Real Estate Market Shows Broad Signs of Sustainable Rebound
The March real estate market reports have been released and, it is no surprise that sales, median price and pending sales all grew yet again. The Sarasota area was a buzz of activity, mostly driven by our treasured tourists, with many here hunting for a new home, condo or land to develop for a future move. Transactions from investors seeking some good bargains in the distressed market also contributed to the market’s improvement. There is no doubt that we have enjoyed a super spring!
Sarasota sales for March rose yet again, adding another nearly 7% on top of a 24% increase in February and we still have another full month of peak season ahead of us! If we remain at the same pace we have been experiencing for the last few months, it is likely this selling season will set records. Our first-quarter 2013 Sarasota real estate market transactions are more than 11% higher than last year.
Inventory once again shows our major market weakness in its drop of more than 18% from last year, with single-family falling 9% and condominium inventory dropping 13%. Last months’ data showed that available listings in Sarasota have decreased 11% from January 1, 2013 and 21% from the same time last year. Facing considerably less than six months of supply now and likely through the end of the year, our continued gains in sales could be tempered, though the lack of supply will help us to continue to grow prices.
Last month Sarasota median sales price exceeded last year by almost 19%, an extremely powerful signal of a recovering market. Single family home median price is now hitting $210,000 and condo prices have reached a median of $182,000. Based on sales in March, my research shows that our region has just over 3.5 months of supply right now, the lowest we have seen in 10 years. A more finite look at the various price points reveals that in the under $500,000 market inventory is just 2.7 months, in the mid-market segment of $500,000-$1 million the supply is at 6.5 months, and at the luxury level above $1 million available inventory is sitting at 16 months, a far cry from the 26 months in that segment last year. In four years, inventory has dropped from over 9,500 available properties to only 3,250 today. Tight supply and prices still considered “affordable” are stoking demand and helping to nudge prices higher. Though still a far cry from the peak market pricing in 2005 and 2006, we are moving up at a measured pace that bodes well for a healthier market revival.
The Florida Association of Realtors reported last week that this is the 14th month in a row that median prices have been up year-over-year. Nationally, February median prices rose 11.6% over last year with a 12-month consecutive climb and the strongest since November 2005. Despite the tight supply, national sales bested last year by more than 10%, the 20th successive month of increased sales.
Giving us continued confidence that our Spring 2013 selling season will finish strong, pending sales were extremely strong at month-end. The Sarasota Association of Realtors claims that pending sales last month were the highest in the past seven years and possibly the highest in the region’s history. A stunning increase of 31% year-over-year for single-family properties under contract but not yet closed in the month of March is a convincing statistic to confirm a healthy season. Statewide, last month’s pending sales saw an improvement of 28% from prior year.
On the national front, recent news of revised forecasts being released by the market experts and economists was good news. Bank of America has moved its expectations boldly from its original prediction of an increase of home prices expected this year to be 4.7% over last year to a new forecast of an 8% rise in prices. A reduced population of underwater home owners is helping, along with continued low mortgage rates and a positive outlook from the construction industry are all contributing factors in the revised outlook.
Zillow surveyed more than 100 leading economists, and though the average expectations from this large group weren’t quite as extraordinary as BofA’s, the results showed that these market experts believe that 2013 will see a price increase of an average of 4.6%, and over the next five years a 22% rise. Zillow’s chief economist is quoted as saying, “The panel is quite bullish on home prices…expectations are consistent with continued strong home value growth fueled by tighter-than-normal inventory of for-sale homes and robust demand attributable to high affordability and a stronger general economy.”
Home builder confidence is exceptionally strong and their increasing activity is responding to new home buyer pent-up demand. Unfortunately, material shortages and unavailability of skilled labor are causing challenges in the pace of completions. Some reports indicate that the time to finish homes is being extended by as much as 20% while builders wait for lumber and specialty laborers. The New York Times reported last week that it has not been since the 1980’s when we were recovering from a double-dip recession that housing starts have risen so dramatically year-over-year. National new home permits rose almost 34% and new home starts were up just under 47% compared to last year. In Sarasota total permits issued in March 2013 were more than 96% higher than last year, with the value of the new construction showing nearly 40% higher than a year ago. This progress in new building gives hope to easing the real estate industry’s inventory strain, as well as helping to heal our regional employment and retail industries.
Overall, the housing market is consistently showing further signs of strength, whether we look at our hyper-local market or nationally. With continued increases in sales, prices, pending sales, and new home starts, we will be seeing a narrowing of time on the market for new listings. Given the strong projections from the economic experts, now is an excellent time to add your property to the listing books. I would be delighted to help you to decide what is best for your property, both from a listing timing and price setting strategy. Give me a call if you are considering a sale of one of your properties or in the market to buy an investment property or a new home, and I will be happy to offer my best advice for your individual situation. I am confident that our progressive momentum will continue and, whether you are in the market to buy or sell, this is a uniquely advantageous time to be in the real estate market.
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).
SARASOTA MARKET REVIEW MARCH 2013