Michael Saunders recently appeared on WEDU’s Suncoast Business Forum, a regular monthly business program on Tampa Bay’s PBS affiliate. The interview in its entirety may be seen here.

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Just as every ailing person must submit to the appropriate medical interventions to restore good health, so too must Florida’s overstressed real estate market. Wherever prices inflated radically during the real estate boom of 2004/2005, there must now be a meaningful correction before healthy appreciation can resume anew. That’s the sobering news facing every Florida market targeted by too many overconfident investors who bought at “high noon” during the boom.

There’s good news too. Sarasota-Bradenton is the toast of Florida, having been the first market in the state to take the painful but appropriate initiative of convincing sellers to lower prices—mainly by tempering unrealistic profit expectations born of the boom. In doing so, we have already accomplished what many Florida markets are just now realizing must be emulated. As a result, for the first quarter of 2008, Sarasota-Bradenton has enjoyed a sustained upturn in unit sales of both single-family homes and condominiums; a trend that appears to be gaining traction as today’s best opportunities become irresistible to previously uncommitted buyers.

Chart “A,” tracks monthly unit sales for the past year in Sarasota-Bradenton. Since bottoming in January ‘08—with 490 single-family units sold—there have been three successive months of solid gains. These statistics show that March sales of existing single-family homes broke the 700 barrier for the first time since July ‘07—finishing at 709. The same trend holds true for condominiums, whose unit sales bottomed in January; then started upwards again, breaking the 300 barrier in March for the first time since May ’07—finishing at 313. All of this in spite of the incessant drumbeat of doom and gloom surrounding mortgage defaults and foreclosures that has seized Wall Street and dominated coverage in the mainstream media during the same period. Clearly this increase in local sales, occurring as it has in defiance of persistently negative news regarding the broader market, speaks to a healthy resurgence of buyer confidence in our market.

In Sarasota, one of the continuing bright spots reflected by the March report was the strength in pending sales, which stood at 674—the highest level in the past year—and have been edging upwards since December 2007, when there were only 374. Pending sales represents the number of signed contracts in a month and are the leading indicator of closed sales to come. There is a direct correlation between pending sales and closed sales that are reported a month (or two) later.

Chart “B” tracks movement in the median price over the same period and its downward trend explains why unit sales are up. Median price represents the market’s midpoint; half the homes or condominiums sold for more, half for less. Having posted a 6.5% decline in the fourth quarter of 2007, followed by a 3% decline in the first quarter of 2008, buyers are now confident that today’s best-priced properties present an acceptable threshold through which to re-enter the market and make long-deferred purchases while interest rates are still low.
Although these rates are still hovering at historic lows, the general home buying public has yet to see the benefits of fresh cuts in the Fed’s prime lending rate manifested in even lower mortgage rates. Indeed, rates of late have inched upward as the supply of available money has steadily dwindled since 2004/2005. This is especially true involving jumbo mortgages—any amount over $417,000—and loans for second homes. As well, some of the nation’s largest banks have shied away completely from offering loans for condominium purchases—although Wells-Fargo, our financially solid partner in lending through MSC Mortgage—still has loans available for creditworthy condominium buyers. With new and tighter restrictions cropping-up daily, it makes sense to borrow now and take advantage of today’s excellent buying opportunities rather than risk the possibility of slightly lower prices with greater restrictions on borrowing.

With tourism in Southwest Florida still humming along at record levels and local home prices back into realistic focus, buyers have rediscovered their confidence, are finding true value in the homes they want, and are ultimately succumbing to a lifestyle second to no other in Florida. Finally they’re starting to realize that the clock has ticked past midnight for the best buyers’ market in many years.

By now, everyone has heard that activity among international buyers, cueing up to purchase properties in Southwest Florida, has heated-up considerably—especially with their buying power vastly magnified by low-interest rates, the best local prices in years, and a seriously anemic U.S. dollar. Far from being unconfirmed hearsay, this positive development for the region’s recovering real estate market is now a matter of public record. Some of the most noteworthy sales of the year have involved international buyers, many of whom initiated their property search on michaelsaunders.com while still at home in their native countries.

Almost before the ink could dry on an analysis of year-to-date visitation to michaelsaunders.com—conducted just days ago by Google Analytics—the news broke that the second largest sale in Sarasota this year involved a European couple, now residing in the U.K., who found the perfect match in a waterfront listing from the St. Armands office of Michael Saunders & Company. They loved the property so much that they persevered through months of negotiations; finally spending $6, 387,500 to realize their heart’s desire.

The closing is yet another confirmation that far from being a much-rumored phenomenon, international buyers are doing a great deal more than simply daydreaming of owning properties here. They are visiting michaelsaunders.com in amazingly high numbers, contacting us by phone and email, getting paired-up with just the right associates, and often negotiating from halfway around the world before showing up to claim their prize. At closing they often assert their newfound buying clout in cold hard Euros, Pounds Sterling, Loonies or other equally robust currencies.

Google’s report indicates that year-to-date usage of michaelsaunders.com is not only up dramatically across the board—by 52% overall, compared to the first quarter of 2007—but is frequented in ever-growing concentrations by home buyers from outside the U.S. Visitation to michaelsaunders.com from the United Kingdom, for example, was up by 81 percent for the first quarter of 2008. Is it any wonder then why so many international sales are coming together involving buyers from the U.K? It wasn’t more than a few weeks ago that a citizen of the U.K., residing in Hong Kong, saw a listing on michaelsaunders.com, fell in love with the property and immediately flew halfway around the world to secure its purchase.

This noteworthy increase in Web visitation is not only indicative of heightened interest by buyers in all 50 states, but also proves that international buyers aren’t squandering what they confidently believe is a once-in-a-lifetime window of opportunity. It’s now or never for the best opportunities in a recovering market.

From every corner of the world traffic to michaelsaunders.com is being clocked at record levels. Compared to last year, the first three months of 2008 have shown a radical increase in visitation from countries as disparate as the Czech Republic (up 783%) and Costa Rica (up 330%). In raw numbers, the greatest amount of visits totaled 10,441 from Canada (up 250%), 5,666 from the United Kingdom (up 81%), and 1,247 from Germany (up 107%). This dovetails precisely with the 2007 Profile of International Home Buyers in Florida—issued by the National Association of Realtors—which indicated that British, Canadian and German nationals constitute the largest pool of foreign buyers for properties in Southwest Florida.

From inside the U.S., the number of visits thus far in 2008 amount to an astounding 216,722; up 46% over the same period of 2007.

The fortunate by-product of all this international activity is that each new owner adds that much more zest to the region’s growing international cachet; which in turn attracts more new buyers who are likeminded in their desire to feel at home abroad.

Just as every bursting dam starts by springing a leak, the good news out of our real estate market continued to trickle forth last week. It wasn’t necessarily screaming at us from front page headlines, but the ever-increasing volume of positive activity unquestionably speaks to the return of buyer confidence.

Largest Siesta
Sale In 18 Months

Here at Michael Saunders & Company, the news that we closed the largest residential transaction on Siesta Key in 18 months was bested only by the fact that precision teamwork from within the company brought both the buyer and the seller to the closing table. Listed through our Longboat Key office, the well-priced property found its new owners through our Main Street office and sold for $5,150,000—proving yet again that savvy buyers are more than willing to quit the waiting game whenever an exceptional opportunity comes knocking.

As if to bolster that point, just down the road in the Sanderling Club another waterfront listing sold last week for $3.4 million; while on Longboat Key a condominium in En Provence sold for $3.3 million—both to buyers working through our St. Armands office.

Meticulous interoffice teamwork also paved the way for another recent sale in which the buyer, also working through our St. Armands office, purchased a home listed by our Main Street office. In what proved to be a classic case of love at first sight, the buyer—browsing the Internet from his home in Hong Kong—viewed the property on michaelsaunders.com, contacted his sales associate immediately and flew here without delay to place it under contract for $3.5 million.

Other noteworthy sales last week included a $3.3 million residence in Positano, the imposing new waterfront condominium on Longboat Key. It was the second such sale in 10 days, leaving only one Positano condominium unsold.

Tip Of The Iceberg

As impressive as these sales were, they proved to be only the tip of the iceberg in a week of banner sales across all price ranges. For the week ending Friday, April 4th, Michael Saunders & Company closed on sales volume totaling $40,990,855, or just under $8.2 million each business day. This was 73.5% higher than an average week in March; 78.6% higher than an average week in February; and 123% higher than an average week in January.

The closed properties represent the widest possible spectrum of the market—from less than $100,000 to $5.15 million. There was a $1.575 million sale in our Siesta Key office; a $1.425 million sale in our Longboat South office; a $1.3 million sale in our Bradenton office; a $1.5 million sale and a $1.1 million sale—both from our Palmer Ranch office.

From Bradenton to Venice, the middle of the market exhibited potency as well. Among many others, there was a $375,000 sale in our Bradenton office; a $425,000 sale in our Lakewood Ranch office and a $292,000 sale in our Venice office.

Neal Sells 33 Homes
In A Single Month

We were delighted to read in the Sarasota Herald-Tribune that Neal Communities sold 33 new homes in March. According to the paper, Neal got a major boost from an aggressive new pricing strategy for Key West-style homes at Forest Creek, causing more than 1,000 people to show up on the first weekend following the launch of the new strategy. The company sold twenty-four homes in Forest Creek in March, and since introducing the new pricing strategy has generated a total of 34 sales, including four in a single weekend.”

Be it old or new, condominium or single-family home, wherever exceptional opportunities exist buyers are demonstrating a renewed willingness to act swiftly. As a result, the most competitively priced homes are selling with relative speed. Clearly for confident buyers in today’s market, it’s as much about “price-price-price” as it is about “location-location-location.”

With the stock market and real estate market both reeling from the recent turmoil in the lending markets, prudent investors are doubly confused about where to park their money these days in order to safely maximize its long-term appreciation. Last week the Wall Street Journal complicated matters considerably by running an eye-opening front-page article that pulled the rug out from under the widely-held notion that blue chip stocks are generally the best investment when held for ten years or more. Entitled “Stocks Tarnished by ‘Lost Decade’” the article suggests that money invested in the stock market ten years ago is worth only marginally more today than it was back then, especially when adjusted for inflation.

Authored by E.S. Browning, the article led off with statistics that were no doubt unsettling to long-term devotees of the stock market. It read: “The Standard & Poors 500-Stock Index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday—below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen just 1.3% each year over the past 10 years, well below the historical norm, according to Morningstar Inc. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.”

Conventional wisdom in the stock market suggests that when investors purchase a broad variety of stocks and hold on to them, they generally fare better profit-wise than they would with other investments. Unfortunately, that rule hasn’t held true for stocks purchased in the late 1990s or 2000.

“Over the past nine years,” according to Browning, “the S&P 500 is the worst-performing of nine different investment vehicles tracked by Morningstar—including commodities, real estate investment trusts, gold and foreign stocks.” Big U.S. stocks were even outdistanced by lowly Treasury bonds, whose performance is typically much weaker. His overall conclusion: “Through history, lengthy stock booms have typically been followed by busts that can last a decade or more. Some economists believe that current economic troubles are severe enough that the period of stock weakness isn’t over.”

Here’s another eye-opener. In spite of all the bad things you’ve read or heard in the media about Sarasota real estate, the median home price ten years ago—in February 1998—was $112,500. Today, that price is $254,200, according to the February sales statistics released just two weeks ago by the Florida Association of Realtors. The median price represents the midpoint in the market; half the homes sold for more, half for less. This 226% median price jump between February 1998 and February 2008 includes the sizeable downward correction in the median price from its highest perch amid the wildly unsustainable real estate boom of 2004/2005/2006. Further, as Sarasota began its real estate correction sooner than most other Florida markets, statewide statistics now strongly suggest that it is emerging from it faster as well.

Unlike seeing the Standard & Poors 500-Stock Index remain disappointingly flat over the past ten years, if you’ve owned a Sarasota home for an equivalent amount of time you are looking at a substantial return on your decade-long housing investment. Even if you’ve only owned the home for five years it has appreciated to the tune of 147% since February of 2003.

For some stock market investors the past decade was marked by disappointment and lost opportunity. For Sarasota homeowners it was a decade of healthy appreciation, even factoring in the correction that has unfolded over the past couple of years. Alas, nothing is more reassuring than a comfortable nest egg, except perhaps the immeasurable pleasure of living in it.

Even though all real estate is local, the press tends to toss it all into one big bucket using oversimplified headlines that reflect the national overview. Yet people don’t buy real estate nationally; they buy it one property at a time, one market at a time. To get the real picture of what’s truly happening in your market of interest, you have to drill down and examine the statistics that apply there.

Happily, sales in Sarasota-Bradenton continue to be buoyed by sellers who have heeded the call to adjust their prices downward; leading an ever-increasing number of both American and European buyers to end the waiting game and act on properties of exceptional value. We are definitely encouraged by this response and can be very proud that we’ve taken exactly the steps that were called for in every Florida market, but took them first. Some Florida communities have yet to follow suit and their reluctance to do so is reflected in unusually anemic sales. Sarasota-Manatee, on the other hand, continues to post unit sales that outperform nearly every other statewide market large and small.

While year-over-year sales of existing single family homes netted an overall statewide decline of 25 percent in February, Sarasota-Bradenton was down only ten percent in a month that saw Jacksonville’s sales decline by 40 percent; Miami’s by 41 percent, Orlando’s by 31 percent, Tampa-St. Petersburg’s by 29 percent and Ft. Lauderdale and West Palm Beach’s by 28 percent each.

According to the latest recap—issued just this past week by the Florida Association of Realtors—Sarasota-Manatee once again outsold such mega-markets as Miami and Ft. Lauderdale, building on a solid trend that held throughout every month of 2007 and continues thus far into 2008. In fact, with 608 homes changing hands in February, Sarasota-Manatee sold more existing single-family homes than both Miami (244 sold) and Ft. Lauderdale (360 sold) put together. As well, we outsold West Palm Beach-Boca Raton by 34 percent and sold only marginally fewer homes than Jacksonville (687 sold), a market twice our size.

Further, if you isolate sales in Sarasota alone, the numbers are even more impressive. As reported by the Sarasota Association of Realtors, the month of February 2008 showed a major leap in overall property sales, according to statistics culled from the Sarasota MLS. In February, there were 423 property sales compared to only 329 in January—a one-month increase of 28 percent.

There were 294 single family homes sold in February, along with 129 condominiums. While sales were strong, the median sale price for homes and condominiums continued to fluctuate. Single-family homes actually saw a rise in the median sale price, from $265,000 in January to $285,000 in February—a seven percent increase. Condominiums, on the other hand, recorded a 24 percent decline in the median price, from $303,500 to $230,500.

Perhaps the brightest spot of all can be seen in the strength of February’s pending sales, which jumped to 654; the highest level in almost a year. Indeed, these sales have been edging steadily upwards since December of 2007, when there were only 374. Pending sales are a significant harbinger of closed sales activity to come within the next thirty to sixty days.

Inventory levels were also lower in February 2008, with 10,035 single family homes on the market compared to 10,391 last February—a reduction of 356. The inventory of condominiums dropped by 372 year-over-year; from 5,960 in February 2007 to 5,588 a year later. Not earth-shattering by any standard, but every drop in inventory is a step in the right direction.

Clearly these results indicate that confidence among buyers in our market is on a definite upswing. No one has the ability to time the market to the exact day, but anyone has the ability to make a prudent buying decision once they detect an exceptional value.

Sarasota is that most uncommon of American markets that combines a fully-realized, leisure-centric lifestyle with the daily rhythms of a small-scale, progressive metropolis. Truly it’s a rare jewel with many facets, one of the most beautiful being its enormous philanthropic heart.

Each year, through numerous public charities and not-for-profit organizations—2,228 to be exact, throughout Sarasota, Manatee and Charlotte Counties—the Southwest Florida community marshals thousands of volunteers and millions upon millions in donations to assist worthy causes, especially for the less fortunate among us. The region literally bustles all year long with activities that engage the community to pitch in wherever help is needed. No matter where your heart lies philanthropically, there’s certain to be an organization waiting to benefit from your time, talents and commitment. “Everyone can be great because anyone can serve,” Dr. Martin Luther King, Jr. once said. “You don’t have to have a college degree to serve. You only need a heart full of grace and a soul generated by love.”

Volunteering has a number of lesser-known fringe benefits beyond those accrued by the people whose lives are touched by a volunteer’s commitment. Reams of scientific documentation ascribe incredible health benefits to those who make the time to volunteer regularly. Such outer-directed activities improve self-esteem, reduce heart rate and blood pressure and increase endorphin production—while boosting the immune system, buffering the impact of daily stressors and prohibiting social isolation. Moreover, people with solid social support networks achieved through volunteer activities exhibit lower premature death rates, a lower incident of heart disease, fewer health risk factors overall, and a general increase in life expectancy.

If you are new to the community, a seasonal resident or simply wish to broaden your local horizons, volunteering expands your social networking opportunities by exposing you to like-minded people you might not otherwise meet. Through their chosen affiliations, volunteers build lifelong friendships, absorb new job and people skills and set important examples for their children and others. As well, employers are more likely to hire job applicants who display a history of commitment toward helping others. Whatever your reason for giving of yourself as a volunteer, it’s a win-win situation for everyone involved.

At Michael Saunders & Company we are proud to join in the spirit of giving back to a community that has given us so much to enjoy and be thankful for. This is evidenced every day in so many ways as our associates, staff and management donate their time, money and talents to benefit those in need of assistance—thus improving the quality of life for all of us.

Though best known for the exceptional real estate experiences they bring to every customer, one of the many things that make the people of this company so special is their deep and abiding sense of community. Today we dedicate this page to members of our own corporate family, as well as committed volunteers throughout the region, who continually give their all to make sure that “paradise” is as good as it can possibly be.

Pictured here is just a sampling of the associates at Michael Saunders & Company who distinguish themselves daily in service to such noteworthy organizations as the All-Star Children’s Foundation, Boys & Girls Clubs of Sarasota and Manatee Counties, Child Protection Center, The Community Foundation of Sarasota County, The Downtown Partnership, Girls Inc., Goodwill Industries, Habitat for Humanity, Marie Selby Gardens Botanical Gardens, Sarasota Museum of Art, The Selby Foundation, Senior Friendship Center and The Wellness Community, just to name a few.

As much as any one person can do to improve the human condition is magnified many times over when more good people like these heed the call to help others. As the saying goes: Snowflakes melt alone, but when joined together can be traffic stoppers.

The Miami/Ft. Lauderdale/West Palm Beach Metropolitan Statistical Area, with its combined population of 5,523,032, has nearly eight times more people than the Sarasota-Bradenton Metropolitan Statistical Area. Yet according to monthly sales recaps issued by the Florida Association of Realtors, Sarasota-Bradenton—with its population of 703,351—sold significantly more existing single-family homes during every month of 2007 than Miami, Ft. Lauderdale or West Palm Beach.

Is it any wonder then why real estate economist, Jack McCabe—whose Deerfield Beach headquarters lays midway between Miami and West Palm Beach—came to Sarasota, stood before an audience and had nothing but the grimmest prognostication for the state’s real estate market? More than two years into a correcting market and sellers up and down his stretch of coastline have yet to be nudged from their pricing pedestals. They cling to boom-time prices while refusing to accept the new dynamics of a buyers’ market that put sellers in Southwest Florida on the right track some time ago. We would naturally expect someone from his part of Florida to remain a wholesale pessimist.

Meanwhile, with January 2008 now in the record books, Sarasota-Bradenton continues to outsell these much larger markets, besting West Palm Beach by 33 percent, Ft. Lauderdale by 60 percent and Miami by an astounding 78 percent. Only Jacksonville, Orlando and Tampa sold more existing single-family homes in their respective markets in January than Sarasota-Bradenton. That being said, Jacksonville—with nearly twice the population—sold only marginally more homes than Sarasota-Bradenton. Orlando with nearly three times the population sold less than twice as many homes; and Tampa with four times the population sold only two and half times the number of homes sold here.

We mention these truths not to make light of the depth of the correction still being felt in other places. But clearly something of seismic proportions has happened during this latest real estate correction that keeps Sarasota-Bradenton selling at a far better pace than its much larger neighbors to the north and east. It’s something more than our growing reputation as Florida’s cultural hub; something more than the sum of our world-class beaches and recreational opportunities; something more than an upscale demographic that has attracted solid commitments from some of the most illustrious names in luxury retailing, fine dining and deluxe hotels.

More than anything else, the big “something” that has Sarasota-Bradenton consistently outselling Florida’s other major sunshine metros is the reality check that long ago persuaded sellers here to scale back on unreasonable pricing expectations fixed in their minds from a few years of wild and unsustainable appreciation. Realtors in Miami and Ft. Lauderdale are among the first to admit that sellers in their markets have yet to experience a similar epiphany when it comes to setting realistic prices. They half-jokingly ask if we can send someone down to teach them how to do it.

Obviously, Mr. McCabe can be partially forgiven for expressing such a bunker mentality. After all, he’s been reporting from one of the deepest foxholes in the state.

But wait. Could McCabe have an interest in keeping the market infected with fear and pessimism? Two years ago, Forbes Magazine offered this tidbit of information regarding his other entrepreneurial activities:

“In the aftermath of every crash come a few fearless souls, intent on making money on the misery of others. Jack McCabe, the Miami consultant, is raising a $250 million vulture fund to buy condos. He aims to pick up $1 billion of south Florida apartments on the cheap. Lenders are already offering him blocks of condos repossessed from distressed homeowners.”

Inviting an “expert” like McCabe to offer “guidance” on the real estate market in Southwest Florida is something akin to asking a fox to guard the hen house.

General George S. Patton, one of history’s greatest military leaders, once said: “The test of success is not what you do when you’re on top,” he told his troops. “Success is how high you bounce when you hit bottom.”

Today we borrow the General’s definition of success to illustrate the outstanding accomplishments of the highest achieving associates at Michael Saunders & Company for 2007. While the region’s real estate cycle was wending its way toward the bottom late last year, the professionals at Michael Saunders & Company had already sharpened their focus, adjusted their game, and with shoulders to the wheel propelled the company to $ 1.5 billion in annual sales.

Eight of these associates bounced high enough to earn the distinction of being the top-producing professionals in the market’s top-producing company. In other words, they squeezed the sweetest lemonade from the most stubborn lemon of a real estate market in recent memory. In essence they did exactly what Patton told his wartime troops to do: “Make your plans to fit the circumstances,” he advised them.

Kudos for this year’s top individual performance belong to Linda Roe Dickinson of our St. Armands office. A perennial achiever for more than three decades, Linda has been the company’s top performer for the past several years while still finding time to be active on the boards of such noteworthy institutions as the important new Sarasota Museum of Art.

Top performance as a team goes to Annette Rogers and Michael Moulton, from the Longboat Key South office. Since joining forces only five years ago, Michael and Annette have channeled impressive individual careers into a most formidable team at Michael Saunders & Company.

Five other top performers stared down the barrel of a tough year and transformed it into another milestone in their string of personal bests. They include Janis Collier, Linda Driggs and the team of Kim and Michael Ogilvie—all from the Main Street office—along with Ann Martin of the St.Armands office. Each of these individuals or teams wrapped up 2007 with well over $ 20 million in sales. Congratulations are also in order for Jennifer Schwell, also of our St. Armands office, who came within a whisper of the $ 20 million mark.

Legions of other associates turned in annual performances in the many millions of dollars. We applaud each of them for achievements that are all the more impressive for coming in such a challenging year. Their stand-out performances epitomizes the disciplined expertise that led the combined constellation of the 450-plus all-stars at Michael Saunders & Company to achieve an average of $ 4.4 million in daily sales throughout 2007. While the “pessimistas” in the media wanted everyone to believe that absolutely nothing was stirring in our market, these professionals were quietly and resolutely proving them wrong. Day after day.
Each of them demonstrated what George Patton meant in another of his more illustrious quotes. “Pressure,” he said, “makes diamonds.”

Cordially,