Scott's Sarasota Bay Market Update

Data Library Update

All sales transactions are posted for all sales recorded through the end of January 2010.

Data Library Is Updated For All Sales Through 2009

The sales history files for single family homes and condos are all updated for transactions recorded through December 31, 2009.

Volume of Sarasota Single Family Home Sales Continues to Increase

Single family home sales for the six months ended totaled 2,761 homes (Trendgraphix: All Sarasota County for six months ended November 30, 2009). That is about 13% increase in unit sales over  the same 6 month period in 2008.

Levels of Unsold Home Inventory in Sarasota and Bradenton Remain Low

The levels of unsold single family homes in Sarasota inched up slightly at the end of November but remained more than 50% off the peak established in early 2008. Across the county, inventory is back to late 2005 levels. The same is true for Manatee County.

Unsold condominium inventory in both counties was also essentially flat with the previous month but still down nearly 40% and 55% from the early 2007 highs in Sarasota County and Manatee County, respectively. Condominium inventory for both counties is back to late 2005/early 2006 levels.

On a neighborhood –by- neighborhood basis, the some of the declines are even more severe, as the chart below shows:

	Inventory @
Area	12/1/2009	Peak	Month of inventory Peak	% Decline
SINGLE FAMILY HOMES
ZIP 34202 (mostly Lakewood Ranch)	285	1283	Mar-07	-78%
West of Trail (Mound to Bay Road)	87	184	Apr-07	-53%
Longboat Key	155	305	Mar-07	-49%
Anna Maria Island	225	449	Feb-07	-50%
CONDOMINIUMS
ZIP 34202 (mostly Lakewood Ranch)	64	447	Nov-06	-86%
ZIP 34236 (downtown Sarasota plus Lido/St. Armands)	400	706	Apr-07	-43%
Longboat Key	392	548	Feb-07	-28%
Anna Maria Island	177	433	Feb-07	-59%
West Manatee County	396	706	Mar-07	-44%
Source of data is Trendgraphics for the dates and areas indicated

If this trend continues or if inventory just holds at these levels, prices have got to start firming up. The big fear is that another round of foreclosures will rain on the parade.  What happens with foreclosures is the big wild card.

According to the Federal Reserve website, 9.8% (Q3 2009 data) of all residential mortgages are in default. That’s up from 5.3% for the same quarter in 2008. According to the Center for Responsible Lending, there were 2,400,000 foreclosures in 2009. With delinquency rate nearly twice last year’s rate, what will 2009 foreclosures be? And Florida is the undisputed leader in foreclosures. More on all of this in later posts.

Top 7 Ways Home Buyers Find Homes

Each year, the National Association of Realtors performs a study of home buying and selling habits. The NAR surveys of over 100,000 home buyers and home sellers across the country about their home buying/selling experience. The survey results are tabulated, summarized, and published each November in the NAR’s “Profile of Home Buyers and Sellers”.

 

While there are literally hundreds of survey questions summarized as part of the study, one question stands as the most informative. When it comes to marketing homes, this question is all that you need to know. Asked to home buyers, the question is:

 

How did you first learn that the home you purchased (in 2008) was on the market?

 

Here are the results:

 

My Real estate agent told me about the home    34%

I found the home on the internet     32%

I saw the “for sale” yard sign 15%

Friend, relative, neighbor or otherwise knew seller       9%

Learned of the home from the home builder     7%

Print Newspaper     3%

Other printed ad (home and land guide, etc)   1%

 

* Results total 101% due to rounding    

 

If you look at the results from the standpoint of someone trying to sell an existing home (ie not new construction being sold by a builder), then the internet accounts for over a third of the prospects. Further assume that you have exhausted your list of friends, relatives, and neighbors – now the internet accounts for 38% of all prospects. If, in addition to the previous 2 assumptions, you live in a condominium or an HOA that does not allow signs, the number jumps to 46% of all prospects.

 

The data show why having a comprehensive internet strategy is necessary to sell a home at the best price in today’s market. It is especially true of most condominiums and some HOA’s where signage is prohibited. It also shows that most of the seemingly proactive and outbound marketing (push) techniques (like print advertising, open houses, and TV) are a waste of time and money. More on these differences later and why inbound marketing works so much better (today anyway).

Case - Shiller December Release (for October Results)- Miami drops a little/Tampa takes a dive

The Case-Shiller indices were released earlier this week. The results were not good. The Tampa Index dropped from 142.57 in September to 140.27 October - a 1.6% drop in just one month. The Tampa Index has now given up all gains it made this year and is again at a post-bust low.

The Miami index faired better, showing a minor loss from 149.69 in Sepember to 149.09 in October.

The national market composite indices were essentially flat.

Manatee County Condo Pricing Disparities / Sarasota Herald Tribune Quote (part1)

On December 28^th, Michael Braga published a SHT article (http://www.heraldtribune.com/article/20091228/ARTICLE/912281016?tc=ar) on condominium sales. He was kind enough to call me for a quote. I always sound much smarter (to myself) when I’m talking with Michael than when I read my quotes.  Apparently, those that read it online felt the same way based on some of the comments posted. There’s something about seeing what you said in writing that never sounds the way you intended.    Mostly, I think, because the 30 minute conversation preceding or following the quote isn’t printed and obviously can’t be.

Originally, we had been discussing the financing of condos. Specifically about the affects of the following items on financing:

· short sales and foreclosures

·  delinquent maintenance fees

·  high percentages of tenant occupied units

· Buildings where the HOA was still under the control of the builder (there are various percentages of sales thresholds whereby the developer can and must pass control to the new owners).

We agreed that these factors had all combined to restrict financing, which contributed to the continued downward spiral of condo prices. I did say that I thought there might be some bright spots, though.

Condo prices have plunged much more so than single family home prices. When you look at the Case-Shiller indices, remember that condo prices are not included in the index. If they were, the condos on South Beach and Downtown Miami would probably cut the Dade County index another third. There is no statistical data on condo prices across Sarasota and Manatee counties (comparable to Case-Shiller) but just based unscientific observation, the average for west Bradenton has got to be 50%- 60% off the highest, pre-bust sale. That would mean that condos that sold for $250,000 during the boom are going for the $125,000 to $100,000 range.

Yet in some areas, the slide is even worse. Most of these worst performing communities are in either new construction or condo conversions (apartments or hotels that were converted to condominiums during the boom).  Generally speaking they are the projects that came on line at the top of the market and were unable to sell out before the bust.

Not only have prices fallen more in these areas, but the sale price per square foot and, in many cases, the absolute sales price has fallen below the prices of 25-30 year old condos in West Bradenton. The only reason for this is the ownership and financing situation. The older West Bradenton condos are owned mostly by stable, retired people as primary residences and vacation homes with little or no financing while much of the new construction and condo conversions were bought on speculation with heavy financing.  The original buyers in these poorly performing areas never intended to own the condo for as long as they have.   Many of these owners are now facing foreclosure and, of course, not paying any maintenance fees. Adding to the woes of these communities is the fact that many of the developers, never sold a majority of the units. Many of the HOA’s are still under the control of the developer who is probably on shaky financial footing himself.

I don’t think that anybody believes that home prices, condos in particular, are going to increase broadly until the foreclosure mess is cleaned up and inventory starts to shrink. But I do believe that this pricing disparity is a sign that as soon as the mess does get cleaned up, these currently underperforming condos will get experience a jump in price over and above the market average. There is no reason that a new, modern condo in Lakewood Ranch should sell for less than a 26 year old condo in West Bradenton (adjusted for size and amenities).

It’s not location because the single family homes in the same areas work the other way. Single family homes in Lakewood Ranch sell for huge premiums to west Bradenton (30% per s.f. on average in 2009). But the condos in Greenbrook and the Village at Townpark sell for discounts to West Bradenton condos in the 20% range. The only reason I can see is weak ownership.

And when this does get cleaned up, the age spread will give today’s laggards another advantage. If five years from now, you want a condo less than 10 years old in Manatee County, today’s trouble spots will be the only choice. The next best alternative will be a 30 year old one somewhere else in the county.

I’ll give you all of the details in a subsequent post.

Sales History Update

The sales histories will be updated through the end of 2009 by Jan 15th,2010.

Sales and Inventory Charts are Now in the Data Library

I have charted multi-year histories of sales and inventories for both Sarasota and Manatee Counties (single family homes and condominiums separately) as well as for certain popular areas of each county. All of these charts are now available in the data library to the right.

September Case-Shiller (Released in November) Numbers are Choppy

Unlike the last couple of months when nearly all markets showed improvements (gains) over the previous month, the September indices were mixed. Nine markets showed price appreciation over August while 11 showed declines. Both the 10 and 20 market national composite indices showed gains.

For Florida, the Miami market showed a gain of .5% over August while the Tampa market showed a similar decline.

There did not seem to be much of a pattern to the numbers. All of the California markets (LA, San Diego, and San Francisco) all reported gains as did Phoenix, AZ. Las Vegas, however, showed a decline. The largest gainer over the prior month was Minneapolis, up 1.8% over August and up over 15% since April.

The market reporting the largest decrease for the month was Cleveland, down 1.5% from August. However, the market is still showing appreciation from April 2009 when prices first started inching up.