SAR Year-End Report Validates Upward Trend

As reported in my Year-End Sarasota Real Estate Market Report last week, the key statistical markers are pointing toward sustained recovery.  As further evidence I am attaching the Sarasota Association of Realtor’s recently released analysis of our region’s 2011 results. 

Property sales up 8.2 percent for full year 2011; prices stable

For the full year 2011, property sales of members of the Sarasota Association of Realtors® jumped by 8.2 percent to 8,224, achieving the highest level since 2005. The surge in sales was accompanied by stabilization in the median sale prices, which now stand at $155,925 for single family homes and $156,800 for condos over the full year, and have not fluctuated much for the past 12 months.

Once again, the market has demonstrated that Sarasota is a destination of choice for many homebuyers. For the overall year of 2011, the resurgence in sales was dramatic, and represents a 44 percent increase over the low point of the downturn in 2008, when only 5,820 properties changed hands.

“This is really incredible news, and demonstrates how far this market has improved in only three short years,” said SAR President Laura Benson. “Now, we also offer very affordable pricing. Combined with the high quality of homes and condos on the market, I think we clearly have the best values in Florida, without question.” 

Property transactions in the Sarasota real estate market jumped 7.3 percent in December 2011, compared to the November totals. Combined sales stood at 648, up from last month’s figure of 602 and the October 2011 sales of 577. This sales resurgence has paralleled the drop in the available inventory, and put the remaining months of inventory in the range of a seller’s market.

The inventory of available properties for sale in Sarasota was at 4,567 in December, down slightly from the 4,672 in November. The inventory fell to a 10-year low of 4,408 in August 2011. As the inventory has slid, the months of inventory has dropped and now stands at 6.3 months for single family homes and 9.2 months for condos. A figure of 6 months is considered equilibrium between a buyer’s and a seller’s market. 

The December 2011 median sale price for condos recovered strongly to $150,000 from November’s figure of $127,000. This was the highest level since August 2011. Condo prices have been fluctuating for several months, with the year-to-date median sale price at $156,800. 

For single family homes, the median sale price dropped slightly in December to $160,000 from $162,000 in November 2011. For the overall year, the figures have remained remarkably steady, indicating a stabilizing market.

“There is a real sense of optimism and excitement returning to the market,” Benson noted. “We’re entering the height of the season, and the open houses have been bustling with energy and interest. Recent news of new home sales doubling in one community and setting records for annual sales in another are clear signs of the strength of the current market.”

Pending sales were at 694 in December 2011, down slightly from the November 2011 number of 782. Last month, 504 single family homes and 190 condos went under contract.

Distressed property sales continued to represent a higher percentage than normal in the local market for the fourth quarter of 2011. In total, 41.7 percent of sales in the fourth quarter were distressed property sales (foreclosures and short sales). This was somewhat higher than the third quarter, when the overall percentage was 38.8 percent, but well below the market high of over 50 percent in the second quarter of 2010. 

Median sale prices continued to show three distinct markets, with normal market transaction sales prices more than double those for bank-owned transactions. But the price gap has narrowed somewhat, particularly during the past two quarters. For the second quarter of 2011, foreclosed condos sold for a median price of $62,250, while market condo transactions saw a $270,000 median. For the quarter just ended, those prices were at $73,500 and $193,500, respectively.

“Realtors® and consumers have adjusted to the market realities, and it appears that pricing in all categories has become more reflective of the current conditions,” said Benson. “We continue to watch and hope for a break in the distressed property cycle, and we anticipate the improving economy and lower unemployment rate will eventually bring these figures down to lower levels. The positive side is that our market offers incredible buying opportunities that won’t last long.” 

Click HERE for the complete press release in PDF format, plus six pages of statistical charts.

Year-End 2011 Signals Optimism in 2012

The Power of the Region’s Dominant Broker

In Michael Saunders’ most recent blog post, not only is it revealed that agents of our fine firm represented 11 “sides” of Sarasota’s top 10 sales in 2011 but, she also reminds us that Michael Saunders & Co. continues to be the market leader in selling the region’s luxury properties. The article further cites economic conditions and statistical evidence of the area’s positive positioning for continued real estate market recovery.

In addition, with the largest two of the transactions coming from foreign buyers, I reflect back to a 2011 Moulton Report in which I reported on the importance of International buyers to Florida Real Estate. An estimated 25% of all real estate acquisitions in the state are credited to foreigners, with the majority executed with cash. The foreign interest in our region’s properties tends to reflect perception of value, the large selection of well-priced options, a desire to diversify investments, the opportunity for rental income, and a belief in long-term security with real estate investment in our area. Michael Saunders & Co. and her team have created unparalleled visibility around the globe for our buyers and sellers. By establishing a carefully chosen group of essential partnerships, the extraordinary transnational exposure for Sarasota Real Estate through our company cannot be understated.

I invite you to read the Michael Saunders blog posted here to read for yourself more about why “Performance Matters” when selecting the best agent to represent you in your real estate transaction.

http://www.thesaundersblog.com/when-performance-matters/

It’s Time to Take Advantage of Low Interest Rates

You may already know that the country is experiencing historically low interest rates, but have you taken the time to examine what this means for you as a potential home buyer?

Right now, the average 30-year fixed-rate loan with no points or fees is around 5%. Forty years ago, in 1970, the 30-year fixed rate was around 7.25%. Since then, the rate began a steady, then sharp, rise which peaked at 18% in the early 1980s. Although the rate did decline to recent levels of 6%-7%, it took nearly 30 years to do so. This tells us that, historically, this particular rate rises much more quickly than it declines.

If you are even considering buying a first time or new home, now is the time to act. Bear in mind that the financial impact of the fixed-year mortgage rate on the cost of purchasing and paying off a home is one of the most important buying factors.

Here’s why this is true:
Every quarter-point change in the interest rate is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed mortgage. Therefore, if you put $40,000 down and borrow $200,000 to pay the price of a home, each quarter-point increase in the interest rate will cost you $12,000 over the life of the loan. By the same token, if every quarter of a point is worth $12,000 per $200,000 borrowed, then each whole interest point is worth almost $50,000.

To bring this into perspective, consider the price difference over the loan for a $240,000 home at rates greater than the current 5%. At 6%, the mortgage payoff on the same home will be approximately $50,000 greater. At 7%, the total amount swells by nearly $100,000 over the period of the loan.

If you have plans to purchase a home or if you are considering a move to a larger home, you are wise to keep a very close eye on interest rates and act before they take an upward turn. In reality, they stand to affect your mortgage and total loan cost more than the price of the home.

Sarasota Tops the List of Best US Home Markets!

Barbara Corcoran recently revealed a Top Ten List of the Best Real Estate Markets in the country on NBC’s Today Show. Topping the list at #1 was Sarasota—one of two Florida cities to earn a mention; the other was St. Petersburg.

Criteria for the list included cites whose home prices dropped the most since last year and are trending upward. Corcoran explained that prices are expected to continue to rise due, in part, to smart city planning. “This is the time to buy in these particular places,” she says.

A sophisticated urban city with all the amenities that one would expect plus beautiful beaches helped place Sarasota at the top of the list. Citing statistics from the National Association of Realtors, Corcoran noted that with a current median home price of $175,800, Sarasota prices have dropped by a full one-third since last year. On the recovery, home prices are up 13% in just the past quarter and the timing is s right for buyers and investors.

Spotlight on Local Housing Sales

Nationally, the sale of existing homes rose 9.4% in September. In Florida, sales rose by 34%. Local analysts say it’s a combination of falling prices and the $8,000 first-time homebuyer tax credit that has made all the difference in South Florida.

Housing activity in two counties, Broward County and Palm Beach County, reveal just how active the market is right now in Florida.

According to the Florida Association of Realtors, sales of existing homes in Broward County increased 31 percent in September from a year ago. In fact, Broward’s monthly sales have increased on an annual basis since July 2008. Broward’s median home price in September was $200,000, down 23 percent from a year ago and 8 percent from August. The median price means half of the houses sold for more and half sold for less.

Palm Beach County sales rose 43 percent in September and have risen in 14 of the past 15 months. Palm Beach County’s median price in September was $242,900, down 17 percent from a year ago and 1 percent from August.

When it comes to condo sales, markets in both of these counties remained strong last month with sales increasing dramatically in both counties. In Broward, the median price for a condo fell 40 percent from a year ago to $78,300, the lowest since the Realtors’ group started releasing condo figures in 2006.

The tax incentive has helped to reduce the number of properties on the market. The numbers of homes and condos for sale in both Broward and Palm Beach counties are down close to 30 percent from a year ago, according to the Keyes Co.

While sellers hope prices will stabilize soon, housing analysts cite high unemployment figures and say that prices may keep dropping until mid 2010. One prediction, from Moody’s Economy.com, forecasts that Broward’s prices could sink to $130,000 and that Palm Beach County prices might not hit bottom until the $150,000 range.

Low Mortgage Rates Incentivize Refinancing

Mid-October rates for a 30-year fixed-rate mortgage averaged 4.92%. This is 6.46% less than the rate a year ago.

According to Freddie Mac chief economist Frank Nothaft, rates under 5% are enticing some homeowners to take advantage of low rates to refinance their current balances. Northaft says that three out of five mortgage applications in the past several weeks were for refinancing.

“For people with good credit who have got some equity in their home, this is a good time to refinance to get a better rate,” says Brian Short, executive director of the Tennessee Association of Mortgage Professionals.

Not everyone is able to take advantage of the low mortgage rates, however. In many areas of the country, the rate is there, but the value is not. Low home values and tight lending conditions are market deterrents to refinancing. Also a factor, damaged credit scores due to unemployment or reduced work hours also prevent some homeowners from snapping up a better deal. Often, the best rates are available only to those with solid credit and a 20 percent down payment.

Home Sales Up Everywhere in September

Bolstered by first time homebuyers taking advantage of the $8,000 tax credit, the sale of previously-owned homes was up 9.4% in September. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” explains National Association of Realtors chief economist Lawrence Yun.

The strongest market regionally was the West, where sales climbed 13%, which was 5.7% higher than last year. Still down 15% from last year, the median price of homes sold during the month was $219,000.

In the Midwest, sales were up by 9.6%, which was 7.8% higher year-over year. Median home price here was $147,600, down 1% since 2008.

Sales in the South were up 9% from August and 10.8% from last September to a rate of 2.6 million. Median home price has dropped 7.6% to $153,500 in the past 12 months.

The slightest rise was in the Northeast, with existing sales up 4.4% from August. The median price there was $234,700, down 7.6% from last year.

“We’re getting early indication of price stabilization but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy,” Yun said.

Despite this most recent boost in September, experts say the housing market is still underperforming as home values continue to decline. Nationwide, the median price of homes sold in September was $174,900, falling 8.5% from a year earlier. An influx of distressed properties, foreclosures, and short sales are blamed for the price drop in prices.

To help boost home prices and sales, lawmakers are considering extending the tax credit and expanding it to all but the wealthiest homebuyers. Although few would argue the successful impact the tax credit has had on home sales, senior economist Robert Dye explains that an extension would only induce a temporary effect until the program stopped, similar to the Cash for Clunkers incentive.

“First-time homebuyers don’t represent the bulk of the market and there is strength well beyond them,” said Dye. “If economic indicators such as consumer confidence show improving trends, then experienced homebuyers will stay in the market and take advantage of [the low] prices” even without the credit.

Plan to Aid State and Local Housing Finance Agencies

Obama Administration officials have unveiled a plan to aid state and local housing finance agencies that provide mortgages to first-time and lower-income homebuyers and enable the development or rehabilitation of rental properties. The measure will enable housing agencies in all 50 states to provide lending directly to families and enable the development or rehabilitation of rental units.

Under the initiative, the Treasury Department, along with Fannie Mae and Freddie Mac, will purchase housing bonds issued by the finance agencies. This will give the groups the funding needed to make new loans. The government will also provide a temporary credit program to allow the agencies to refinance their existing bonds to more favorable terms.

The finance agencies that stand to receive support from the initiative have had difficulty funding mortgages due to erratic bond markets. Susan Dewey, president of the National Council of State Housing Agencies, states that agencies are operating at only 20% to 25% of their usual capacity, with some groups forced to halt their lending entirely.

“This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times,” says Treasury Secretary Timothy Geithner.

The agencies will pay fees to participate in the program, which officials say will cover its cost. They are still working with the agencies to determine the extent of support needed. The initiative could cost as much as $35 billion. While the administration says the program comes at no cost to taxpayers, the Treasury Department is ultimately responsible if an agency defaults on its debt payments.

Homebuyer Tax Credit Ending Soon (Or is it?)

While an extension of the November 30, 2009, deadline for the homebuyer tax credit is actively being considered, it’s not a done deal quite yet. In the meantime, it bears noting what the first time home buyer tax credit has done and continues to do for the real estate market.

Almost 50% of all houses sold last year were bought by first time buyers with the help of the tax credit which was passed earlier this year as part of the economic stimulus package. This has been a huge boost for the housing market. With qualifying income (less than $75,000 for singles and $150,000 for couples), the credit, which does not have to be repaid, is good for up to $8,000, or 10% of the purchase price. Both first time buyers and those who have not owned a home in the previous three years are eligible.

The National Association of Realtors attributes much of the recent home sale activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit. Of those, 350,000 would not have been able to buy a home without it.

With the incentive deadline looming, some market analysts fear that the rise in home sales will take a sharp decline once the tax credit expires. The expiration date of November 30^th applies to closing date, which means that home buyers just starting the process now will not benefit from the tax credit.

On the other hand, there is a growing contingency of support for extending, and even expanding, the buyer’s incentive. For example, Johnny Isakson (R-Ga.) is a former real estate broker who is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions. Others, like Senator Majority Leader Harry Reid and Senate Finance Committee Chairman Max Baucus have proposed the extension of the home buyer’s tax credit through 2010 in which the full $8000 will be received.  The tax credit would then be reduced by $2000 each quarter until expiring at the end of 2010.