Natalie Arrowsmith recently helped a client move her plants and other belongings into an upscale apartment in the Lake Ivanhoe neighborhood of Orlando. It was an unusual task for a Realtor who is trying to help people buy and sell homes. But unusual is the name of the game these days in the Central Florida residential real estate market.
Her client wanted to take advantage of the equity she has in her home and sell right away instead of making the contract contingent on her family finding another house to buy. Renting an apartment for seven months was the solution — and it worked. “We were able to sell their home in 20 days for $30,000 over asking price, and they’re happy,” Arrowsmith said. “If you can find something that works for you and your family, it might be the time to sell.
But I always say to call a Realtor first and have that conversation and see what’s right for you.”
Arrowsmith, the broker/owner of NextHome Arrowsmith Realty in Apopka, has worked in real estate since 2004 and has never seen anything like today’s white-hot housing market. As 2021 president of the Orlando Regional Realtor Association, she speaks with real estate professionals all over Central Florida and other parts of the state and the nation, and the industry is abuzz with activity.
The biggest challenge is low inventory. There aren’t enough houses to meet the demand of 1,000 new residents a day relocating to the Orlando area, let alone local people who are trying to move. Records show there were fewer than 2,700 homes for sale in Central Florida in April. That was about three weeks’ worth of inventory, down from 2,878 homes on the market the month before and down 65% from the same month in 2020.
“When you have six months’ worth of homes, that’s a healthy market,” Arrowsmith said. “Real estate is simple supply-and-demand economics. Three months’ supply is a seller’s market. We are just under three weeks of housing inventory, so that’s one of those ‘Oh my goodness!’ moments. It’s crazy busy.”
The situation presents a challenge for real estate professionals, who have to work harder to make each deal. “Being successful in this market is all about educating yourself, understanding the process, understanding contracts. You need to understand how contingencies work, you need to understand what questions to ask. We’ve gotten to where there are multiple offers being provided, 10 to 15 at one time, and over asking price. You have to have the ability to write that offer for your buyer — or as a listing agent, you need to know how to have that conversation with your seller.”
For buyers and sellers, getting good advice and considering all options is key in this kind of market, Arrowsmith said.
“We’re actually designing spreadsheets for the sellers so they can look at all the pros and cons of each contract. A lot of people say, ‘Cash is king,’ but cash isn’t necessarily king if a cash offer is coming in under price or with contingencies attached. You can have a very clean finance contract that might be better than a cash offer.”
Newly constructed homes are caught up in the same situation as resales, Arrowsmith said. Developers are building new homes as fast as they can, with added challenges because of difficulty in securing building materials such as lumber, which are priced higher because of low availability and increased demand.
Some buyers looking at new construction are on three-phase wait lists, she said. The first buyers on the list get first dibs on properties that become available. Then the second phase gets to choose, and the third phase can pick from whatever is left.
Arrowsmith calls the situation “the perfect storm” spurred in part by historically low interest rates and the work-at-home realities created by the COVID-19 pandemic. “People are finding they don’t have to necessarily work in the same town where they live, they can live in other places, or maybe they want a house with an office in it or a gym, or a place to put their children because they’ve been home all the time now. There’s such an influx of buyers that we just can’t keep up with it.”
Even when Central Florida was going through the housing bubble before the Great Recession hit in 2007-08, the area didn’t experience such a difference between supply and demand, Arrowsmith said. “I think at our lowest inventory during the bubble, we were at about 5,000 houses.”
Homes in all price ranges are selling quickly, Arrowsmith said. “They’re all pretty hot right now. We listed one for $1.4 million, and in two hours had two cash offers at $1.5 million and $1.51 million. Then I listed one for $200,000 and had 15 offers. They’re lined up out the door to see them.”
Arrowsmith’s advice for buyers and sellers is to work with a Realtor. “So often we see people who say, ‘I can do this myself,’ but because of the market we’re in, and any other time really, a Realtor can help you navigate rough waters. A Realtor is there to help protect you and to help make sure you get the best for your investment. Our job is to guide you through these tough times and help you get the best deal you can get.”