2016 was a great year for both buyers and sellers in the West Volusia real estate market. Interest rates, although climbing slightly after the election, remain at historically low levels (just over 4%), providing buyers with ability to borrow money inexpensively. Cheap money helps buyers buy more home for the same dollar. Sellers cashed in on buyers’ low interest rates and were able to obtain an average 98.4% asking price/selling price ratio for the year. This may have been helped by the lack of inventory as in January there were 1081 homes available in Deland, Deltona, Debary, and Orange City; however, by December, there were only 735 homes on the market in this same area. The confluence of low inventory and nearly full asking/listing price ratios led to homes selling more quickly as well. In January 2016, the average time to sell a home in this area took 41 days; however, by December, it took only 16 days!
As we look further ahead into 2017, a pervasive sense of optimism rules. Although interest rates may rise, increases are expected to be modest. Home prices are also expected to rise; however, this will only continue until home prices (and mortgage payments) meet or exceed buyer’s ability to pay. I expect this meeting point will not come until 2018 or beyond unless interest rates decline.