The housing market in Southwest Florida has successfully finished rebooting itself. In fully refreshing its fundamentals, it has given back as much as 40% of the exaggerated price appreciation that occurred at the peak of the housing bubble.
The number of homes for sale throughout Sarasota and Manatee Counties is currently at its lowest level in seven years, which has sparked competition among buyers that has led to 12 straight months of year-over-year median price increases. Meanwhile, the Federal Reserve did its part by lowering interest rates to historic, fire-sale levels—and has kept them there for quite some time. So while the pundits split hairs trying to decide whether real estate markets everywhere have truly hit bottom—which clearly happened in Southwest Florida at least a year ago—the cost of borrowing to buy a home has never been cheaper.
As an industry insider told the radio show Marketplace last week during an on-air discussion of the resurgent housing market: “Money is not going to get any cheaper. It’s tough to say when home prices are going to bottom in any particular market. But we know that mortgage rates have hit bottom. Before you buy a house, you have to buy the money to buy the house; and money will never be cheaper. These are historic lows and that’s really what’s driving most of the demand.”
Regardless of whether they arrive fortified with cash—or meet today’s more stringent lending standards—a crush of buyers has succeeded at reducing Southwest Florida’s inventory of available properties to a 4.4-month supply. (Source: Trendgraphix) In other words, if no new properties were listed for sale after today, our market would run out of properties to sell in just over four months. This is more than 25% lower than the six-month supply considered normal in a healthy, balanced market.
These facts have opened the door wide for builders to begin building again, which has already translated into sharp increases in new jobs related to housing and construction. We see this reflected in the improving employment picture throughout Southwest Florida, whose year-over-year job growth has suddenly surpassed all other Florida cities. The region’s jobless rate dropped nearly half a percentage point in December alone—to 7.8 percent.
By comparison, Florida’s jobless rate dipped slightly to 8 percent last month. Moreover, job growth is a lagging indicator, a fact that implies that both jobless rates may be even lower than current statistics suggest.
The housing and job markets in Southwest Florida are inextricably linked. Improvement in one forces improvement in the other. Builders in Sarasota and Manatee Counties started construction on 2,478 homes in 2012, a 30 percent increase over 2011. (Source: Sarasota Herald-Tribune) Each new home started, says an analysis by the National Association of Home Builders, generates as many as three new jobs. The incomes generated by these jobs empower new households to form; which, of course, leads to more demand for housing. And so on.
With both the housing and job markets back on a much firmer footing, the driving wheels of our economy have regained their traction and positioned our new market to more evenly serve the real estate goals of both buyers and sellers. Thus, for the first time in 10 years it is both a good time to buy and sell.