Archives June, 2008

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Major Inventory Reduction Underscores Market Recovery

The unsold inventory of homes in Sarasota County is at its lowest level since June of 2006; this according to the latest update from Trendgraphix. And while this level has yet to approach the six month supply considered healthy, the inventory has almost been cut in half since reaching a high of 33.5 months of available inventory in January 2008. By May, thanks to a steady increase in monthly sales, that number shrank by a considerable margin considerably to 17.2 months of available inventory.

A decline in inventory is significant to the anatomy of a market turnaround. Global Insight, one of the most highly-respected forecasting companies in the world, said in one of its most recent industry forecasts that “A housing market will not hit bottom until its inventory level starts to come down.” So we have definitely taken a giant step in the right direction with improved sales contributing to a drastic erosion in inventory.

Newcomers to Florida might also want to consider another important fact before choosing where to live: Global Insight now lists Sarasota-Manatee as one of the eight Florida markets (out of a total of 20) that are now considered undervalued. After being overvalued by as much as 40.4 % in the 1st Quarter of 2006, Sarasota-Manatee is now listed as being undervalued by -4.8% for the 1st Quarter of 2008. Interestingly enough six of the eight undervalued Florida markets are on the West Coast, while only two are on the East Coast, where sellers’ reluctance to lower prices has stymied the pace of their correction. The other 12 major real estate markets in Florida are still considered overvalued. Miami leads the pack with a 27% overvaluation.

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Looking Down From Where We Used To Look Up From

 

A friend of ours, headed home last Saturday aboard a flight bound for Sarasota, noticed several different languages being spoken in the boarding area before she left Atlanta. “It was then,” she said, “as I was literally surrounded by a plane full of foreign travelers that I realized just how much our area attracts visitors from around the world. No sooner had we landed and were making our way through the terminal than I caught a glimpse of Saturday’s front-page headline. I was obviously delighted to read the news and, I must admit, felt happy for my fellow travelers. If they’re here to buy a home, they now know their timing is as close to impeccable as it gets.”

The headline that screamed boldly to them from the concourse, “Local Real Estate Market Perks Up” not only proves that confident buyers from all over are stepping-up wherever they detect great value, but also demonstrates in the most convincing of ways that all real estate is local in nature and not always reflective of national trends. For while year-over-year sales of existing homes dropped 1 percent nationwide in April—and nine percent statewide in Florida—three markets along the Gulf Coast, Sarasota-Manatee included, decidedly bucked both trends by posting solid, even impressive gains.

In Sarasota-Manatee, year-over-year sales were up five percent; and in Port Charlotte/Punta Gorda/North Port up six percent. If that wasn’t enough good news for the Gulf Coast, in Sarasota-Manatee rising sales are being accompanied by a continued strong showing in pending sales; suggesting no end in sight to the market’s rebound. Though lower than a year ago, the media price for a home in Sarasota-Bradenton was 12 percent higher in April than it was in March.

Sarasota-Manatee, along with its Gulf Coast neighbors (and Ft. Pierce-Port St. Lucie), were the only Florida markets to post rising sales in April. With 743 single family homes sold, Sarasota-Manatee continued to best markets many times larger. In Miami, for example, sales dropped 47 percent with only 281 homes sold. Ft. Lauderdale sold only 518 homes.

Median prices in Sarasota-Manatee are still lower than they were a year ago—by 11 percent to be exact. But the year-over-year comparisons mark nine consecutive months in which median prices for Sarasota Manatee have stabilized in a range between $240,000 and $270,000.

In Sarasota, home sales for April 2008 stood at 567—the highest level in 10 months—and approximately 72 percent higher than sales in January, 2008. At the same time, April’s inventory of single family homes, now at 9,830, was also paring down—compared to 10,443 in April 2007. Buyers are making offers and sellers accepting them on homes with prices reminiscent of the pre-boom years.

The April 2008 report continued to reflect strength in pending sales, which stood at 765, the highest level in the past year. In April 2007, pending sales were only 609, but have been edging upward since December 2007, when there were only 374 reported. Pending sales are strongly indicative of closings to come.

Ours was among one of the first markets where prices shot up wildly, driven by heavy speculation during the boom. Ours has also been among the first markets in Florida to correct back to pre-boom prices, which is undoubtedly why ours is one of only four statewide markets to show rising sales and a healthy level of pendings.

In hindsight, we’ve seen the bottom and have undoubtedly been there. That conclusion even the newspaper reached. And while we may hover above the bottom for as long as it takes to chip away at our excess inventory, we are at least looking down at where we use to look up from.



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