For those that follow Sarasota Real Estate Market activity in the media, it’s not new news to you that the pace of sales has clearly retracted through most of 2016. However, conversely, keeping up with the brisk tempo of the last two record-setting years might be cause for some concern, given the still limited growth in inventory. Homebuilder confidence once again rose this month, according to the National Association of Homebuilders, which is great news as it is the new construction that has had the greatest impact on the market this year.
As mentioned in my last month’s Moulton Sarasota Real Estate Report, new home sales are not recorded with the Association of Realtors as all other data is, so it is difficult to have an accurate count of just how many new homes are being completed and sold. Last week John Hielscher of the Herald Tribune reported that new home starts in the Sarasota Real Estate Market have grown 43.6% over the prior year. Industry experts estimate that new home availability is about 4.5-months of supply, nearly the same as our existing home reserve.
While market reports indicate that total transactions in the Sarasota Real Estate Market fell over 22% last month, when adding the increase in new home construction and sales, and eliminating distressed transactions form the calculations, I do not believe that the moderating pace of sales is quite as dramatic as the number appears.
Within months, literally thousands of new condominiums, single-family homes and rental homes will be completed in our region, and looking at the Sarasota Real Estate Market conditions, I see a healthy environment and most certainly a sustainable one.
Sales
As mentioned, Sarasota Real Estate Market transaction fell more than 22% in July. But if you remove the substantial decline in the distressed market, the “traditional” sales fell at a much less alarming level of 15.5%. Indeed, the number is still worthy of a raised eyebrow, however, as I have said, I feel that new home/condo inventory is growing at a healthy pace now and is keeping real estate, one of our area’s most important economic drivers and employment sources, on an upward track.
When taking the sales activity and slicing it by price tier, the largest decline – about 26% – was in the under $200,000 category. At the luxury level where most of my activity takes place (above $1 million), sales decreased about 18%. Year-to-date, all sales in Sarasota’s Real Estate Market have fallen less than 8%.
- Sarasota is averaging monthly sales in 2016 of $301.4 million vs. $277.4 million in 2015. July saw $311.1 million in transactions, 14% less than July 2015.
- The monthly average of single family sales this year is 581 vs. 613 in 2015 and for condos the monthly sales are 281 vs. 297 last year through July.
- Single-family sales last month were down 22% from prior year, and down 14% from June 2016.
- Condominium sales were down 25% from last year in July and about 28% less than June.
- S. real estate sales decreased 10.9% in July.
- Florida’s housing transactions saw single-family home sales fall 8% compared to last year and condo sales were down 11.5%.
- All cash sales in Sarasota continue to be strong with 34% of single-family and 59% of condos sales closed without a mortgage.
- On a national scale, all cash sales were 21% of total sales.
- Distressed sales were only 6.2% of total sales, compared to 12% last year.
Note: Some analysts have suggested that because July had five weekends and only 20 business days during which closings would be scheduled, the unusual calendar event may have contributed to the more significant drop in sales compared to other months of 2016.
Prices
Once again, the Sarasota Real Estate Market showed impressive price growth. Though we have fallen a bit from the heady 20+% year-over-year increases of last year, again this moderation is a sign of health and market stability.
- In July, Sarasota’s single-family homes were sold at a median price of $242,500 vs. $219,500 a year ago, an increase of nearly 9.5%. The year to date monthly median average was $212,536 vs. $182,200 last year.
- Condominium median sale price grew to $205,000, an increase of 8% over July 2015.
- Florida median price for a single-family home is reported to be up 11.6% over last year, to $223,000, and condo median prices increased 6.8% to $160,000.
- Nationally, median prices for all homes rose 5.3%.
- The average sale price for houses in Sarasota was $335,617 in July vs. $308,356 a year ago, a 8.8% increase.
- Sarasota’s condominiums sold for an average price of $325,238 vs. $275,700 a year ago, an 18% increase.
- Sarasota homes sold at 95% of the list price.
This week, leading real estate news and data resource, KeepingCurrentMatters, prepared a chart for the years 2000-2016 that overlays actual home price increases (in tan) on one that shows an historically based average of 3.6% annual increase (dark blue). Despite some commentators concern that prices are escalating at too rapid a pace – or even that we may be entering a housing bubble, this chart offers a very interesting picture asserting that without the wild price swings over the last decade, our home prices might be even higher.
Inventory
The rising inventory of existing homes and condominiums for sale has been steady these last several months – and we needed it! Buyer interest has remained strong all through the summer and we will need this increased selection of properties as the selling season ramps up in the fall.
- Total available inventory in the Sarasota Real Estate Market has increased by 404 properties or 10% since the beginning of this year.
- For single-family homes inventory has grown 7% and condos 18% over the past 12 months.
- The Realtor Association of Sarasota-Manatee Total reports that there are just 5.1 months of supply of condos and 4.2 months of single-family homes in inventory, well shy of a balanced market, which is defined by a 6-month supply of inventory, indicating the Sarasota Real Estate Market is still considered a “seller’s market.”
- Sarasota is averaging 1,176 new listings per month this year and currently shows a total available inventory of 4,301 properties for sale.
While national, state and regional data all showed a softer month of sales in July, it is important to remember than a single month does not indicate a long-term trend. There are many influencers on the number of closings each month and any single one can swing activity quickly, one way or the other. An example is my note earlier about the number of days available in the month of July to transact closings, another is when the school year starts creating a “need” for families to complete moves by a certain date, and yet another is how long an appraisal might take and whether it might be disputed and cause closings to be postposed, or even further negotiation on a sale price. In addition, research has shown that the Baby Boomer generation is staying in their homes longer than in years past, and instead there has been a surge in home improvement spending. Is this trend beginning to affect property sales?
The Sarasota Real Estate Market is presently stabilized with new homes and condo activity robust to help in keeping pace with demand. The region continues to be ranked one of the best places to live, work and play, and early indications for the fall selling season look promising. A healthy local economy, steady demand and “seller’s market” inventory levels are considered by market experts to be signs of a stable real estate market. 2016 may not beat last year’s sales and price appreciation records, but I believe the area needed moderation to ensure sustainability.
Echoing my view of the market’s health, just today, CoreLogic economist Sam Khater called the housing market “an oasis of stability.” He says that the moderation in housing prices vs a market with volatility and more dramatic fluctuations indicates weakened sustainability. In today’s steady market he proclaims that, “a stable home price environment is a very good sign for the housing market and will help anchor the economy if it encounters rough patches in the future.”
With fresh inventory entering the market, maybe it’s time for those buyers who haven’t yet started the search to take advantage of the larger number of choices before our peak selling season starts. At the same time, I would recommend anyone considering selling so that they can purchase something else not to wait – prices will continue to rise modestly, but if you’re waiting for some large increase before listing your home, that is unlikely. Rather you may want to view these great new properties that are being listed, because they might just be what you’re hoping for in a new home!
