A Promising Start to the New Year
The Sarasota Real Estate Market’s first month of 2017 did not disappoint the forecasters. With the last months of 2016 showing strong volume of new contracts signed, the healthy number of transactions in January were generally expected. Reports of improved consumer confidence at the end of 2016 helped to attract buyers, potential increases in interest rates likely also motivated would-be buyers, and expectations of continuing price appreciation moved buyers to take action.
While growth in sales across the nation has slowed slightly over the last year, it is expected that the prolonged growth cycle we have been experiencing will continue. The gradual economic gains, rather than patchy peaks and valleys has helped housing stay on an even course.
In general, consumers believe that housing is a sound investment. The Conference Board reported that consumer confidence rose in their February survey, both for current conditions and near-term (6 months), as well as for future business conditions. Though there is some concern tied to the projected interest rate increases, a recent survey of 100 economists by Pulsenomics showed that in their opinion, an impact on sales would likely not occur until rates for a 30-year fixed mortgage hit 5% or higher. And to put the rate into historical perspective, the average over the last many decades has been 8.1%.
Home builders also remain bullish, especially after new home sales clocked a 5.5% increase over January 2016. Headwinds for new construction in the year ahead such as burdensome regulations, rising material and labor costs do not appear to be swaying home builder confidence. New homes typically average about 35% more than the cost of an existing home.
Economists surveyed last month project that over the next five years, housing prices will grow a cumulative 17.3% or an average of about 3.5%, with 2017 seeing an increase of 4.4% and gradual decline each year to 2.8% growth in prices in 2021. I believe this to be a fair and sound picture of housing on a national scale, with slightly higher increases in our region.
The following are some of the key data that I assimilated from the many resources I review on a monthly basis:
The big story in the Sarasota Real Estate Market in January was the considerable increase in condominium sales over the prior year. Based on the pending contracts activity that we saw in the prior months, I was not surprised by the figures, and expect next month to also show improvement. The dollar volume of transactions in Sarasota was also impressive, with total sales improving 12.4% over prior year, all a result of the increased condo sales, where volume rose 60.4%.
- Single-family home sales in January of 474 decreased 9% when compared to January 2016, and decreased 23% compared to December.
- Florida’s single-family sales grew 5.2% year-over-year.
- U.S. sales were up 3.7%
- Total number of condominium units sold of 248 in Sarasota in January increased 15% from a year ago, and decreased by 50 sold properties from the prior month.
- Florida condo sales were 6.2% higher in January 2016 over prior year.
- Condo sales nationally grew 4.8% over January 2016.
- The 2016 monthly average of single family sales for 2016 was 653 vs. 697 in 2015, and for condos the average monthly sales were 301 vs. 314 in 2015.
- All cash sales in Sarasota continue to be strong with 41% of single-family and 62% of condos sales closed without a mortgage.
- The national average is 23% of all sales transactions.
- Distressed sales in the Sarasota Real Estate Market in January were only 5% of total sales, compared to 10% last year in January.
- National home sales are expected to increase 2.25% in 2017.
- Pending sales, homes that went under contract during January, increased 8.1% over the same month last year. Condominium pending sales also grew – 11.2%. This is an excellent indicator of sales pace in the months ahead.
Median and average prices in the Sarasota Real Estate Market continue to climb, albeit at a more measured pace than last year’s often double-digit growth month after month.
- In January, Sarasota’s single-family homes were sold at a median price of $250,000 vs. $230,500 a year ago, an increase of 8.5%.
- Florida median price for single-family homes was $220,000, a 10% increase over last year.
- The national median price for homes was $228,900, a 7.1% increase over prior year.
- The 2016 monthly median price average was $249,867 vs. $221.067 in 2015.
- Condominium median sale price was $239,900 in January vs. $218,000 in January 2016, a 10% increase.
- Median price for a Florida condo last month was $161,000, a 6.6% increase over January 2016.
- U.S. median condo price in January was $217,400, a 6.2% increase.
- The average sale price for houses in Sarasota was $352,507 in January vs. $341,644 a year ago, a 3% increase.
- The year’s monthly average price for houses sold in 2016 is $345,918 vs. $321,651 in 2015, another strong 7.5% increase.
- Sarasota’s condominiums sold for an average price in January 2017 of $439,711 vs. $314,735 a year ago. The key factor in the sharp increase was the closing of some significant new construction waterfront condominiums.
- The 2016 monthly average price for sold condominiums is $325,232 vs. $284,361 in 2015.
- Sarasota properties sold at 95% of the list price, which mirrors the rest of the U.S.
The Sarasota Real Estate Market has hovered near a balanced market for much of the last year, in stark contrast to many other markets across the country where inventory shortages have been inflating prices and creating unbalanced conditions. While our growth in inventory is concerning to some, I find it a great relief to have multiple high-quality properties to show each of my buyers.
In the low-to-mid price tiers inventory is still tight, while in the luxury level we are in a healthy position with new inventory nearly evenly replacing sales each month, establishing a nice pipeline of fresh properties coming to market. Motivated sellers are being pressured by the growing inventory and are beginning to revise prices to move their properties so that they in turn can find their next home.
- Total available inventory in the Sarasota Real Estate Market has increased by 556 from December or 12%. The largest growth occurred in the $200-400,000 price points.
- Since the beginning of last year the available inventory has increased 1,151 properties or 30%.
- For single-family homes, inventory has grown by 560 properties since the beginning of 2016.
- In the luxury tier, above $1 million, growth was 11% compared to more than 40% in the mid-priced tiers.
- Florida single-family inventory is at a 4.2 month supply and condos at a 6.4 month supply.
- Inventory on a national scale has fallen more than 7% since last year and is at just a 3.6 month supply.
- Condominium inventory has grown by 517 properties since the beginning of last year.
- The Realtor Association of Sarasota-Manatee reports that there are 5 months of single-family homes inventory and 5.9 month’s supply of condominiums. The number has been steadily increasing each month the past year.
- Sarasota County averaged 1,274 new listings per month in 2016, about the same monthly average as 2015. In January 1,665 listings came on the market.
- Currently there is available inventory of 5,048 properties for sale vs. 3,835 at the end of 2015.
- At the luxury level of greater than $1 million, inventory of single-family homes has increased 11% from prior year, and condominium inventory has grown more than 16%.
- Time from listing to sale fell about 25% during 2016, however, sales above $1 million typically take up to three times longer than properties priced in every other pricing tier.
According to a recent report in RealtyTrac, the average sale in 2016 netted a 21% gain since the homeowner purchased their property – this is the highest since 2007. With prices continuing to escalate over the next year, home equity will stay on an upward trajectory, providing the capital needed for those wanting to sell to “move-up” and others wishing to make improvements to their current residence through use of HELOC’s. HELOC activity has been on the rise for the last several years, with activity growing 21% in the last two years alone.
As we move into the Sarasota Real Estate Market’s peak selling season, all of the data and analyst forecasting lead me to believe that our first-quarter 2017 will build on the prosperous start in January. With the Administration’s focus on adjusting regulations to make home-ownership more attainable for qualified purchasers, necessary loosening of onerous regulations, modest rise in interest rates, commitment to building job opportunities and investing in infrastructure, along with encouraging investment in the U.S. from International markets, and many other economic stimuli will sustain the advancing momentum of our housing industry.
Based on my own business activity since the start of the year, especially at the luxury level where the majority of my listings and sales occur, I feel a noticeable burst of energy in the Sarasota Real Estate Market. Buyers and sellers that I have worked with over the years are both in a “get moving” temperament. Buyers who were sitting on the fence are looking feverishly for their something special. Sellers who have been tentative in either bringing their property to market or in “right-pricing” to get it sold are also in a great mind-set to move on to their next home. From my perspective, I see our peak selling season keeping us busy!
If you have interest in listing your property, please ask me for my proprietary “Comparative Market Analysis” which enables me to analyze your home or property along with recent area sales, other homes on the market, and current overall market performance for your neighborhood and price points. With this data I am able to help you to determine the current value of your home, what key factors might be most important to consider when pricing, and in what general time frame you can expect a sale based on today’s market conditions.
Conversely, if your interest is in buying, I would be pleased to work with you in establishing the areas within the Sarasota area that most interest you, develop your key purchasing criteria, share with you my knowledge of the community that will be helpful in narrowing your focus, and help you find that dream home or condominium!
It is always my pleasure to work with friends and family of my valued newsletter subscribers. Please let me know if you hear of someone seeking to buy or sell a property in our community!