Even the most casual of observers can easily see that housing demand and residential real estate values have rebounded in recent years in Hillsborough and Pasco counties.
There are new subdivisions popping up all over.
But, to put a finer point on what’s happening, Craig Nowicke, a real estate broker with RE/MAX, based in Carrollwood, dropped by the Rotary Club of Lutz to talk about the Hillsborough real estate market in the past decade.
Nowicke and his wife, Linda, are licensed Realtors, with Nowicke specializing in both commercial and residential properties, and his wife focusing on residential properties, including the luxury market.
He provided a “snapshot” of the Hillsborough market between 2008 and 2018.
That marks the period from when the market “absolutely crashed” to today, “where we’re essentially back where we were,” Nowicke told those gathered at the Heritage Harbor Golf & Country Club.
From 2007 to 2008, a year that Nowicke said Hillsborough’s housing market was “driving off the cliff,” the market volume dropped by 24 percent, he said. The total dollar value of single-family residential homes that were sold that year dropped from $3.1 billion to $2.4 billion,” he said.
At the same time, the median sold price decreased by 19 percent, from $220,000 to $178,500.
There were 10,471 units sold in 2008, Nowicke said. And, at that time, there was 24 months’ worth of supply in the inventory.
He explained: “That means there was two years’ worth of houses to meet demand. If no new house came on, it would take two years to sell everything in those market conditions at that time.”
In 2008-2009, the market volume bottomed out at $2.3 billion in sales, he said. Median prices continued going down, reaching $132,000.
“Units (sold), though, started to recover because price has gone down,” Nowicke noted.
In 2011-2012, the market volume increased by 27 percent, going from $2.5 billion to $3.2 billion, he said.
“We hit the bottom, in January of 2011, in price,” he noted.
Unit sales continued to rise, increasing from 16,600 to 18,432. Meanwhile, inventory dropped to 13.5 months, in January 2011.
Fast-forwarding to 2017, the total market volume was $6.8 billion — an 11.7 percent increase from the year before. The median price was $216,600. And, there were 26,000 units sold — which is more than 2 ½ more (units sold) than bottom.
Now, the market’s inventory is well below a balanced market, Nowicke said.
There was 2.7 months of inventory in May, the most recent statistic available, he said.
“That is really, really low inventory,” he said.
Experts today consider 5.5 months of inventory to be a balanced market, Nowicke said.
A sellers’ market
The amount of inventory available dictates the difference between a sellers’ market, a buyers’ market and a balanced market.
“The sellers’ market means that the sellers have all of the leverage. There’s no inventory to sell, which is where we are now. Sellers have all of the leverage. There’s more buyers than there are sellers,” he said.
“It’s going to drive prices up. The sellers can demand more, or, for example, if they need to do some repairs, they can just refuse to do them because they don’t care. They’ll just wait for the next buyer.
“The buyers’ market, remember back to the 24-month supply? The buyers had all of the leverage,” he said.
So, buyers get lower prices and more concessions, he added.
“You don’t want to give me a good deal on this house? I’ll just go buy the next one because there’s plenty of houses to buy.
“The balanced market means there’s approximately an even number of the people who want to buy and sell,” Nowicke said.
The real estate expert also talked about the difference between distressed sales and traditional sales.
Distressed sales include homes that are in foreclosure and homes that are being sold short of how much is owed on them, he said. A traditional sale is a home that went on the market that wasn’t a short sale or a foreclosure.
“It was just an everyday sale,” he said.
“In 2011, 40 percent of our market was traditional sales; 60 percent was distressed,” he said.
Since then, the market has improved enormously, and the only homes that can be found at a discount tend to be those which need substantial repairs.
Conditions in the housing market were different when it heated up before, he said.
“This is my general impression, not necessarily data that I researched, but we had a whole lot of new inventory come on line. Lots of builders building new developments. And, then we had unbelievably lax lending policies.
“So, I think if you could fog a mirror, you could not only buy the house, but you also could get a second and a third line on it. You might have $400,000 worth of financing on a $300,000 house that was probably worth $200,000 on its best day,” he said.
Now, he said, “you drive around here and you see all of the construction. They’re building new product all of the time, and it is selling.
“I just helped somebody buy up in Spring Hill, and there’s 30 houses coming up out of the ground next to the one that she just bought.
“I get nervous about this. How long can this go on?
“I don’t know how long it can go on. The pendulum always swings, so there will be a day when it will be a buyers’ market again.
“I don’t know when, but it isn’t right now,” Nowicke said.
Published July 25, 2018