Approaching Equilibrium
A moment that seemed choreographed to cause maximum confusion about whether the housing market is in recovery—or not—took place in real estate markets across Florida last week. No sooner had the National Association of REALTORS® issued its nationwide snapshot of existing home and condominium sales for the month of January than the Florida Association of REALTORS® released its own statewide recap. To say the least, the two sets of monthly statistics clashed dramatically, painting very different pictures of the market.
Poised for national sales to finish up slightly in January, economists were caught off balance by NAR’s announcement that unit sales had actually declined nationwide for the second straight month, falling to the lowest level since last June. Rightly or wrongly, the result was widely interpreted as a sign that the national housing recovery might be faltering.
Then—literally moments later—January sales for Florida were released by the Florida Association of REALTORS®. The contrast between the two sets of results could not have been sharper; proving once again the old business adage that “all real estate is local.”
Far from mimicking the sluggish national trend, Florida’s existing home sales continue to blaze a trail of sustained recovery in the price ranges below $350,000. Sales here rose impressively again in January, marking 17 straight months in which statewide sales have increased in year-over-year comparisons.
Existing single-family home sales were up 28% last month in Florida, with a total of 10,485 homes sold compared to 8,174 homes sold in January 2009. This followed on the heels of an equally robust December, in which sales were up 33% year-over-year. In addition, statewide sales of existing condominiums also rose impressively in January—by 81% versus last January; although the median price declined by 14%. In other words, buyers responded to the best priced opportunities.
In an encouraging hint that the next few months will be every bit as impressive locally as January was, the Sarasota Association of Realtors just announced a total of 1,035 pending sales in Sarasota County for the month of February. Shorter by three days, February’s pendings were still 26% higher than January’s.
At Michael Saunders & Company, the agents in our 16 full-service sales offices from Bradenton to Englewood have contributed mightily to the region’s sustained uptick in residential sales; and have consistently outperformed the market in terms of their average price per sale.
In February, our agents cranked their performances up several more notches, achieving residential pendings totaling 495 company-wide—an impressive 57% increase over January and an amazing 119% increase over last February. Moreover, the average company-wide contract price for the month of February was $361,608, an amount 34% higher than the market’s overall average of $269,222.
Its been said time and again by the experts that the first markets in would be the first markets out with respect to the order in which the nation’s housing markets would recover from one of the deepest corrections ever. That certainly seems to be the case.
Florida was one of the first states to bubble-up during the boom; and within it, Sarasota, Manatee, and Charlotte Counties were easily among the earliest and frothiest boomers. Now, just as Southwest Florida was among the first markets in the nation to feel the bubble burst, it is also among the nation’s first to forge a comeback.
Even Warren Buffet—who knows a thing or two about money and markets—seems confident that we’ll have recovered from this slump by 2011. He believes that while prices will remain well below “bubble” levels, a more normalized market will reappear by sometime next year.
So it’s not so much that the nationwide recovery is faltering, as the pundits first feared when they saw NAR’s disappointing January results. The recovery is proceeding at a good pace in markets such as ours where aggressive pricing now reflects the new realities of a buyers’ marketplace. As we’ve learned locally through lo these many months of coaxing our own recovery along, recapturing momentum in today’s market is all about price, price, price.
In a textbook example of the law of supply and demand, when too much supply meets too little demand, only the most aggressively priced properties will find their way into the “sold” column. Once news spread that sellers in Southwest Florida had turned a vastly over-priced market into one of the nation’s best values, buyers literally descended from everywhere. Now—for our market at least—the supply and demand curve is fast approaching a place of much greater balance for buyers and sellers of correctly priced properties. It’s fast approaching equilibrium.
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