Seldom does a day go by that a client, neighbor or friend doesn’t ask us how the housing market is doing. We are, after all, the ones who should know.
In framing our response we are always careful to explain that no two housing markets perform exactly alike; and that we can only speak with fluency about ours. That said, there are indeed common economic fundamentals that tend to drive all housing markets. Chief among them is population growth; which, of course, creates new demand for housing.
Between mid-2014 and mid-2015, the Sarasota metro area—consisting of Sarasota and Manatee Counties—was listed among America’s 20 fastest-growing urban areas (# 11 to be exact), based on U.S. Census data. Emily Le Coz, reporting the story for the Sarasota Herald-Tribune, writes that an estimated 20,123 people—or 55 newcomers each day—moved into our metro area during that 12-month period. Put differently, this is enough new residents to create another city the size of Venice.
With the Sarasota-Manatee metro frequently called-out in the media as being one of the best places in the U.S. to retire, thousands of active retirees are currently rushing to embrace the plethora of cultural and leisure activities for which our region has become world famous.
But just as many younger newcomers are being drawn to the region for the employment opportunities that recently earned the Sarasota-Manatee market the #1 spot on the list of “Best Florida Cities for Finding a Job,” released by the online financial site, WalletHub. The metro area was also just named one of the best places in the country to start a business, by the financial news network CNBC.
A Return to Healthy Levels
The intense level of housing demand touched-off by these two major groups of incoming buyers has led to a chronic shortage of properties for sale, which has been heightened by the fact that minimal new housing was built in the region during the Great Recession. But builders have finally recaptured their stride, with new housing starts in the region now being clocked at their fastest pace in nearly 10 years.
What does all this mean for buyers and sellers as we approach the final months of 2016 and begin looking toward next year?
During the first half of 2016, the number of sales backed away from the record levels of the past few years. Though homes are still selling briskly—with average days on market holding firm at 70—this moderated pace of buying is allowing local housing inventories to replenish to healthier levels. Currently, our market has a four-month supply of properties, compared with just a three-month supply a year ago. With six-months considered normal and balanced, the needle is definitely moving in the right direction.
Likewise, pending sales have retreated from the record levels of the past few years, but still remain healthy. And while it is too soon to suggest that median prices have moderated away from the sharp monthly spikes that typify a market starved for inventory, they have backed-down by 5% from their May high as inventories continue to rise. Median prices are now trending exactly where they were in July, 2004—before prices rose to unsustainable highs during the boom, then became grossly undervalued during the subsequent downturn.
For the first time in over a decade, the Sarasota-Manatee market is trending at prices that are truly reflective of genuine supply and demand. Buyers remain plentiful, and are being given more choices to consider. Still, they must show solid financial and employment credentials before being approved for a mortgage.
The Florida Department of Economic Opportunity currently projects that the Sunshine State will enjoy statewide job growth of 12.7% between now and 2023. By comparison, the Sarasota-Manatee region is projected to enjoy a 17.1% rate of job growth by 2023.
Our region’s longstanding appeal to retirees combined with this favorable long-term job outlook strongly suggests that demand for new and existing properties will continue unabated so long as the economy stays strong and consumer confidence remains high.