If you are an active buyer in today’s Sarasota real estate market, I want to raise your awareness that you need to look beyond the way most buyers think about value- i.e. financial value. I coach my clients about value in a more comprehensive way. There are three ways that I’m going to define value today: financial, intrinsic, and personal.
- Financial value. In January 2020, the median price for a property here in Sarasota was about $280,000. This is still less than when prices hit the peak 14 years ago. In fact, we’re about 15% lower than we were then. However, financial value really is very very local. It can come down to a street or neighborhood, and it’s really the value of the property and how it compares to its comparables in the neighborhood.
- Intrinsic value is two things to me. First there is brand equity. For example, there are people that will buy at the Ritz Carlton Residences because of the Ritz-Carlton brand which has a global cache. Another intrinsic value is walkability. There’s a direct correlation between a walkability score and a value for a property: the more walkable a property is to something, such as the beach or amenities such as shops and restaurants, the greater the value.
- Personal value. Honing in on the way you want to live puts into perspective your personal values- what I also call lifestyle values- and makes it easier to find the right property for you. For an example, I’ve been working with clients who want to live right in Downtown Sarasota to have walkability to everything the city offers. They also have some very specific parameters- they want to have full bayfront views AND to be able to sit on their balcony and not hear any street noise. They also would like new. With these parameters there are only a couple options that would work for them in Downtown Sarasota.
Is a “deal” really a deal?
If you are looking to purchase, I want to warn you about over focusing on financial value. Buyers become susceptible to what I call the Neiman Marcus effect. Of course, we all get excited about getting a “deal”. Periodically, Neiman Marcus will have a dramatic sale and items that were $3000-5000 may be reduced to $500-800. Financially, it is a significant savings, but if it just sits in the back of your closet still in the original plastic, that value was never there for you.
It is important to contemplate all three values when choosing a home- especially in a period of price appreciation. A poor decision now- one based on financial value and ignoring the other two- will likely cost you more in the long run if you need to make a change. The rate of appreciation is slowing, and we are not in a speculative market, so the transaction cost on the buy and sell side are not offset by appreciation if you are making a lateral move.
The Value of Sound Advice
I like to tell my clients to begin their real estate search by looking at Personal Value first. Since so much of a lifestyle choice is based on location, I always reiterate “You can change a house, but you can’t change a location.”
Finally, I want to share that that most of the desired Sarasota lifestyles are still available at a wide range of budgets.
Call me @941.587.0740 if you value having a true expert to guide you through the process.