Marci Rossell speaking at the All Company Meeting
A few days ago,
Marci Rossell—the former chief economist for CNBC—delivered an upbeat, long-term assessment of the U.S. economy to the annual meeting of
Michael Saunders & Company. Rossell is calling 2015 the “Year of Normalization” on three important fronts:
- Labor markets have stabilized and wages are beginning to rise as competition to hire and retain good workers heats up. Because jobs are key to home ownership, the good news for the housing market is that the nation’s unemployment rate has fallen to 5.5%—a level considered full-employment by leading economists. (Locally, Sarasota and Manatee Counties’ rates are 5.0% and 5.1% respectively according to the U.S. Bureau of Labor Statistics)
- Gas prices have been on a breathtaking downward trajectory now that the U.S. controls vast supplies of its own domestically-produced oil. Savings at the pump should boost the discretionary income of every U.S. household by an average of $1,500 per year.
- U.S. monetary policy will begin to take carefully-calculated steps toward normalcy later this year. With interest rates expected to be dialed-up very slowly—as has been forecast for some time—markets should take the increase in stride. In fact, rising interest rates when also applied to their deposits may actually encourage Americans to continue their newfound penchant for saving even as they enjoy more spending power.
2015 is also shaping up as a year of normalization for the property markets of Sarasota and Manatee Counties. Up to now, record levels of buyer demand have led to record low supplies of existing homes which—in true textbook fashion—have led to higher median home prices. That said, buyers can take comfort in knowing that May’s median home prices—though up 17% in Sarasota County and 13% in Manatee compared with a year ago—in no way resemble the levels at which they topped-out in late 2005. Then, the median price was as much as 40% higher. Plus, rising prices mean equity is surging back into our homes, restoring their value; and empowering many homeowners to sell and pursue new housing goals. It’s not that sellers haven’t seized on this moment of rising equity to do just that. Over the past 15 months the Sarasota-Manatee market has taken an average of 2,190
new listings per month, higher even than the previous 15 months; and more or less consistent with the monthly level of the last five years. It’s just that inventories of existing homes have not kept pace with rising demand given the region’s remarkable economic comeback, its return to full employment; and its explosive new population growth. On top of this, the region’s tourism agencies have been extraordinarily successful at working with community and business leaders to create 1,001 new reasons why buyers would want to live nowhere else in Florida but here.
Just Listed in Sarasota
Another trend ignited by the property shortage is the demand for more
new homes and condominiums. Although it took time for builders and developers to recapture their stride, new communities are springing up throughout the region, creating a multitude of new choices for buyers frustrated by low inventory. Ironically, our construction renaissance has been both a cause of the region’s blazing economic comeback—and one of its effects. For even as new homes and condominiums help alleviate the region’s property shortage it also creates new housing demand from the very people involved in their construction and servicing. For such record levels of home buying to occur, the underlying local economy must be vigorous, its job market strong and stable; and buyers must be imbued with confidence and buoyed by optimistic long-term expectations. If you were unable to buy when prices were well below their true market value—or indeed didn’t sell when they were well above their true market value—we are now at a place in our market’s history that is filled with sensible opportunities for both buyers and sellers to accomplish their property goals.
