Longboat Key
A pair of news items captured our attention last week because they provide a good perspective on the current state of the
real estate market in Sarasota and Manatee Counties. One item came to us courtesy of the region’s REALTOR® association; and the other from the
Sarasota Herald-Tribune’s “
Inside Real Estate” blog.
Record Number of Sales First, the newly-minted union of the
Sarasota Association of REALTORS® and the
Manatee Association of REALTORS®—now known as the
REALTOR® Association of Sarasota and Manatee—is reporting that 2014 enjoyed a record number of sales in Sarasota County; and near-record sales in Manatee County. To be exact, Sarasota County finished the year with a total of 11,550 closed transactions, topping its previous record of 11,482 sales—set in 2004. Similarly with 7,976 sales officially closed last year, Manatee County came within just a few transactions of topping its annual record of 8,004—set in 2013. With so many property transactions closing in a single year, comparisons are inevitably being drawn to the boom years of 2004 and 2005; with many people wondering whether our market is beginning to show signs of unsustainable property appreciation again. The answer to their concerns is no. Instead, last year’s record number of sales underscores our market’s relative affordability compared with 2004. Back then, a near equivalent number of closed sales resulted in dollar volume 35% above 2014. “While prices have recovered considerably over the past three years,” the report concludes, “they have not risen to the levels of a decade ago, when some experts predicted prices had reached unsustainable (and unaffordable) levels.”
Economic and Jobs Recovery The report also concludes that today’s record level of sales is being driven by solid market fundamentals having to do with the region’s impressive economic and jobs recovery rather than by any sort of unsustainable frothiness. These fundamentals include record low interest rates, growth in every sector of the region’s economy, unemployment at an eight year low; and lower energy costs that have given a sudden surprise boost to household incomes. Additionally, the lifestyle attributes that make Southwest Florida such a desirable place to live, work and play have received more than their share of national and international attention.
Today’s Median Sale Price In last week’s other item of note, business reporter Michael Braga—of the
Sarasota Herald-Tribune—provides an important insight into the region’s current median home price by comparing it to what it was 14 years ago at the turn of the century. He then projects it forward based on the region’s normal rate of property appreciation. His conclusion: Strip away the boom time highs of 2004-2006, and the deep recessionary lows of the last several years, and today’s median sale price is almost exactly what it would have been had the region experienced its traditional level of between 3 and 4% annual appreciation all along. In November of 2014, for example, the median price for a single-family home in the Sarasota-Bradenton market was $215,000. By comparison, Braga reports, it was $138,000 in November of 2000. Had you purchased a home at the median price of $138,000 in 2000, and increased its value by 3% each year, its median price today would be $210,099. That means the region has already surpassed the 3% annual appreciation rate and appears headed toward 4%. In advance of the region’s busy spring buying season, we think it is important for both buyers and sellers to be aware of this fact. Today’s median price is neither too low nor too high; but almost exactly in the range it should be in a normally appreciating property market.
