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    A Beacon of Light Appears For Tampa Real Estate From May 2020 Statistics

    Written by: Phillip Fricke, REALTOR® with Dalton Wade Real Estate Group

    Closed-sales data both for Hillsborough & Pinellas counties for the month of May 2020 were frightening–Hillsborough sales fell almost 30% versus May 2019.  This compared with a  22% decline for April  2020 compared with a year ago.  Pinellas data showed a 47% fall from last year, an accelerated pace of decline from  the 33% drop recorded in April 2020 versus the prior year.  The market appeared to have worsened seriously in May, and so what is the good news?

    The goods news is that there was  sharp improvement in new pending sales in May compared with March and April–both in Hillsborough and Pinellas counties! That is critical.   Closed-sales data is a lagging indicator, representing activity in the market place that took place 30 to 60 or more days in the past. (i.e., transactions actually closed at the end of a long process). New pending sales are indicative of current market activity in that they represent a coming to terms between buyer and seller on a purchase agreement (i.e., an “executed” contract). New pending sales represent market activity in the “NOW” time frame!

    Hence, it is fair to speculate that May closed-sales data marked the hysteria/panic/initial reaction to Covid 19.  That buyers stayed away from  the real estate market  in droves during  March and April was demonstrated by the May closed-sales figures.  The panic appears to have dissipated somewhat (maybe, a lot!) in  May as is suggested strongly by the new pending sales data for the month.  Buyers came back to the market in serious numbers during May 2020 as new pending sales data proves. 

    Let’s look at the data–the disheartening stats…

    • Hillsborough County–New Pending Sales Declined Sharply in March and April:  2,815 units in March 2020, down 15.5% from a year earlier, and 2,347 units in April 2020 , down 32.5% from 2019.  And so closed-sales data showed a decline of 29.6% in May 2020 to 1,939 units from 2,754 a year ago.
    • Pinellas Country–New Pending Sales Declined Sharply in March and April:  2,157 units in March 2020, down 27.5% from a year ago, and 1,514units in April, down 46.4% from April 2019! Closed sales fell 46.7% in May to 1,266 from  2,377 units in 2019.

    The good news–new pending sales rebounded sharply in May…

    • Hillsborough County–New Pending Sales Rebound in May:  3,383 units for May 2020 versus 2,347 and 2,815 in April and March 2020 , respectively.  And, May 2020 was actually up 1.2% from the strong new-pending sales of May 2019 which totaled 3,343.
    • Pinellas County–New Pending Sales Rebound in May: 2,496 for May 2020 versus 1,514 and 2,157 in April and March 2020, respectively.  The May stat was off 5.4% from the year-ago level, but still far stronger than April and March 2020, and I regard that as good news.

    One Month is Not a Trend, But Reason for Optimism Has Surfaced

    To be sure, one month data is not a trend, but the data for the month of May 2020 strongly suggests that buyer sentiment improved considerably in May from the pessimism of the previous two months. Likely causes?  A combination: 1) realization that the underlying fundamentals and structure of the U.S. economy remain strong;  and 2) belief that the virus pandemic is more likely to be a temporary  rather than permanent dislocation to our society and economy.  Putting on the economist’s hat I wore many years on Wall Street, I am firmly in the camp that believes in the viability of the United States economy and that no recession is on the horizon.  Nothing is guaranteed, uncertainty remains at least over the near-term, and we are not passed the virus pandemic by any means.  Nevertheless, I anticipate buyer demand for housing is likely to firm, inventory is likely to remain on the low side, and prices are more likely to remain stable than crash.

    Implications & Recommendations for Buyers & Sellers

    Believing that prices will remain relatively stable, and that interest rates are probably at their low point and are more likely to trend higher than lower, these are my insights…

    • Buyers–If there is a genuine motive to buy, go in now.  You are not likely to gain significant advantage by waiting, and any increase in interest rates will prove unfavorable.  The one advantage I see in waiting is that inventory could increase if sentiment improves much further.  Perhaps a bit of pricing leverage switches to the buyer?  I do not envision any significant price advantage going to the buyer waiting that is not likely to be offset by the cost of higher interest rates.
    • Sellers–The risk of a crash in prices does not appear great.  Stable pricing appears more probable than falling prices. And, inventory is low.  If you need to sell, staying the course and remaining active in the market may be to your advantage versus the course of withdrawing and waiting.  Panic selling, fearing that the market will crash and it is better to get out now rather than wait might not be the best strategy either.   If you do not need to sell, consider the merits of staying the course.

    Written by: Phillip Fricke, REALTOR® with Dalton Wade Real Estate Group

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