Is the real estate market emitting mixed signals? Or is the picture being blurred by conflicting accounts of its renewed strength? Probably a little bit of each. Sales Activity over Six Months As real estate markets re-stabilize, it is not uncommon for upward spikes in monthly sales to be followed by a month or two of pared-down activity. Such mixed results inevitably spur nervous hand-wringing among market watchers, even though it is virtually impossible to spot a developing trend over such short periods of time. For this reason it is wiser to examine at least six consecutive months of sales activity to assess where we’ve been; as well as six months (or more) of local economic indicators to predict where we’re going. Between January and June, residential property sales throughout Southwest Florida were up 0.44% over 2013; and were 11.3% higher than the first six months of 2012. It is worth mentioning, however, that a flood of pent-up demand made 2013 the region’s most active year ever in terms of total properties sold—and thus a tough act to follow in any year. A Rising Median Home Price Such record high demand has strained housing supplies and caused home prices to climb in markets across the U.S. Still, buyers with affordability concerns can take comfort from the May 2014 Home Price Index Report from Core Logic. According to the study, while May’s median home price in the Sarasota-Manatee region rose by 11% over last May—compared with the overall U.S. rate of 8.8%—it is still 34.3% lower than in September 2006, when home prices throughout Florida peaked. Plus, a moderation in these price increases is widely forecast over the next year as more properties hit the market; which is expected to keep the housing recovery on track. The market for new residential construction is also experiencing a major rebound throughout the U.S. As an example, building permits in Sarasota County for the first six months of 2014 were up by 14% compared with 2013; and by 69% compared with the same six months of 2012. Improvements in the Region’s Labor Market Such dramatic improvements in our local housing market is partially attributed to corresponding improvements in the region’s labor market; as people simply don’t purchase big-ticket items without the confidence inherent in having a secure job. Manatee and Sarasota Counties have each seen their unemployment rates trending lower since the beginning of 2010, when it was hovering at around 12.8% in both counties. Two years ago it was 8.5 and 8.7% respectively; and as of the most recent reading—taken in May—it was 5.7% in both counties. With hiring at its highest level in many years, those percentages are certain to go lower still. Investment Portfolios The recovery of investment portfolios has also been a major contributing factor to rising home sales across our region—particularly for properties in higher price ranges. Since its recessionary bottom in March of 2009, the closely-watched S&P 500 has nearly tripled from 676.53 to 1,977.10 (as of July 14th). Half of that restored growth has taken place in just the past two years. Meanwhile, the Dow Jones Industrial Average has risen above 17,000 for the first time, nearly doubling its recessionary low of 8,829; and the NASDAQ is at its highest level since 2000. All this has placed vast sums of discretionary income back into play, which helps explain why two-thirds of the property transactions facilitated by agents of Michael Saunders & Company have involved all cash. What Brings People Here Local tourism, which has long functioned as an important font of buyers for our region, has also rocketed off the charts in recent years. Now in addition to our legendary beaches and arts venues, tourists are flocking to Southwest Florida to attend major international sporting events. And when the Mall at University Town Center celebrates its grand opening in October, Sarasota-Manatee is expected to become a major destination for retail tourism as well. (More on the region’s explosive growth in retail in our next column.) Taken together, all of this data strongly suggests that real estate—like all of our region’s vital economic sectors—has a lengthy period of prosperity ahead.Parsing the Market
- By Michael Saunders
- Posted
Is the real estate market emitting mixed signals? Or is the picture being blurred by conflicting accounts of its renewed strength? Probably a little bit of each. Sales Activity over Six Months As real estate markets re-stabilize, it is not uncommon for upward spikes in monthly sales to be followed by a month or two of pared-down activity. Such mixed results inevitably spur nervous hand-wringing among market watchers, even though it is virtually impossible to spot a developing trend over such short periods of time. For this reason it is wiser to examine at least six consecutive months of sales activity to assess where we’ve been; as well as six months (or more) of local economic indicators to predict where we’re going. Between January and June, residential property sales throughout Southwest Florida were up 0.44% over 2013; and were 11.3% higher than the first six months of 2012. It is worth mentioning, however, that a flood of pent-up demand made 2013 the region’s most active year ever in terms of total properties sold—and thus a tough act to follow in any year. A Rising Median Home Price Such record high demand has strained housing supplies and caused home prices to climb in markets across the U.S. Still, buyers with affordability concerns can take comfort from the May 2014 Home Price Index Report from Core Logic. According to the study, while May’s median home price in the Sarasota-Manatee region rose by 11% over last May—compared with the overall U.S. rate of 8.8%—it is still 34.3% lower than in September 2006, when home prices throughout Florida peaked. Plus, a moderation in these price increases is widely forecast over the next year as more properties hit the market; which is expected to keep the housing recovery on track. The market for new residential construction is also experiencing a major rebound throughout the U.S. As an example, building permits in Sarasota County for the first six months of 2014 were up by 14% compared with 2013; and by 69% compared with the same six months of 2012. Improvements in the Region’s Labor Market Such dramatic improvements in our local housing market is partially attributed to corresponding improvements in the region’s labor market; as people simply don’t purchase big-ticket items without the confidence inherent in having a secure job. Manatee and Sarasota Counties have each seen their unemployment rates trending lower since the beginning of 2010, when it was hovering at around 12.8% in both counties. Two years ago it was 8.5 and 8.7% respectively; and as of the most recent reading—taken in May—it was 5.7% in both counties. With hiring at its highest level in many years, those percentages are certain to go lower still. Investment Portfolios The recovery of investment portfolios has also been a major contributing factor to rising home sales across our region—particularly for properties in higher price ranges. Since its recessionary bottom in March of 2009, the closely-watched S&P 500 has nearly tripled from 676.53 to 1,977.10 (as of July 14th). Half of that restored growth has taken place in just the past two years. Meanwhile, the Dow Jones Industrial Average has risen above 17,000 for the first time, nearly doubling its recessionary low of 8,829; and the NASDAQ is at its highest level since 2000. All this has placed vast sums of discretionary income back into play, which helps explain why two-thirds of the property transactions facilitated by agents of Michael Saunders & Company have involved all cash. What Brings People Here Local tourism, which has long functioned as an important font of buyers for our region, has also rocketed off the charts in recent years. Now in addition to our legendary beaches and arts venues, tourists are flocking to Southwest Florida to attend major international sporting events. And when the Mall at University Town Center celebrates its grand opening in October, Sarasota-Manatee is expected to become a major destination for retail tourism as well. (More on the region’s explosive growth in retail in our next column.) Taken together, all of this data strongly suggests that real estate—like all of our region’s vital economic sectors—has a lengthy period of prosperity ahead.
