There are a lot of reports about the real estate market and the direction of the overall economy, especially here in Florida where Hurricane Ian swept our shores with significant impact. Rising inflation and the highest mortgage rates in two decades have prompted a lot of headlines about recession and the next 'housing bubble.' But what's the data really showing, particularly in Sarasota?
There's no denying that the real estate market has shifted and is showing a 'healthier' supply-demand balance, in the words of a recent piece by Sarasota Magazine. That doesn't mean that the high-momentum trends of the past two years are now heading in a downward direction, though. The most recent data is telling us that pandemic-driven spikes in price are tapering, so prices are still increasing just not at the rate they had been.
What about levels of inventory and days on market? Inventory is indeed higher than it had been during the past two years... but there's still very high demand too. So while inventory is increasing, it's not increasing by enough to satisfy the sustained high level of demand in Sarasota. That means we're still in a seller's market.
Days on market are another indicator of market trends. Over the past two years, the number of days between listing and closing have dropped precipitously as buyers have reacted to the limited inventory and exhibited outright desperation to secure properties in the SRQ market. That sense of urgency is pivoting to a more normal pace, and we'll continue to see listings last longer on the market than we've been used to over the last two years especially if they are not priced strategically.
The Latest Real Estate Numbers Show a Move Toward a Healthier Market
September data for the Sarasota and Manatee housing market continues the trend of fewer sales and rising inventory alongside some closing delays caused by Hurricane Ian. After Ian made landfall at the end of September, some sales set to close before the month’s end were either pushed back to October or shelved. But, altogether, local realtors don’t expect the Category 4 storm to have lasting effects on the market.
“The broad thought is that we’re moving toward a more normal market,” says Adam Hancock, owner and founder of The Sunshine State Company. “What we’re seeing day to day is if homes are priced appropriately and the home fits the price, they’re still going fast. But we’re not correcting to 2019. Whatever that new median price is, we’ll level off, but we’re not going to go back to what it was three-plus years ago.”
Median prices for both Sarasota and Manatee counties continue to show year-over-year increases but are not as high as prices were earlier this year.
For single-family homes, the median sale price in Manatee County increased year-over-year by 20.3 percent to $517,193 and in Sarasota County, the median price increased by 22.2 percent to $497,275. The median sale price for condos in Manatee County increased by 18.2 percent to $337,000, and in Sarasota, it’s now $399,999, a 23.1 percent increase from last year, according to the Realtor Association of Sarasota and Manatee.
The feverish home grab the region saw after Covid has calmed, and, due to outside factors like higher mortgage interest rates and talk of a possible recession on the horizon, buyers aren’t as rushed.
“There’s still plenty of buyers, but people buying out of scarcity was out of whack and now there’s more of a wait-and-see attitude,” Hancock says.
The total number of closed sales across the region was 1,263 in September, a 39 percent decrease from last year.
Closed sales for single-family homes in Manatee County decreased year-over-year by 37.5 percent to 422 sales and in Sarasota County, single-family sales decreased by 45.1 percent to 458 sales. For condos, Manatee closed sales decreased by 35.9 percent to 148 sales, and Sarasota sales decreased by 29 percent to 235.
Moreover, the median time from listing date to contract date has been increasing since June. In September, the median time it took for single-family homes to go under contract was 20 days in Sarasota County and 19 days in Manatee County, compared to seven days in both counties during the same time last year.
But it’s still a seller’s market.
“Prices continue to be very strong, but inventory is still on the lower end, which means that it is still a great time to sell,” Hancock says.
The months’ supply of inventory has more than doubled from last year, but remains low. Generally, a balanced market will lie somewhere between four and six months of supply. In cases of less than four, sellers maintain an advantage.
The months’ supply in Manatee County increased to a 2.7-month supply. In Sarasota, the single-family home supply increased to a 2.1-month supply. Manatee County’s condo supply increased to 1.9 months, while Sarasota’s condo supply increased to 1.6 months.
“By the end of March of next year, it’ll tell the story,” Hancock says. “People want to buy here still, but there’s not as much incentive to move as fast. They don’t think they’ll lose out if they wait to see what happens with prices and the economy. People are waiting to see what the new baseline might look like, and will probably wait until after the holidays to make a move.”
Cash buyers still represent a large chunk of transactions, with 42 percent of single-family homes sold in cash. Last year during the same time it was 45 percent.
“Sarasota is unique in the economy due to its heavy net migration from outside and a hospitality-based market versus a working-class market,” Hancock says. “The money is often coming from elsewhere and they still think it’s advantageous here.”