Sarasota Real Estate Report for June 2012.
Sarasota, FL - The first half of 2012 booked 5,539 residential sales in Sarasota County. You would have to go back to 2005 to find a better first half of the year. This also represents the third best year to date sales in the past 10 years. We saw similar numbers last year but at a much lower price point. This past April, I reported that the bottom of the real estate market in Sarasota was most likely in our rearview mirror. You’re starting to see media reporting many markets around the country are recovering. After prices came down about 50% since 2006, you knew this trend could not continue forever. The beaches are just as nice as ever, the activities are just as fun, the people are as nice as always, and we still don't have ice on our windshields in the winter.
Knowing the ups and downs of the real estate market over the past 10 years, there really is no doubt that the market has recovered or at least is in a recovery. The average sales price continues to rise, average cost per square foot has made huge gains, and the typically slower summer market remains well ahead of prior years. Yes, this is an election year and who knows what the future will bring. Buyers have been out buying regardless of the economy. My sense is things have been tight for so long people that have the ability to enjoy life are choosing to do so regardless of what happens in Washington, DC.
Residental Sales Through June by Year
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Average Sales Price is Up
The average sale price has risen from a low around the $220,000 mark at the beginning of the year to $265,000. This is due in part because there simply are very few homes in the low end of the market anymore. What is significant to note is in both of the past two years the average price capped out around $250,000.
Foreclosure Filings and Sales
Foreclosures continue to be a small part of the market. The number of initial filings still remains just shy of 400 per month. It will take a number of years for many of these cases to move through the court system. While these numbers are higher than last year there still significantly lower than the 8 to 900 per month we saw three or four years ago.
We will continue to see foreclosures trickling onto the market in all price ranges but not at levels we saw a few years ago. Banks will not want to dump a bunch of property onto the market and hurt the value of their assets.
Average Cost per Square Foot Jumps
The average cost per square foot price skyrocketed to over $180 where it had been hovering in the 120-130 range for the past couple years. My chart shows running average of the past three months to help remove the spikes. There are several factors that can contribute to the surge.
- Fewer low end properties
- A surge in sales on the high end
- A true upward push in price per square foot because of demand
We’ll obviously want to monitor this as the cost per square foot number feels more like a temporary spike. If so, it would moderate what the number is but not enough to signal any downward movement in pricing.
Total Sales Continue to Break to the Upside
Total units sold also broke out to the upside in March and continue to do so. As in past years at this time of the year, sales are beginning to retreat slightly. Typically the summer months are slower but this year’s seasonal dip does not appear to be as strong as in prior years. While many people were drawn to the market to find a foreclosure or short sale, over 70% of the sales do not involve any bank on the seller's side. So the surge in units sold is not driven by the distressed property market.
Inventory Level is Dropping
The Sarasota Association of REALTORS reported last month that inventories levels have continued to drop. I don’t track these numbers but have noticed the Sarasota inventory of homes are in the 4,000 range where they had been 6,000 or more in prior years. I’ve also noticed in several subdivisions that I work there used to be 10 or 12 homes available and now there are only one or two. Bird Key had over 60 properties for sale last year and now have less than 20.
Looking Forward
I believe as I did in April. This summer is the summer to buy. When all the snowbirds head back down in November many will want to buy homes. If our inventories hold at the current levels, the economics of supply and demand will take hold and prices will have go up. Interest rates will most likely remain low through the presidential election. The price for long-term rentals have gone up significantly which usually is a precursor to home pricing. These are all factors that contribute to my opinion that this market is headed up from here.
As always, your comments and questions welcomed. I hope to see you in Sarasota!
John Woodward
SarasotaOne Partner
Sarasota Real Estate Group
