Even those of us in the real estate industry are awed by the continued strength of our region’s market. Just when you thought that we had squeezed out just about every bit of good news and record setting statistics, another month of data is released and it once again reflects terrific results! In fact, total number of sales in the Sarasota real estate market surpassed 1000 units in April, and according to the Sarasota Association of Realtors, this area has only achieved this level of monthly sales 10 times in the last 90 years! The increase in total closings over last year of 13% is consistent with the statewide reports of monthly sales increases however the single-family transactions in our region exceeded the Florida average sales.
As I have reported for the last several months, several factors are at play in pushing our real estate market past recovery and toward real growth. As you will see evidence of later in this report, inventory continues to be tight; our feeder markets are experiencing some relief giving prospective investors, buyers looking to relocate, and pre-retirees more confidence in their financial position and recovery from underwater first-homes and other real estate holdings; the extension of record-low mortgage rates; and homebuilder confidence is high.
What is happening on the national real estate scene is important to us since so much of our demand is dependent on the economic conditions in the markets where our buyers are tracking from. Nationally, the list to sale period has dropped by 11% from last year. This is significant in that it shows that our prospective buyers are being freed up more quickly, allowing them to take advantage of cheap money and giving them greater buying power and confidence to capitalize on our modestly growing market
Sarasota’s record closings in April were certainly in part attributable to our peak season traffic, however given the strong April pending sales and the number of buyers in the market in our “shoulder” season – both local and from out of the area – I see the Sarasota Real Estate market being able to sustain this progress in erasing several tough years, and actually begin to build in some parts of our market toward where we were before the region’s inflated condition and the economy faltered. 1st quarter 2013 single family home sales increased almost 40% from the same period in 2012. Sure, we have just come out of our peak selling season, but adding to this remarkable activity all of the other factors, I am confident growth will maintain, though not likely at the same robust pace, through the next softer selling period.
It is stunning to take a look at how far we have come from our peak of 24-months in inventory of single family homes and almost 42-months for condos, and to be grateful for the incredible correction since the worst of the Sarasota real estate market condition in late-2008. Sarasota’s inventory has fallen more than 27% since the beginning of 2013. And according to the reports that I analyze, our region has less than three months of supply right now, the lowest we have seen in 10 years. Essentially, our market has just three times the number of homes typically sold in a month, well below the six-month equilibrium suggested by experts to be a healthy market. Looking at the supply by price point, the under $500,000 market has only two months of available product, the $500,000-$1 million is sitting at just five months and the luxury inventory over $1 million is at 11-months of supply, 31% less than last month and a considerable improvement from the 26-months of supply of last year at this time. In four years, our inventory has dropped from over 9,500 available properties to only 2,700 today.
The luxury market, properties over $1 million, is a large part of my business and also that of some of my long-time peers here in Sarasota. Michael Saunders’ most recent blog post, Luxury on the Rebound, speaks aptly of this end of our region’s recovery in the higher end. With an increase of 25% in sales of luxury properties compared to last year, this end of the market that was hit so hard by the economic downturn is showing exceptionally strong signs of real progress. I know I can speak not only for myself, but also for the many great realtors in the Sarasota area that specialize in the luxury market, demand for the limited move-in ready, well-located and fairly priced properties is strong.
The Florida Association of Realtors reported inventory of 5.2 months of supply in single-family and 5.6 months in condos. This is about 40 and 30% respectively higher than Sarasota’s inventory levels. Nationally, inventory is just 13.6% below last year, further showing how strong our market is compared to much of the country.
With regard to the fear that the backlog of underwater properties would undermine our recovery, last month only a little over 20% of the sales were considered distressed, in line with the national average and a far cry from 2010, which was the peak of our distressed-sale period with more than 50% of the sales falling into that category. This is another sign of headway being made through the underwater, REO and foreclosure inventory that had been depressing prices.
With the tight supply, strong demand for move-in ready properties, banks easing loan availability for qualifying borrowers, an expected healthy shoulder and summer visitor season, and only gradual entry of new homes and condos coming into the market, prices are climbing. Median prices in the Sarasota area in the single-family segment rose 24% from the same period last year. Condo median prices are also increasing but at a much more measured pace. Though median prices are only near what they were in 2002 as opposed to the period immediately before the market collapse, the gentle rise we are seeing is helping to build a more viable and sustainable Sarasota real estate model for the future. Compare the price improvement in the Sarasota market to the total U.S. increase over last year of just 6.7% quarter-over-quarter compared to 2012, and we can see how strong our hyper-local results are.
Much news has been published about planned large developments, but between reported labor-pool and material shortages, and simply the time it takes to build, it will still be some time before the new-home market can catch up with demand. However, new home starts in the first quarter of 2013 were 70.5% higher than last year, a staggering statistic!
As we enter our more moderate selling season I have a strong feeling, based on my client activity and what I hear from my partners in the industry, that we have entered a time of growth in the Sarasota Real Estate Market, and have moved out of the tenuous time of simply healing. Though it is impossible to project global and national economic, political and other unexpected and uncontrollable effects on our hyper-local economy and especially our real estate market, the tailwinds that we are experiencing have been consistent enough for long enough to have strengthened our region to be able to power through a mild bump should one occur. Positive real estate and economic trends in the markets that feed new buyers into our region, along with the projected continuation of record-low mortgage rates, rising demand and prices, all have created extraordinary conditions for buying or selling properties.
The following statistical data is provided through the Sarasota Association of Realtors by agents within our local board. The table summarizes what happened in each price segment. The Sold, Pending Sale and Listed columns are sales and new listings for the month of the report, and the Pending Total and Listed Total are the current totals of each. YTD (Year to Date).