Have We Hit Bottom?
There’s no shortage of pundits offering opinions about the current real estate malaise including last Friday’s presentation from Jack McCabe.
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“The U.S. housing crash continues. It’s a terrible time to buy.”
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Home values will stabilize again, but it will be a rocky ride until they do — especially for home sellers. If you are thinking about selling, try to ride it out.”
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“With the value of the U.S. dollar low and real estate prices dropping, it isn’t hard to imagine foreigners taking bigger positions in properties here as part of their overall portfolios. At the first blush of renewed energy, the real estate market will bounce back.”
Only a lucky soul with a crystal ball can confidently predict the near-term future of the residential real estate market. As I don’t have one, I’ll deal with the facts of the local Sarasota and Manatee market.
The Downside
Real estate is driven by supply and demand. As of January 2008, the inventory for Sarasota and Manatee was 14,000 properties – a number that has remained relatively unchanged for the past six months.
But this number is at an all-time high. In 2003, by contrast, inventory was about 5,000 homes.
The downside is painfully obvious: inventory is dramatically up since the heady days of a few years ago.
The Upside
Buyers have not shied away from the housing market. The number of homes sold since 1998 has remained fairly constant – 650 to 850 units per month – with the exception of a few banner months during the real estate boom in 2005.
Here’s another important fact: there are few new projects under development in Sarasota and Manatee Counties. So no new additional pressures will be put on sellers.
Another important criterion in evaluating the real estate market is comparing list and closing prices. This gives true insight into the health of the market and can help buyers determine where they should be making offers that have a possibility to meeting acceptance.
Our research shows that homes going for $1 million+ are selling for 89% of list price but there are dramatic swings and still situations of full price multiple offers and therefore buyers and agents must do their homework before automatically assuming that a property is over priced.
How I See It As long as absorption (purchases) remains fairly consistent, the Sarasota and Manatee markets will slowly rebalance themselves. And I believe absorption will remain constant because this is a desirable part of the country.
With a beautiful climate, world-class culture and arts, excellent schools, and a modern infrastructure, Sarasota and Manatee Counties will weather the downturn better than many other parts of the nation and buyers should take notice of the unprecedented number of choices and motivated and realistic home owners and developers.
Chad,
I personal like hearing real facts and not fiction where it comes to the current real estate market. It is a liberating experience to be able to go in and sit down with a seller with this information, and while it may not always be what they want to hear, it is the truth. I think this can only help sellers make informed decisions about their valuable assets. Please keep the REAL INFORMATION coming!
Chad,
It is never easy being a pioneer. People are creatures of habit and often resitant to change, therefore anything that challenges “business as usual” is met with much skeptisism and negativity. Your articulation of the current market facts are just that, FACTS. Business as usual in our curent market will not work. Negative people talk about the problems. Pioneers view problems as challenges and provide alternative thoughts. Therein lies the difference. Keep up the good work and continue on the path as a local real estate pioneer. You will be thanked by employees, clients and competitors in the future.