Heralded nationally as the “Year of the Buyer” for both the general and luxury markets, the Gulf Coast real estate market entered 2019 with mixed results but picked up momentum as the first quarter drew to a close. As seen throughout the second half of 2018, a healthy pace of inventory creation carried throughout the entire quarter with buyers coming off the fence aggressively in March – perhaps hedging their bets to see what the remainder of listing season would offer before fully committing to a purchase. In this quarter’s market report we look at what a Buyer’s Market entails for both buyers and sellers and how both can remain competitive in this landscape.
Drayton Saunders, President of Michael Saunders & Company, discusses this and other notable factors seen between January and March; in addition to where we stand in Q2 and what to expect for the remainder of the year.
The Full General Market Report is Available Below
The Full Luxury Market Report is Available Below
- Moving into a Buyer’s Market for the remainder of 2019
- Stable interest rates and slowed price appreciation encourage entry-level homeownership
- Single-family home sales lead while condominium sales lag
- SALT (State-and-Local-Tax) pushing luxury buyers to state tax-free locations
The Year of The Buyer
A buyer’s market indicates that buyers have greater control over the price point. This is usually determined by months of inventory available and the market’s corresponding demand (shown with pending sales). In the general market, Q1 saw an average of 6 months of inventory. For perspective, more than 5 months of inventory equals a buyers market and the last time Sarasota, Manatee and Charlotte County (collectively) saw similar levels was 2012 (according to third-party data provider TrendGraphix). Since then, our region has fluctuated from a Seller’s Market to a Neutral Market with demand (pending sales) showing its typical seasonality with slight appreciation during peak season each year. Looking at the graph below, you can see this stairstep-like appreciation for both inventory and demand. Now in 2019, healthy new construction starts from previous years (which have since slowed) have allowed inventory to slightly outpace overall demand and nudge the market to favor the buyer.
What Do Buyers and Sellers Need to Know?
Buyers – While a Buyer’s Market may give you more leverage in a negotiation, the interest in living along the Gulf Coast is high and stable interest rates coupled with balancing home prices are making the investment more attractive to first-time buyers. In working with your local real estate agent, be sure to take advantage of homes that meet your needs and wants. The allure of something better coming along will be strong, but another buyer won’t be far away if you pass on a home.
Sellers – As Drayton mentions in the market report, keep in mind these 3 key factors when listing and marketing your home.
- Price – Hiring a professional familiar in your local market to assist in the selling of your home is important. Real estate is hyper-local and having someone that eats, sleeps and breathes your neighborhood’s market data and amenities will allow you to set a competitive price that meets the market. Rarely in a Buyer’s Market will the market meet the price.
- Condition – How a home is maintained can make all the difference. Apart from making a good first impression during showings, homes that have been well-cared-for throughout the life of ownership are more attractive to buyers from an investment standpoint because it means less capital will need to go toward their own maintenance.
- Competition – In addition to resales, pay attention to the new construction in and around your neighborhood. These homes represent “new” in every sense of the word and reflect the latest trends. In addition to determining your list price, you may also be able to incorporate new design trends that appeal to the buyer that wants new but doesn’t want to wait for construction.
No matter what real estate goals you have this season, we always recommend reaching out to one of our local experts to help you get on the right track.
Stable Interest Rates Making Homeownership More Attractive
Though real estate may be hyperlocal, interest rates are most certainly national and impact buyers whether you live in Poughkeepsie or Port Charlotte. Benchmark rates for 30-year and15-year fixed mortgages and 5/1 ARMs have been continuing to decline in response to trade negotiations and the Federal Reserve’s efforts to stabilize the inflation rate. With rental rates hikes in areas of the Gulf Coast higher than the national average of 1.5% and home values slowing in appreciation, many prospective buyers will likely try to lock in a low rate while they can.
Single-Family Homes Lead, While Condominiums Lag
In a press release from the Realtor Association of Sarasota and Manatee (RASM), March statistics pointed toward a rise in single-family sales and decline in the condominium market. RASM President Amy Worth commented:
“The condo market in Sarasota was exceptionally strong last year. It would be very unusual for that trend to continue for an extended period of time. Single-family homes continue to become more balanced, spending more days on the market while closed and pending sales increase. This could be a sign of more activity from sellers and buyers entering the market.
SALT (State-and-Local-Tax) Pushes Luxury Buyers to Low/No State-Tax Locations
The first quarter of 2019 in the Gulf Coast luxury market showed signs of improvement after a frustrating third and fourth quarter of 2018. With external factors such as fluctuating interest rates and red tide, many buyers and sellers went into hibernation over the holidays. Positive signs of growth in February and March encouraged a more balanced market, showing higher inventory levels (10.9% up) and pending sales rising at a sharper appreciation rate month-over-month.
Other Florida markets, such as Miami Beach, however, experienced a dramatic uptick in sales (161% up) that has been attributed to the 2017 federal tax overhaul that limits the ability to deduct state and local tax. 2018 was the first tax season where this was truly felt and it has spurred many wealthy business owners to explore moving executive operations to states without a state tax.
As of now, we consider this a trend to watch on the Gulf Coast, as several benchmark luxury sales have already put 2019 on a course to outpace the $3 million+ sales of 2018. Thus far, 30 sales have closed in the new year as compared to 38 in all of 2018. Among this echelon, Michael Saunders & Company holds an impressive 42% market share (based on number of transactions).
We’ll continue to bring additional insights throughout the year. Don’t forget to comment below and on the market report video with the content you want to see in our next market report update.