Real Estate Matters

Overall home sales in the Sarasota real estate market exceeded 500 for the second time since June 2008, inventory levels dropped, and the median sale price for both single family and condominiums stabilized in May 2009. These statistics all point toward a normalization and moderation of the market following a more volatile period during the past two years.

Pending sales also remained at highly elevated levels, with the overall total of 929 which was very near the 981 pending sales reported in April 2009. The trend for pending sales has been upward for several months. The total of 917 was 34 percent higher than the 692 pending sales reported in May 2008. Pending sales have now exceeded the 500 level for the 17th consecutive month.

Another positive influence in our local market is that foreign buyers have noticed the lower prices. The National Association of Realtors (NAR) recently released a survey of sales to foreign born buyers’ shows that Sarasota cornered 9 percent of all sales in Florida, coming in third behind only Miami and Orlando, and ahead of larger markets like Tampa, Naples and Ft. Myers. I recently attended a global real estate congress in Madrid, Spain, where the focus was directed to the global real estate crisis, with many international practitioners agreeing that the real estate market in the United States is leveling off and should see a much stronger market beginning later in 2009.

The statistic is a strong indicator for the next two or three months of sales, when many of these pendings will become closed sales. Pending sales reflect contracts executed by buyers and sellers during the month.

We are all encouraged by the recent strength of the local real estate market, and we are hopeful that this upward trend will continue as we enter the traditionally slower summer season. We’ve had many reports of high activity at open houses, and we’re starting to see more multiple offers on homes. Of course, until we get through this period of elevated foreclosures and short sales, the median sales price will remain artificially low. But we can expect those figures to return to a more historic average, with moderate property appreciation once this inventory of distressed properties clears.

The continuation of historically low interest rates, the first-time homebuyers’ tax credit of $8,000, and the influence of government programs designed to ease the deep national recession have all been factors in the local real estate market recovery. Those who meet eligibility requirements and purchase a home this year prior to Dec. 1, 2009 are eligible for a tax credit of up to $8,000, and unlike the 2008 tax credit, this one does not have to be repaid. Across the nation, this has led to a surge in first-time buyers, and Sarasota has mirrored the national trend.

While prices have leveled off, they are still much lower than May 2008, primarily due to the higher number of short sales and foreclosures, which have pulled down the median prices from last year’s level of $274,500 for single family and $367,250 for condominiums.

The health of the Sarasota real estate market in May 2009 continues to improve for both single family homes and condominiums as inventories continue to decline. The months of home supply on the market – the number of months it would theoretically take to sell all the current properties for sale – now stands at 14.3 months for single family homes and 19.0 months for condominiums. This compares to 15.2 months for single family in April 2009 and 22.9 months in May 2008; and 19.2 months for condos in April 2009, and 24.3 months for condos in May 2008.

Any number above 6 months indicates a buyer’s market, while under 6 months is a seller’s market, and near or at 6 months would be a market in equilibrium, with an equal number of buyers and sellers.

So, real estate activity in the Sarasota Florida area continues to show signs of stabilizing and we all look forward to this trend continuing for the balance of 2009 and into 2010.

Cheers,

Bill Geller