Market Conditions Remain Solid
As the summer selling season gives way to our traditionally busier months ahead, recognizing The Sarasota Real Estate Market’s steadiness of demand, sales pace, price appreciation and inventory growth experienced in recent months is important. Having a solid foundation as we head into “season” highlights the strength of our region’s market. Despite general global economic uncertainty and political unknowns ahead, all indications from analysts and experts, the area is expected to continue on a steady path.
The bulk of activity in The Sarasota Real Estate Market occurs in the mid-market tier – between $150,000 – 400,000. Driven by young professionals and newly forming families, retirees and investors this category represents the highest volume of sales transactions and new inventory. The luxury category – above $1 million – saw steady activity throughout the summer months, and recent replenishment of quality inventory bodes well for the coming season.
A recent report from Luxury Portfolio, a Michael Saunders & Co. global luxury affiliate, revealed that more than one-half of the world’s ultra-wealthy population – more than 60,000 individuals – reside in N. America, Sarasota’s major feeder market. And it was also noted that more than 45% of this of category of potential buyers of Sarasota’s luxury listings are planning to buy within the next three years, and a large percentage claim that they have been “Sidelining” cash until the U.S. presidential election is over. To read more about their findings, see their most recent report titled The New Rules of Luxury Living.
One dilemma that my luxury home buyers are discovering, is having the patience needed to find the right property. Luxury buyers behave differently from mid-market. They typically demand first and foremost special locations, along with privacy, highest quality construction and specific style and floor plans. Most are seeking properties in near-ready condition to move into, and with cash ready to pull the trigger as soon as they find what they’re looking for, they want “it” now. Waiting for new construction or hassling with extensive renovations is not the prevailing preference. I tell my luxury buyers that if they find something they like, they had better move quickly, because if they don’t someone else will!
On the other hand, selling luxury homeowners waiting for their own transition, have resisted making much needed renovations to their listings, so a number of the available properties will not meet luxury buyer demand – unless sellers are prepared to price their properties “right.” While inventory at the luxury level has reached a more normalized quantity, quality is not necessarily where it needs to be to create robust activity.
The rate of new single-family homes and condos entering the marketplace is reported to be nearly 30% ahead of last year’s pace on a national level. While I do not have accurate numbers to confirm local activity, based on general information released by developers and builders, the Sarasota Real Estate Market is exceeding this pace. Homebuilder confidence remains strong and regional activity is expected to continue to be impressive through the year ahead, helping to relieve some of the pent-up demand for new construction.
September 2016 Sarasota Real Estate Market Data:
Sales:
Non-distressed activity once again recorded sales gains last month, rising 6.5%. When all sales are figured in, total sales in the Sarasota Real Estate Market decreased slightly from the previous month, which is typical of September, and declined 1% compared to September 2015. As noted in my comments above, I do believe that market demand continues to be strong, and at all price points I am confident that with the solid market conditions we have, the season ahead looks promising.
- The monthly average of single family sales this year is 672 vs. 730 in 2015, and for condos the monthly sales are 309 vs. 331 last year through September.
- Single-family sales last month fell 3% from prior year, and 5% from last month.
- Condominium sales grew 3.3% over prior year and were just slightly ahead of last month.
- U.S. real estate sales saw condominium transactions fall 3.2%, and single-family homes grow 4.1% compared to prior year.
- Florida’s housing transactions saw single-family home sales fall by .5% compared to last year, and condo sales dipped 3.9%.
- All cash sales in Sarasota continue to be strong with 35% of single-family and 57% of condos sales closed without a mortgage.
- The national percentage of all cash sales is near 20%, and Florida’s all cash transactions are reported to be 28%.
- Distressed sales in the Sarasota Real Estate Market August were only 6% of total sales, compared to 11% last year.
- Distressed sales fell to a new low of only 4% on a national scale, and represent more than 9% of all sales in Florida.
Prices:
The growth of median prices in the Sarasota Real Estate Market continues, however as many will recall from my previous reports, the region is still on a recovery path and not yet at pre-recession levels. The pace is larger than many other cities around the country, but we also had one of largest declines in prices in the nation. The added bonus of the price gains here is that it has created considerable improvement in home equity, allowing those who have wanted to purchase something new greater freedom to do so. Market experts recently reported that home equity wealth has doubled over the last five years, largely because of the recovery of home prices. Seeing the Sarasota Real Estate pricing move back in line with what would be “normal” year-over-year patterns after more than a decade of less stable growth spurts and dips breeds even more confidence in the solid ground our region is on.
- In September, Sarasota’s single-family homes were sold at a median price of $249,000 vs. $223,500 a year ago, an increase of over 11%. The year to date monthly median average is $248,086 vs. $217,355 last year.
- Condominium median sale price at $192,450 was consistent with a year ago.
- Florida median price for a single-family home is reported to be up 11.3% over last year, to $222,500, and condo median prices increased 6.7% to $160,000, just about equal to August prices.
- Nationally, median prices for single-family grew 5.6% to $235,700 and condos traded for 6.1% more than last year, now $222,100.
- The average sale price for houses in Sarasota was $340,938 in September vs. $341,376 a year ago. The year to date average price sold is $350,554 vs. $317,806 last year.
- Sarasota’s condominiums sold for an average price of $275,757 vs. $319,365 a year ago, a 14% decrease and a significant decrease from the August average price of $330,379. The year to date average price sold is $329,933 vs. $285,772 last year.
- Sarasota properties sold at 95% of the list price.
- The national median price for new home sales is reported to be $313,500.
Inventory:
The majority of inventory growth is taking place in the mid-tier price points in the Sarasota Real Estate Market. As mentioned, we are also seeing improvement in the number of properties on the market in the luxury price points, but as previously stated the luxury buyers are considerably more precise in what they are seeking and less likely to “settle” for something that doesn’t meet their criteria. There is so much data available to consumers and real estate professionals that sellers must be ever-more careful in pricing properties competitively if they truly desire to sell their property. While it is still a seller’s market, as we inch towards market equilibrium, pricing becomes all important.
- Total available inventory in the Sarasota Real Estate Market has increased by 303 properties or 8% since the beginning of this year.
- For single-family homes inventory has only grown by 97 properties since the beginning of the year and by 20% from a year ago.
- Condominium inventory has grown by 206 properties or 16% since the beginning of the year and by 39% from a year ago.
- The Realtor Association of Sarasota-Manatee reports that there are 5 months of supply of condos and 4.2 months of single-family homes in inventory, still shy of a balanced market, which is defined by a 6-month supply of inventory.
- Sarasota is averaging 1,283 new listings per month this year, about the same monthly average as 2015 and currently shows a total available inventory of 4,501 properties for sale. Average number of properties sold this year is 981 per month vs. 1,011 monthly in 2015.
- Florida housing inventory is reported to have 4.2 months of single-family supply – 4.2% fewer than last year at this time, and 5.8 months on condos listed, 9% more than last year.
- National inventory is reported to be 4.5 months of supply of all housing types, a dip of more than 6% in supply of available properties for sale.
With the recent indication that interest rates may be rising in the New Year, some are wary of how that will affect the Sarasota Real Estate Market. As well, other macro-economic and political forces are bound to have some influence on buyers and sellers, our region’s proven stability and soundness may not insulate us entirely from an event of some significance, but I continue to be very confident that demand for our region will remain strong. With the market moving closer to a balanced one between sellers and buyers, prices will continue their ascent and new construction will remain constant.
The Mortgage Bankers Association president and CEO was quoted as saying at their recent annual conference, “A home is more than the American Dream. It is the heart of every community and housing comprises 18% of the gross domestic product, a steady source of hundreds of thousands of jobs, and it is critical to the success of every single American.” This clearly rings true for Sarasota, where one of our most important economic drivers is the housing market.
Sarasota Real Estate Market’s steady decline of distressed homes and along with that the opportunistic investors taking advantage of those properties, the large population of cash buyers ready to take action, steady median price growth, a stable sales volume environment, increasing existing homes coming to market and growing new home inventory are all important factors creating the region’s solid foundation.
As I look ahead to our peak season, I not only look forward to assisting my valued buying and selling clients meet their expectations, but with season comes even more excitement in our community. A plethora of fine exhibits, entertainment and performances by our extraordinary local and visiting artists, charitable events of every kind and for everyone supporting the amazing health and human services organizations in our area, and the arrival of our all-important tourists and seasonal residents make our winter and spring season something to truly look forward to.
