The Moulton Sarasota Real Estate Report – May 2013
Last week’s release of May real estate market data showed a continued healthy growth trend with little appearing to be in the way of a Sizzling Summer for the real estate market in Sarasota. The last of the statistics revealed each month is usually the number of pending sales, those are sales with contracts but not expected to close for a month or two. Our region’s pending contracts set yet another new level hardly imaginable just a year or so ago. Nationally the number of contracts signed in May rose more than 12% over last year – the 25th consecutive month of growth – and locally our pending properties increased about 7% year-over-year, reflecting expected moderate “shoulder season” sales. The continued strong pace of properties under contract as we enter our traditionally softer “summer season” indicate that our record-setting sales pace should endure, leading me to say that we will experience a “Sizzling Summer for Sarasota Real Estate!”
Other statistics that the experts and analysts are citing as signals of a sustainable advancing market are our total sales for the month of May, which were almost 20% higher than last year in Sarasota – an eight-year record – and up about 13% nationally; regionally single-family home median price increased just under 19% reaching the highest level since August 2008, and U.S. median price rose a little over 15%, still more than 20% below the 2006 peak; and the decline in inventory in our region of more than 27% since the end of 2012, with only three months of supply for single-family homes and just 3.9 months of supply for condos. Zillow reported last week that across the country, the greatest drop in inventory has moved into the luxury level with an almost 16% decline.
The media reports of fearful buyers and sellers as a result of word of mortgage rate increases, I believe are somewhat amplified from reality. The slight increase in rates did in fact occur, however rates are still at incredibly low levels compared to the height of our real estate boom and there are no expectations of sizable or alarming rate increases expected for the year. A small creep in rates is to be expected as unemployment, manufacturing and consumer confidence climbs.
Investors in the Sarasota Real Estate Market continue to present fodder for the media. Large REITs purchasing blocks of homes and land for investment and rental have contributed to a reduction in overall inventory, especially at the low to mid-price range. Additionally, this activity has helped to weed out the high percentage of bank-owned and distressed properties in our market. In fact, distressed inventory is now 45% less than it was at the end of 2010, with just 23% of sales in May falling in this category.
One of the most significant needs we have in our region is new inventory. While U.S. inventory seems to be inching up, Sarasota is not yet seeing enough to meet our demand. My research shows that our region has just over 2.5 months of supply right now, the lowest in a decade and a stunning 72% less than four years ago. Fortunately, announcements by homebuilders and luxury condominium developers recently gives rise to confidence that the dearth of product my peers and I have to work with right now will begin to be relieved through the next 12-24 months. Restocking our inventory will signal a less volatile market and slow the rate of median price escalation so that sustainability remains certain. With 46% more permits pulled in Sarasota County than last May and the value of the construction being planned up more than 90%, our market’s future looks strong.
In the meantime, for those who have been waiting for the right time to list their property, I cannot say with any more conviction that if your property is in good condition, well-located and priced right, your list to sale period will be surprisingly swift. Though it does appear to be a seller’s market as a result of demand and inventory, those properties that are being entered into MLS at inflated prices will continue to remain unsold for extended periods. Buyers are eager to purchase, but they are not yet willing to accede to over-valued properties. For home sellers who believe that the strong pace of price gains will continue, a report from Zillow chief economist suggests they may be in for a surprise. The data they review indicates that as inventory improves, home prices will moderate. An economist with Capital Economics went so far as to say that he expects price inflation to end 2013 at 8% and drop to 4% in 2014. This moderating is actually not a negative event because if rates continued to increase at a pace like last month’s local 19%, homes would quickly become overvalued again. It is my sense that if home prices moderate their climb, this is a good sign of a healthy and sustainable market.
As mentioned in previous postings of mine, I have a unique market analysis to work with you on correctly evaluating your specific property and establishing the “right-price” to sell it. With number of days from listing to contract constricting 22% from this time last year in the Sarasota area and the national trend dropping more than 40%, it is clear that the opportunity to sell your home so that you can upgrade, relocate or purchase investment property are excellent right now. If you are a buyer and think you should wait for inventory to expand or other factors that might slow this positive headway, you are risk of missing out on a terrific opportunity.
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).