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
All indications point to an active 2012 selling season as the Sarasota real estate market continues to show strong signs of recovery. While I think price appreciation this year will be modest, the general consensus from industry experts is that our prices bottomed out in 2011 and will continue to hover at this level through the better part of the 2012 with nominal upward movement. Realistic motivated sellers are getting their properties sold following the advice of seasoned professional realtors who know our market well and where the current tipping point is.
Sarasota’s monthly average of 657 closed properties indicates that we currently have 6 ½ months of inventory in all price points, a good measure of the marketplace’s positive and stable course, given that a six month supply is the demarcation of equilibrium between a buyers and seller’s market. The overall inventory has declined 25% since the end of 2010, which is 1,434 less properties for sale, and 1,800 fewer properties than the end of 2009. This compression of available properties is contributing to the recent news that homebuilder confidence is rising and, after several years of limited new homes entering the market, we are hopeful some high quality product will be added to the supply chain to feed the already evident increased buyer interest.
This year 481 more properties sold than during 2010, a healthy 7% increase. We have a similar number of pending sales to start 2012 as we had to start 2011. As a result of the average month’s closings activity the past year, there is now only 5 months of inventory for properties listed under $500,000, compared with 7 months at the beginning of the year and 11 months at the beginning of 2010. In the segment between $500,000 and $1,000,000, there is a 15 month inventory vs. 19 months to begin the past year. The inventory of available luxury properties over $1,000,000 has reduced by 16%, 116 less properties since the beginning of the year and now represents a 25 month supply, down from 28 months at the beginning of the year, and now at one of the lowest levels since before the boom in the luxury market that began in 2002 and nearly 70% below the market crowning in 2006. And with the median sale price of luxury properties almost 16% higher than December 2010, (Sarasota is one of the country’s highest ranking regions in increases in home prices,) and the dwindling supply of move-in ready homes, this will be an interesting market to watch.
The Sarasota area continues to have an abundance of properties listed as Short Sales or Bank Owned. This segment represented 43% of the sales in 2011 and approximately 50% of the sales under $500,000. This is expected to continue to be the case in 2012 as more properties are finally getting through the judicial foreclosure process. Banks are clearly motivated to manage their foreclosures better and are attempting to expedite short sales, so I am optimistic the market will absorb these and the effect on overall pricing and sales will be somewhat marginalized.
As I have noted in my recent blog posts, with economic vital signs such as improvements in the unemployment rate and evidence of increased consumer and builder confidence, added to continued low interest rates and pent-up demand, the Sarasota Real Estate market appears poised for sustained recovery. When all of the factors noted in this report are blended with the many extraordinary natural, cultural and business attributes that make Sarasota the greatest community in the nation to live and work; I think we are on the verge of a steady and sustained recovery. Though elements necessary for an extended recovery are still fragile, there are many reasons to be optimistic.
The following statistical data is provided through the Multiple Listing Service (MLS) of the Sarasota Association of Realtors. The table summarizes what happened in each price segment. The Sold (Closed), Pending and Listings columns are sales and listings for the month of the report, and the Pending and Listed are the current totals of each in the MLS system. The Sold column is the total sales for the stated year. The Listed YE (Year-End) column shows the listing inventory at the end of 2011 and 2010. The SS/REO stands for properties that were either sold as a Short Sale or were owned by a lender at the time of the sale, commonly referred to as distressed sales. The amount of these distressed sales is included in the sold column.
Below is a second table showing the past seven years of sales history. 481 properties or 7% more closed this year over 2010, the highest amount since the height of the market in 2005. There has been a steady increase of closed sales each year since the low of 2006.
The Case for Real Estate Investment
This week Michael Saunders makes the case quite clearly that, despite the recent years of woe in the housing market, real estate remains a secure and desirable form of investment. In Michael’s weekly market report attached below, she cites data prepared by Steve Harney, a national real estate authority, in which he reports that over the last 12 years, “had you invested $100 in each in early 2000, by now you would have netted $140 in real estate, $112 on the Dow, $90 on the S&P and $70 on NASDAQ.”
Though our regional real estate market continues to be in a somewhat fragile state, it is well reported that 2011 saw sustained increases in key markers such as price and volume, and all indicators are pointing to further improvement in 2012. Buying a home in Sarasota has never been more “affordable”. With the prices lowered across the board plus record low interest rates…add to that the incredible lifestyle of Sarasota’s magnificent setting and infinite options for dining, entertainment and cultural activities, investing in Sarasota real estate is a safe bet!
http://www.thesaundersblog.com/southwest-florida-real-estate-take-that-dow-jones/
10 Things to Know Before Buying A Home
The decision to buy a home seldom comes overnight—indeed, even seasoned investors think long and hard before putting money into real estate. For most people, it’s the single most important investment they’ll ever make. So it’s only natural, even practical, to get informed before taking that step. Here are ten things worth knowing if you want to get your money’s worth.
1. Are you ready to settle?
One sign that you’re ready to own a home is if you can see yourself staying in one place for more than a couple of years. Less than that, it’s seldom worth the trouble (and transaction costs) of reselling and moving out again. Even if the market were doing better, you’ll only lose money by buying a home when you can’t stay put just yet.
2. How’s your credit?
You’ll most likely need a mortgage to buy your home. To get the best deals, you need good credit—it’s the banks’ way of knowing how likely you are to keep up with payments. Start by getting copies of our credit report and double-checking the facts. Do this at least a few months before house-hunting so you’ll have time to fix any problems.
3. How much can you afford?
As a general rule, you should aim for a house worth two and a half times your annual income. If you’re making $100,000, you can probably comfortably afford a $250,000 home. Of course, there are other factors to take into account, such as your debts and other monthly expenses. Try talking to a financial adviser to set a more precise budget.
4. Can you afford the down payment?
Aim for a down payment of at least 20 percent of the home’s value. This will get you prime rates and terms at most major banks. You can still get financing with less—some banks will accept as little as 3 percent—but the more you can put down, the better.
5. How’s the neighborhood?
Experts recommend buying in a district with good schools, even if you don’t have school-age kids. Historically, areas with a strong educational community tend to have higher property values. This gives you solid equity for when you need to refinance, and ensures a decent profit when you need to resell later on.
6. Do you have an agent?
A professional agent can help whether you’re buying your first home or your fifth. It’s not just about getting access to listings; a good agent can also help you arrange for financing, negotiate with sellers, and plan the move. Look for an exclusive buyer’s agent—they won’t be limited to certain sellers and can give you smart bidding strategies.
7. Do you want to buy points?
A point is a small portion of the interest (usually 1% of the value) that you can pay up front in exchange for a lower interest rate. It helps the lenders stay liquid and, if you stay in the home long enough, will save you money in the long run. Sit down with your agent and decide whether or not the points are worth taking.
8. Are you pre-approved?
Getting pre-approved is becoming more or less standard in home buying—some sellers won’t even look at offers that don’t come with pre-approval letters. It also saves you the trouble of looking at homes you can’t afford, since you know at the outset what your limits are. Don’t get it confused with pre-qualification: a pre-qualification is just a quick assessment of your finances, while a pre-approval takes into account such factors as debt, income, and credit history.
9. What’s the market like?
You need a good grasp of the local market if you want to make a reasonable bid. Your agent can give you a comparative market analysis of recently sold homes similar to the one you’re buying, which you can use as a benchmark for your offer. For example, if similar homes have sold for 5 percent lower than the listed price, you should bit at about 8 to 10 percent lower to give yourself negotiating room.
10. What condition is the home in?
Most lenders will require a home appraisal, but that’s mostly to make sure the home is worth what you’re paying for it. A professional home inspection will reveal any problems in construction, wiring, and piping, which could cost you thousands later on. Inspectors should also issue home insurance, which will keep you covered in case they overlook something that causes problems down the road.
