Sarasota Real Estate Blog

Across the nation, new construction homes and existing home sales are strengthening and prices are continuing to rise, stoking confidence among observers of the housing market that a recovery is underway.  Nationwide, sales of existing homes jumped 10.4% compared with the same month last year.  In step with the nationwide market, Sarasota Florida area home sales, which normally drop off during the summer months, remained strong in July with 699 closings, almost 17% higher than the level in July, 2011.  The local July home sales included 523 single family homes and 176 condominium sales.

Beneath all this good news, however, lies a dilemma developing here in the Sarasota - Bradenton area.  There are simply not enough homes available here to meet the demand.  That is information you need to know if you’re still “sitting on the fence” about buying a home here in sunny Sarasota.

Home to gorgeous beaches, championship golf courses, and recognized as the center of the Florida arts and cultural amenities, Sarasota, one of the most popular cities in Florida, is leading the overall housing recovery.  For those who’d like to call Sarasota home sometime in the future, a skeptical reader might ask, “but where is all this demand for homes coming from when the overall economy still isn’t doing all that well ?”

A primary source of demand is coming from 2nd home buyers and retirees.  Even though mortgages are harder to get than at any time in the past 6 or 8 years, people in the upper income brackets can qualify for attractive-rate mortgages because they have the resources to meet the now-common 20% down payment criteria, and even more frequently,  they can and do tend to pay cash. These families can afford to buy a home wherever and whenever they wish and they’ve decided Sarasota is the place and this the time to do it. Many of them are pre-retirement age. They know they'll want a primary or 2nd residence here within the next 5 years, and they see that prices have stopped falling, inventory is diminished, and they want to buy now before prices start to rise.

Second, its coming from first time buyers.  Rents nationwide and locally are rising leading many young families to decide that it will now be cheaper to own than rent for the foreseeable future.  They also see that the decreasing number of homes on the market is beginning to drive prices up.  First time buyers who can qualify for a mortgage are recognizing that if they are going to buy, they’d better buy soon before the price of the home they want gets beyond their means.  That fear, plus the fact that 30-year mortgage rates are at historic lows, have made owning a home a more affordable and more desirable option for young families than it has been in a decade.

At the same time demand for Sarasota homes is high, the available inventory of homes on the market dropped in July to a new decade low of 3,644, about 4% below June's figure of 3,816.  In July, the number of single family homes on the Sarasota market represents a 4.5 month supply, well below the equilibrium level of a 6 month supply.  The condo market in Sarasota is under somewhat less pressure with a 7.5 month supply on hand although that number has dropped consistently in recent months. Last year at this point, there was a 10.7 month supply of condos on the market.

So, if demand is high and existing home inventories are low, why aren’t builders providing a higher supply of new construction homes to meet the demand?  They’re working on it. Not surprisingly, we’re seeing a significant uptick in new construction in the area this year. That is the most telling indication that our Sarasota area housing market is in rebound. Through May of this year, building permits pulled for new construction were up 21% over the same period last year.

What does this all mean to you?  Growing demand for homes in all price ranges coupled with a diminishing supply is causing what always happens when demand outstrips supply – prices are rising.  On attractive homes, and even on some average homes, Sarasota Realtors are now seeing multiple, competing offers  –  offers above the asking price in more and more cases.

If you are considering buying a home or condo here in Sarasota as your primary home, a second home or as a retirement home any time in the next few years, and if you can qualify for a mortgage, or don’t need a mortgage, contact an experienced Sarasota Realtor like Andree Huffine today and get started picking out your home here in Sunny Sarasota Florida.