Our Markets Re-Energized

If you read this column last week you’ll recall that Shawn Tully, senior editor at Fortune Magazine/CNNMoney.com, is unambiguous in his bullishness about buying real estate in today’s undervalued market.  “Forget stocks. Don’t bet on gold,” he advises his readers. “After four years of plunging home prices, the most attractive asset class in America is housing.”

That column had no sooner been put to bed than proof came in rapid-fire succession that an amazing number of buyers in our own market share Tully’s views.   Last Thursday’s (April 21) Sarasota Herald-Tribune hit the newsstands with the headline:  Sarasota-Bradenton Home Sales Highest In 6 Years. Strong demand from investors and second-home buyers, the accompanying article said, had catapulted home sales in Sarasota and Manatee Counties to their highest levels since 2005; while simultaneously reducing inventories of available properties to their lowest levels in six years.  Moreover, buyers who were once faced with a plethora of good choices are suddenly astonished to find a growing lack of them.

The same positive trends have also taken root in Charlotte County; and would be all the more impressive across all three counties were they not being compared to this time last year—when the looming deadline for the first time home buyer tax credit brought buyers off the fence in droves.  Meanwhile, in Sarasota-Manatee, March’s median price rose 12% from February, to $154,600; but was down 6% from the previous March.  In Charlotte County it fell by 8.3%—to $89,400—from February.

By Friday there was bullish news about another segment of our local market.  That day, the headline read Area Condos Selling Like It’s 2005.   March condominium sales in Sarasota-Manatee posted a sudden and dramatic 32% gain in unit sales over February; and a 12% gain over March 2010.  In Charlotte County, there was a 32% increase over February and a 29% improvement over March 2010.

The next day, sellers of properties priced above $1 million got the headline they’ve been hoping for.  Longboat Key Mansion Fetches Cool $12.5 Million, it read. In other words, when the price is right and the seller motivated, there are buyers ready, willing and able to purchase every property in our market area, with the most expensive among them no longer an exception.   At press time, there are 80 pending sales in Sarasota County, 19 in Manatee County and 6 in Charlotte County involving properties priced above $1 million.

The number of homes that were bound to contract in March is perhaps the most encouraging news of all, as their projected closings more or less guarantee that the positive momentum will continue for at least the next few months.  March pendings in Sarasota County were up nearly 30% over February; and 23.4% over March 2010.  In Manatee County they were up 25.6% over February; and 34.2% over last March.  In Charlotte County, they were up 15.4% over February; and 24.7% over March 2010.

All these pendings have to do to maintain the pace of our re-energized market is close successfully.  And therein lies the rub.

A real estate transaction is not unlike a machine, with its many moving parts dependent on each other to keep it running smoothly.   Without proper attention a breakdown is possible at any given time.  Similarly, holding a real estate transaction together requires on-going diligence from the moment the contract is signed until the moment it closes.  Therefore, thorough, active and experienced representation is the only way to assure a successful outcome.

The shadow inventory of foreclosure properties is another cause for concern.  With absolutely no precedent to draw from, however, not even the savviest real estate experts are willing to predict what will occur if a significant amount of these properties suddenly hit the market at once.  One hopes that lenders will at least be judicious toward their own bottom lines by not allowing this to happen.  A more studied and measured release is in every property owner’s best interest.

What is known, however, is that cash-rich investors have developed such a comfort level with today’s prices that they pounce on every half-decent foreclosure the moment it reaches the market.  With the competition for the best properties growing in intensity, they should continue flying off the shelf.

 

Next week:  How to keep your transaction on track to a successful closing.

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