Thursday, June 7, 2012

May Report North Florida

Jacksonville, FL – Buyers Interest is Strong but

Getting to the Closing Table Remains Tough

(3,245 single-family permits in 2011, 27th largest market in the country)

Traffic slows a bit but remains above expectations; closings are the challenge.

Traffic fell modestly in May as compared with levels in April, but remained above agents’

expectations for this time of year. Our buyer traffic index fell back to 55 from 67, while

readings above 50 point to traffic above expectations. Traffic has now met or exceeded

agents’ expectations for five straight months. Low end demand appears to remain the

strongest, according to agents. One agent noted, “Foreclosures are getting multiple offers

in they are under $200,000. Upper range homes are getting fewer showings.” Another

cited, “Increased consumer confidence.” However, multiple agents said that lack of buyer

interest is not an issue; rather, the challenge is getting them approved for loans and to the

closing table. One agent commented, “Buyer traffic and demand remains stronger than

expectations for spring 2012. Everything priced right is selling in less than a week, many

times with multiple offers. The bad news is that the fallout rate has increased from 8% to

almost 30%! Worse yet is that it is mostly because of underwriting in the last week prior to

closing.” Another agreed, saying, “Traffic is the same but the quality of the credit is poor

resulting in fewer sales.”

Prices improve as inventory falls. Agents indicated that home prices improved in May, a

somewhat surprising turn after falling in April, as our home price index jumped to 68 from

33, with readings above 50 pointing to sequentially higher prices. We’re a bit skeptical

seeing such a big jump, especially with more foreclosures to come to market, so we will

watch this closely next month. Lower inventory levels likely helped, as our home listings

index came in at a solid 73, down modestly from 83 in April but well above a neutral

reading of 50. Meanwhile, the length of time needed to sell a home was unchanged in May,

as our time to sell index fell to a neutral level of 50 from 60 in April.

Comments from real estate agents:

¦ “Steady but not overly busy.”

¦ “Appraisers having trouble keeping up with the market change.”

No comments: