As a homeowner on the West End of Panama City Beach and the Inlet Beach communities, you may have seen “For Sale” signs that are staying in place for longer than before. So, are we seeing a new market trend or is this just the tip of the iceberg?
Let’s look: Your memory is correct – homes are currently staying on the market longer. However, the number of homes sold each month has been remarkably stable over time, with the exception of a “mini-boom” during and following COVID. Looking at the last 5 years:
- Median Days on Market (DOM) is 30 days
- Median # of homes sold per month is 10 homes
KEY TAKEAWAYS:
1. Pandemic Boom (2020-Early 2022) Factors
- Low Mortgage Rates: The Federal Reserve cut interest rates in response to COVID-19, making borrowing cheaper. This fueled homebuying demand, leading to higher sales and lower Days on Market (DOM).
- Remote Work Migration: Many buyers moved to suburban and rural areas, increasing demand and driving up prices.
- Limited Inventory: Sellers were hesitant to list their homes, creating a competitive market with multiple offers and quick sales.
Market Effect:
- Home sales surged in mid-to-late 2020 and remained strong through 2021.
- DOM in early 2020 ranged from 34 days up to 68 days, but reduced dramatically starting in 2021 – sometimes as low as 3 days
2. Interest Rate Hikes & Cooling Market (Mid-2022 – 2023) Factors
- Federal Reserve Rate Hikes: The Fed raised interest rates multiple times in 2022-2023 to combat inflation, making mortgages more expensive.
- Affordability Challenges: Higher mortgage rates reduced buyer purchasing power, causing demand to drop.
- Economic Uncertainty: Concerns about a potential recession, layoffs in tech and finance sectors, and stock market volatility led some buyers to pause their home search.
Market Effect:
- Sales started to decline in late 2022 and 2023.
- Homes stayed longer on the market and DOM increased.
- Some markets saw price drops, as sellers had to adjust to the lower demand.
3. 2023-2024: Market Adjustment & Rising DOM Factors
- Mortgage Rates Above 6-7%: By late 2023, mortgage rates were significantly higher than in 2020-2021, discouraging buyers.
- Seller Reluctance (“Lock-In Effect”): Many homeowners who had locked in low mortgage rates (2-4%) in previous years were unwilling to sell, reducing new listings.
- Buyer Caution: Inflation and economic uncertainty made homebuyers more selective.
Market Effect:
- Sales volume dropped in late 2023 to early 2024.
- April–May of 2023 and 2024 saw low DOM, however DOM spiked dramatically in other months, indicating homes were sitting on the market much longer.
- Seasonal Slowdown: Winter months (Nov 2023 – Jan 2024) showed particularly high DOM, which is normal, but more pronounced due to higher rates.
4. 2024-2025: Possible Signs of Stabilization?
- Federal Reserve Policy: If the Fed pauses or lowers rates, affordability will improve.
- Economic Growth & Job Market: If hiring remains strong, buyer confidence may return.
- Inventory Challenges: A lack of new construction and hesitant sellers could limit supply, preventing home prices from falling too much.
Possible Market Effect:
- Sales will gradually recover when interest rates stabilize.
- DOM will decrease slightly as buyers return, but it likely won’t be as low as 2021.
- Local Market Variability: Some regions may see more resilience, while others could continue to struggle.
Conclusion: Is the “Days on the Market” (DOM) impact just the tip of the iceberg?
Looking at this data, the current DOM has been directly impacted by the economy, but it is normalizing gradually as our market always strives for balance. I don’t see an iceberg where there’s something “hidden”, rather the gradual and normal ebb and flow of the real estate market as it responds to economic changes.
As an investor in Panama City Beach real estate, what do we recommend? Price your home wisely; price is one of the determining factors that will lead to a sale. Also have a little patience as the market stabilizes; testing the market for a few weeks will confirm where your pricing should be. Find your differentiators; be different and be better than other similar houses. Last, get a professional and honest assessment of your property’s value; you will need a professional and honest real estate professional. With all these factors in hand, you house will sell! If you are not currently working with another realtor, I will be happy to provide a study and evaluation specific to your home.
