues.

In the past 6 months, we’ve averaged such a slow volume of sales that we effectively have 22 months of inventory. That puts any buyer who is ready and able in a great position to negotiate asking price, get a rate buy down if you want or need a mortgage, and have less competition from other buyers to put you in a stronger negotiation position than you’ve had in years.

If the instant buyer activity of writing offers ticks up even nominally, the absorption rate of our inventory will reduce and become a more balanced market.

Now the power is on the buyer’s racquet.  

Are you going to get in the game or not? Talk to your trusted real estate advisor to identify homes that suit your needs with long-term fundamentals to support their value. You may be surprised by the deal you could strike.

Wait and you will likely pay more.  

TLDR?

• Buyers: the biggest discount off ask remains on homes listed over 40 days.

• Sellers: condition and insurability are VITAL. If you go to market with only a few deals to be made, you want to be sure your offering makes you one of those few deals!  

Call us to discuss your situation and whether or not now is the right time to buy or sell.