Ocala Real Estate News – 2019 Real Estate Market Update
By Clay Lehman, President of Resolute Property Management
Source Data – LINK
The 2019 Ocala Real Estate Market first quarter numbers are in! In February, we discussed why Ocala’s Economy is On Fire. In this post, we summarize the first quarter numbers for Marion County real estate and forecast where the market might be headed this year (spoiler alert – buyers and investors, you’re going to like what you read!).
First Quarter 2019 Results:
- Ocala home sales for March 2019 were almost 9% higher than March 2018
- There remains an average 4.5 months of inventory, indicating we are still in a seller’s market.
While these statistics bode well for buyers looking for appreciation, rental property investors might be more interested in the following:
- The difference between the amount sellers asked for the home (the list price) and amount sellers accepted (the sales price) increased again in March
- Days on market was mixed, with January results looking good but February not as rosy. This will be a key number to watch in months to come. If days on market increase, we could be transitioning to a buyer’s market.
- New listings are up 6% over the prior year and inventory is up 7.4%, which could also be indicating a transition to a buyer’s market.
- Demand for rentals in Marion does not seem to be slowing.
- Marion County rents increased to just under $1,200 a month. This marks the 81st consecutive month with a year-over-year increase.
Generally, a buyer’s market is good for investors, especially those with lots of cash on hand ready to invest. A buyer’s market allows investors to find more “deals” and obtain better cash flow and ROI. The downside of this is that appreciation gains may not be seen until the cycle turns again to a seller’s market. All in all, Marion County remains a very healthy rental market for investors.
The 2019 Ocala real estate market is off to a hot start with sales increasing by close to 5% over the prior year. The month of March 2019 by itself was almost 9% higher than March 2018. This means we may be headed into a very active spring. Not surprisingly, based on this information, the median sale price has risen right around 8% for the month and year. It is worth noting that 8% is the lowest Q1 increase in the last 4 years. So, while closed sales are the highest they have been in 4 years, median home prices are just not keeping pace. I believe this is due to increased competition in the marketplace. New listings are up 6% over the prior year and inventory is up 7.4%.
What we continue to look for is a shift from a seller’s market, which is what we have been in since Q2 of 2016, to a buyer’s market. The measure used by economists to determine if it is a buyer’s or seller’s market is month’s supply of inventory and the key number is 5.5. Where 5.5 is a balanced market, lower than that is a seller’s market and higher than that is a buyer’s market. This number has stayed around 4.5 for the last year (it’s been a seller’s market). The primary inputs to this calculation are current inventory, which is increasing, and closed sales, which have kept pace with the increase in inventory. So far, the supply numbers are remaining steady with no changes. I believe that by the end of 2019 we will see this indicator move higher as inventory continues to be added at a faster pace than sales occur. Cue the buyer’s market!
Of particular interest is the median % of original list price received. How close was the sales price to the original list price? This number has been increasing since 2014, from 92.9% to 96.5%. In January and March of this year, the measure was negative year over year. We are still positive for the quarter, but to have the first 2 months out of almost 60 where sellers took a lower % of their original asking price is significant.
A key driver that will push sales prices down is days on market. Quarter to date the median time to sale (the time from list date to closing date) is down 7.6% from 2018. This is a positive number, however, December and January both showed increases, February was flat. This will be a key number to watch in the coming months. The longer inventory sits on the market, the more sellers will start to decrease their prices. As prices slide down and there is more inventory to choose from, buyers start to rule the market again. The 2019 real estate market could tip towards buyer’s favor by end of year if days on market start to increase.
All said, I think these numbers show two different indications for the real estate market. The first is short term, which is that we will likely have a robust spring season. Interest rates have remained low, so the impact increased prices have an affordability has been minimized with low interest rates. The other indication is that we are continuing to see the slowing of this market, but that may be a good thing. Pricing cannot continue to increase in a vacuum. If real estate slows, it will give wage growth and employment a chance to catch-up.
On the rental side, there are fewer data points available, however, according to Zillow’s rental value index, Marion County rents increased to just under $1,200 a month. This marks the 81st consecutive month with year-over-year increase. Demand for rentals in Marion does not seem to be slowing.
We know our investor-clients want to stay on top of the Florida and Marion County real estate market. If you’d like to discuss further, please call Clay at Resolute Property Management at 352-414-5292.