One of the greatest crises currently facing the housing industry is the nationwide inventory shortage. As the number of homes on the market continues to shrink, the issue is aggravated by other factors such as rising construction costs. Homebuyers can feel powerless in a seller's market and knowing how to be proactive in navigating it can be difficult.
We spoke with Lou Nimkoff, president of the Orlando Regional REALTOR® Association, about these pressing concerns. Having been involved in Florida real estate for some 25 years, he is intimately aware of how low inventory levels can impact a housing market.
Here, Nimkoff discusses how sellers should react to the housing market as spring approaches and what agents can and should be doing to make the home-buying experience as painless as possible for potential homeowners.
You've been in the real estate game since 1983. Speaking to inventory, does this coming spring have any precedent?
Orlando’s current inventory level of 7,604 has seen its equivalents, such as in early January 2013 as we launched into the current seller’s market. We also had this level of inventory (and lower) in the early 2000's prior to the red-hot market that began in 2007.
Of course, the difference today is the enormous pent-up buyer demand plus the additional demand created by Orlando’s population growth. Lack of inventory is most acute in the affordable price ranges, and this concern has risen to the top of community discussion in Orlando.
What can sellers do differently this spring to prepare their homes for sale?
Sellers in any location should not simply rely on seller’s market conditions to sell their home. It’s still important to prepare a home so that it shows well, and it’s especially important to price a home correctly. A home that’s overpriced rather than listed at true market value can discourage buyers from even viewing the property, especially during the crucial two-week period following listing. Of course, an overpriced home with a contract is at risk of running afoul of appraisal issues, which can create nightmares for everyone involved.
What can agents do differently to assist sellers in the coming months?
Managing seller expectation is always a challenge. I’m a big believer in letting the data speak, and there are tons of hyper-local data resources that REALTORS® should be using to counsel their sellers. NAR’s Realtors Property Resource® is just one example, and many others are made available through both REALTOR® associations and MLSs.
You've been in Florida your entire career. How do you think sellers in your state will fare this spring compared to the rest of the country?
While there is a nationwide inventory shortage in aggregate, Orlando’s sellers are bolstered by the city’s strong economy and growing population; elements that are not enjoyed everywhere in our state or certainly our country. The Orlando median price has been on a very sharp upward trajectory for several years. I believe prices are going to continue rising, but not at such a sharp pace. I also think sales are going to slow due in large part to inventory challenges and also to what I suspect is a new expectation of “staying put” rather than “moving up” among owners.
Do you believe the new tax bill will impact the spring market this year?
I am concerned that the overall structure of the final bill does diminish the tax benefits of homeownership and could cause adverse impacts in some markets; however, the bill included some positive elements. From a philosophical standpoint, the traditional American dream of homeownership is more likely to be impacted by millennials’ preferred lifestyle than by the tax bill.
What advice would you give to a potential homebuyer who's contemplating making a purchase this year?
I would advise a potential homebuyer to take action quickly because I believe that interest rates are going to rise.