Real Estate Matters

With all of the distressing news regarding our economy there was some encouraging news from the Sarasota Association of Realtors and Florida Association of Realtors. Pending sales in January 2009 rose by 18 percent to 683 and were over the 500 level for the 13 month in a row. Additionally, pending sales last month far exceeded January 2008 when only 516 pending sales were reported. That’s a 32 percent increase.

Pending sales reflect agreed to contracts by buyers and sellers. Theses numbers demonstrate a steady, strong pattern, indicating buyers are becoming more active in the Sarasota market as the traditional season gets into full swing.

These are certainly historic times for our nation’s economy, and we must be realistic and understand that higher unemployment and the recession impacts everyone. But we must also understand that even during downturns, opportunities exist for savvy buyers. The Sarasota market offers a remarkable number of high quality properties, and the lower prices have made this area a goldmine of opportunity.

Overall closed sales in the Sarasota-Bradenton market experienced only a modest 4% increase in January 2009 over January 2008, according to FAR, but that was expected, especially during a four-year election cycle, when real estate activity often sees a lull prior to a new administration taking office.

The recent signing of the $787 billion American Recovery and Reinvestment Act, plus the Obama administration’s enactment of the $75 billion Housing Support and Foreclosure Prevention program should help improve the real estate markets even more in the months ahead. We are clearly seeing a focus by this administration on the root of the economic problems – the real estate downturn. There have been several initiatives adopted which include suggestions by the National Association of Realtors, and we are hopeful these programs will help us back on the road to recovery.

Another encouraging market tracker is the absorption rate of properties on the market, which continues to track lower than last year at this time for both single family homes and condominiums. Absorption rate is the number of months it would take to sell the entire remaining listed inventory in a particular category, based upon the sales for that particular month.

For January 2009, the absorption rate for single family homes stood at 25.3 months, compared to 39.0 months in January 2008. For condominiums, the absorption rate was at 38.4 months in January 2009, substantially lower than the 52.0 months reported in January 2008.

Pending sales in the Sarasota real estate market once again rose in February 2009, reaching 782 - the highest level since April 2006.  According to statistics from the Mid-Florida Regional MLS for members of the Sarasota Association of Realtors, 611 single family homes and 171 condominiums were reported as pending sales in February, almost 100 more than the 683 pending sales reported in January 2009 and 19 percent higher than the 654 pending sales reported in February 2008.

Another encouraging development is that pending sales have now exceeded the 500 level for the 14th consecutive month, and looks we for increased sales for the next two or three months, when many of these pendings will become closed sales.  Pending sales reflect contracts executed by buyers and sellers.  The report continues to reflect a steady, strong pattern, and indicates buyers are more active in the Sarasota market even in the face of difficult economic times. 

We are encouraged by this statistic, and the word of mouth reports indicating an uptick in showings and offers.  Buyers are becoming even more aware of the many opportunities in the Sarasota market and are making offers and executing contracts.  Also, local Realtors are continuing to educate the public on our market, and this is an excellent chance to purchase a great home at a very attractive price, with interest rates at historic lows.

Overall closed sales in February 2009 stood at 354, compared to 319 in January, for a 10 percent increase.  The figure was lower than February 2008, when 418 properties changed hands.  The breakdown was 260 single family homes sold and 94 condominiums sold.

Another encouraging development is the recently enacted first-time homebuyers' tax credit of $8,000, which should help spur sales to higher levels.  Those who meet eligibility requirements and purchase a home this year prior to December 1st are eligible for a tax credit of $8,000, and unlike the 2008 tax credit, does not have to be repaid.  This credit with historically low interest rates should help encourage more home sales.

Particularly for the first time homebuyer trying to purchase in the Sarasota market, this is a great time to buy.  Affordable prices, low interest rates, plus the tax credit, all make this the best time to buy in decades.

The median sale price for single family homes declined by a modest 5.3 percent in February 09 to $142,000, and condominiums declined by 10 percent to $198,000.  These statistics appear to indicate the growing number of short sales and foreclosure sales in the market, which has dramatically impacted the median sales price.

Another important market tracker, the absorption rate of properties on the market, continues to decrease for both single family homes and condominiums.   Absorption rate is the number of months is will take to sell the entire remaining listed inventory, based on the sales for that particular month. 

For February 2009, the absorption rate for single family homes stood at 24.1 months, compared to 25.3 months in January 2009, and compared to 29.6 months in February 2008.  For condominiums, the absorption rate was 28.5 months, compared to 38.4 months in January 2009, and much lower than the 44 months reported in February 2008.