What “normal” means, in a market as active and in-demand as ours has been in recent years, is subject to interpretation. But one could reasonably argue that home prices in the Sarasota-Manatee market are exactly where they would have been today had the region’s traditional level of annual property appreciation been its only influence over the past 15 years.
To put this into better perspective, it is worth recalling that in January 2001, the median price for a home in Sarasota County was $155,000 in what was then considered a “normal” market. Since then, it has risen as high as $362,000—at the peak of the housing boom—then dipped as low as $120,000 in the aftermath of the Great Recession. However, if you were to discard the excessive highs and lows and instead applied the region’s traditional 3 to 4% rate of annual appreciation from 2001 to the present, today’s median price would be hovering at around $250,000. Which is almost exactly where it checked in during the month of August.
Based on August home sales within the Sarasota-Manatee MLS (Multiple Listing Service), the median price currently stands at $244,000. (Source: Trendgraphix)
Like a “perfect storm,” the sheer number of buyers who have descended on our region is the happy result of numerous positive demographic and economic forces converging all at once to unleash several years of pent-up housing demand.
First came the investors—both large and small—with deep pockets and designs on our large inventory of undervalued properties. More recently came the region’s incredible economic turnaround and its relatively swift return to full employment. Suddenly, millennials could find new or better-paying jobs, needed larger quarters for their growing households; and grew weary of paying escalating rents instead of using today’s historically low interest rates to begin building wealth. Meanwhile, Baby Boomers—their homes and investment portfolios flush with recovered equity—could finally sell properties in their home markets; then proceed to retire or purchase second homes in ours.
Tourism—always a huge factor in the region’s economic mix—has also been breaking all records and creating that many more new housing prospects for our market.
Evidently buyers are comfortable enough with our market’s recent pricing trends to remain steadfast in their search. This despite the persistent shortage of properties that has handicapped our market for the better part of three years. Priced to the market, homes continue to sell with good momentum and often with multiple offers for their sellers to consider.
Still, the question on everyone’s mind is where are all the sellers during this moment of prolific buying?
Storms—even perfect ones—blow over; and this massive wave of buying is bound to moderate. In spite of our market’s encouraging job growth, economists and seasoned market watchers believe this will begin happening as soon as early next year—probably in concert with the Federal Reserve’s long-anticipated rise in interest rates.
Rising interest rates could tamp down buyer enthusiasm, especially as home prices rise. Additionally, with property values on the upswing and the number of distressed properties at an eight-year low, the investing trend has likely run its course; with investors at this point more inclined to sell. This means more options for buyers. And potentially more room for them to negotiate.
Home sales throughout the Sunshine State are already beginning to moderate, according to Florida Realtors; and nationwide they actually declined during the month of August, with rising prices credited for the slowdown.
In the meantime, the median price in the Sarasota-Manatee market has reached the point where healthy levels of annual appreciation would have taken it naturally absent the boom and bust. That means our region is as close to normal, sustainable pricing as it has been in nearly 15 years. With so many buyers resolved to succeed while interest rates are still on their side, the upcoming season is an especially opportune time to sell.