So, with one quarter of 2010 in the books where are we?

The good news is buyers are in the Sarasota property market, and they are also predominantly focused on distress (bank owned and short sales) and value.

What’s driving our market? Pent-up demand and rising consumer confidence amongst buyers who do have solvency and/or are gainfully employed.

Pent Up Demand in the Sarasota Property Market

Last month I attended the world’s largest real estate investment forum in France. One of my takeaways, as it relates to both the global and our local Sarasota property market, is that there is indeed pent-up demand in the residential markets.

From 2000-2002 the yearly average for housing units sold was about 8500 per year. This number provides us a context from before the boom. The prices in our market peaked in mid-2005 and have been declining for more than 4 years. From 2006 to 2008 purchases hovered around 6000 units. Many potential buyers who were solvent and looking for Sarasota Investment property have been waiting as they suspected continued depreciation. In 2009 we were back up to about 8,200 units sold, good news for Sarasota Realtors.

If a reasonable average for sales is 8,000 units per year, then the Sarasota property market needs to average at least 9000 unit sales per year for the next six years to catch up with the purchases that were put off over the past few years. There were 2,200 units sold in Q1 of 2010, so projecting forward we are paced to sell 8,800 units in 2010.

The bottom line here is that there is pent-up demand in the market, and this means there are buyers, but they are of the cautious variety. They are ready to make Sarasota property purchases, but only when they believe that they are getting a good value and trust their Sarasota Realtor.

Sarasota Real Estate Market: Getting Back on its Feet

Sarasota as a community is not doing particularly well in employment terms. The unemployment rate was 13.4% in January, and 13.1% in February. Looking at it from the other vantage point, however, there still remain 86.9% who are gainfully employed and are feeling better about their prospects of stability as across the country there is a sense that companies are making money again.

Many in this segment are willing to channel their pent-up demand into buying properties for sale in Sarasota. Another factor driving our market is the fact that we remain a much sought-after resort town, there are still many solvent buyers coming from out of town to purchase Sarasota investment property.

Lower Price Points Selling Faster in Sarasota: Buyers Look for Value

Over 91% of the sales on Sarasota property occurred under $500,000. While value can be had at all levels there is clearly more comfort at the lower price points. This is illustrated by the fact more than 2/3 of sales in Q1 2010 were under $200,000.

And finally, what about bank-owned properties and short sales? These made up more than 40% of the overall closed transactions and are one of the main areas buyers are looking to find the value they want in foreclosed homes in Sarasota.

My Conclusions after an Encouraging Start to 2010?

1. Buyers are looking for value.
2. All buyers purchase with the intent of buying low and selling high.
3. Residential real estate in Sarasota will rise ahead of employment numbers because there has, and will, continue to be strong interest from out-of-town buyers.

So after a turbulent few years, and with a huge re-adjustment in pricing, it now looks like the Sarasota real estate market is healthy and growing steadily. As NBC’s Today show highlighted, it is also the best place in the country to get value on real estate. It looks like shrewd buyers will continue to get great value on properties for sale in Sarasota, and good opportunities to buy into this fantastic community throughout Q2 2010.

Call with any real estate questions: 941.587.0740.

philanthropy
1. altruistic concern for human welfare and advancement,
2. an activity performed with the goal of promoting the well-being of fellow man.

This weekend my wife and I enjoyed our first live opera, right here in Sarasota. It was Verdi’s version of Joan of Arc. As we sat inside the beautiful, newly-renovated opera house, I reflected upon the immense amount of philanthropy that enabled us to have such an experience in this relatively small community.

The depth and breadth of activities, educational opportunities, and events our community provides is a clear differentiator from many other sub-tropical waterfront communities that can also lay claim to spectacular beaches and natural splendor.

Sarasota Community: A wealth of Opportunity

For me, what defines the Sarasota community, and what makes it so rich in resources, is the philanthropic support of its arts scene and institutions. All of us who live and visit Sarasota are the beneficiaries.

In this entertaining article, crime writer Leslie Glass, describes the recent Association of Fund Raising Professionals (AFP) dinner, where many of Sarasota’s philanthropists were honored. Despite the difficulty of the financial year $100 million was raised this year to benefit Sarasota.

She says:

“The important thing to know about the $100 million raised here is that the $100 million stays here. Nonprofit revenues actually support this city in services to children, seniors, arts organizations, and even the job market. Hundreds of people are employed by nonprofits, and the impact of the organizations is felt in every sector.”

Philanthropy in Sarasota is far-reaching, community-empowering, helps make Sarasota one of the most desirable places to live in the country, and drives the Sarasota property market.

Sarasota Real Estate Market is Enhanced by Philanthropy

At its root, philanthropy is derived from Greek and is a combination of love and mankind. I personally like the reference made by Alexander Hamilton (the face of our $10 bill) which is:

“Work being done to enhance the quality of life.”

This is another intangible factor that those who simply gauge the health of the community by the real estate market, are sometimes overlooking. Sarasota realtors know discerning individuals want to live in Sarasota because it is a wonderful community and offers great Sarasota investment property, and in turn, those individuals’ philanthropic efforts enhance everyone’s experience of living here with their generosity.

It’s a cycle that not only strengthens the community but has a knock-on positive effect on the Sarasota property market too.

Philanthropy Builds Robust Communities

At any moment in Sarasota, we have the choice of an amazing array of community activities, across a full spectrum of the arts, health, and sports scene. Just this week, Sarasota residents could take in lives shows, ballet, circus, opera, participate in free yoga on the beach, visit a folk music festival, take a salsa class, or enjoy the Myakka Canopy Walkway with its amazing views of the incredible natural beauty of this place.

Here are some of the highlights that make this waterfront enclave extraordinary:

• Opendoor Community Acupuncture
• Orange Blossom Festival
• Venice Theatre
• The Legacy Trail
• The Ringling Museum of Art
• Asolo Reperatory Theatre
• Circus Sarasota
• Sarasota Orchestra
• Sarasota Children’s Garden
• Sarasota Opera
• Sarasota Institute of Lifetime Learning

“An investment in knowledge always pays the best interest” — Benjamin Franklin

There are no two ways about it: investment in education is a winner from any angle, but it’s particularly critical to the real estate market. As one of the communities of Sarasota realtors, in my real estate business I see firsthand the value of good schools add to Sarasota investment property prices and the positive impact that has on communities as a whole.

“Grade A Schools can add about 10% to the property value of the area” — Northwestern University Study

The National Education Association (NEA) states that there is a correlation between successful students and the economic vitality of a community. I want to take that a step further by saying that great schools, which are a product of great teachers and administrators, help maintain the stability of a local real estate market.

As Sarasota realtors know, a good school system correlates almost exactly with a better-than-average real estate market, it’s simple supply and demand: areas with good schools are automatically in demand so prices go up. The recent US census illuminates this fact clearly as it shows over and over again; the areas with the highest spending on schools also have the highest property values, making education our most important Sarasota property investment.

Spending on Education Equals Better Communities

The city of Greenburgh, NY is the highest spending city in the country on its schools, and also has the highest percent of people with a bachelor’s degree or higher, some of the highest incomes in the country, and of course, very high property values.

New York State as a whole has a 70% higher spending on education than the rest of the country, and as a result, it’s able to attract top teachers and administrators, thus improving its schools and its real estate prices at the same time. As Illinois State Representative Karen Yarborough reiterates in this Chicagomag article on the link between housing and schools:

“There are two basic building blocks of healthy communities: good schools and good housing” — Sarasota People: Leading the Way in Funding their Schools

Sarasota is also a great example, as the citizens of Sarasota have passed their second referendum increasing taxation in order to pour funding into schools. The third is up for voting in 2010. This kind of commitment to our schools is exactly what creates great communities, and a good Sarasota property market.

Quality education requires broad public support: it also requires educational and financial accountability. The budget for 2009-2010 is $404,075,131 and the majority of that money is spent locally and therefore reinvested back into our local economy.

Funding Schools Increases Sarasota Property Value

“In fact, a study by Professor David Figlio at Northwestern University has found that since the introduction of the grading system for Florida schools, those with the top grade add about 10% or around $8000 to property values in the area.”

In this Bloomberg article, Marcus A. Winters, a senior fellow at the Manhattan Institute and an economist who focuses on education policy, even advises buyers to consider buying in a lower quality school district and then working to improve the schools as a way of creating value on their Sarasota investment property.

And Professor Figlio agrees: He suggests finding a school that just missed the A grade as a way of paying less for a home, but still with a decent school in its area. Then if the school improves the following year, the investment property appreciates in value as well.

Conclusions for the Sarasota Real Estate Market

Sarasota is such a wonderful place to live: with such a thriving arts scene, a good real estate market and strong community. Currently Sarasota also has several stellar schools. Pine View School, for example, ranks #1 in the state of Florida and consistently ranks amongst the top 15 in the nation. While our public school system overall scores well against others in the state, I feel that we should continue to invest to improve the quality of schools so that Sarasota is consistently on top in all areas of the county. This strategy will ensure the value of real estate and a healthy economy long term.

Fell free to call me with any real estate questions: 941.587.0740.

As Charles Dickens wrote so famously in 1859, “It was the best of times it was the worst of times”. And for all businesses and markets globally, 2009 was truly a year of mixed messages. There were some positive parts and some extremely negative ones, of course. So, after a turbulent 2009 for Sarasota realtors and the community, what lies ahead for 2010?

Who do you listen to?

Speculation is rife among Sarasota realtors, there are so many mixed messages out there you can believe anything depending on the person you last spoke to, or as I wrote in my previous article, depending on what day you watch TV.

Recently I read in the paper the recession is over. Great, I thought, life will get better tomorrow. A few days later I read unemployment is set to rise, not so good. But a few days later the news 64% of companies are going to pay a bonus this year: great again.

More than ever it’s time for self-reliance, to reach inside and rely on the information you have that is concrete, rather than reacting to the fluctuating messages around you. Here’s my personal take on the last year, and what the future holds in store:

Know your Business, know your Market, and know yourself.

I am ebullient about the future, about the prospects and possibilities. 2009 has been a really good year and I plan that 2010 will be even better this is why:

My company is built on understanding the Sarasota real estate market and the product. I’m a self-employed Sarasota realtor and this year I’m reinvesting my money in my business and the people who work for me. In times of external uncertainty, there is no greater strength to have than inner knowledge of yourself, your people, and your business.

What happened in 2009 in the Sarasota Real Estate Market?

There were 7,919 properties sold in 2009 in Sarasota County, about the same number as in 2000 and about 19.2% up on the three-year average.

I think that’s pretty healthy. What’s more important to me than the number of properties sold is that the activity level on Sarasota property is palpable. Properties for sale in Sarasota that had been on the market for months or years are beginning to sell, people are moving in, turning on lights, shopping locally, and joining communities.

The future for the Sarasota Real Estate Market

There’s a lot of mediocre housing inventory in the Sarasota listings. Those prices will continue to decline and at the same time Sarasota property valued over $1 million is selling. There is no lack of buyers for Sarasota investment property.

There are three key factors driving the Sarasota property market at the moment which are really positive:

Government money

The US government has extended the $8,000 first-time home buyer tax credit and added a second credit for repeat buyers. For many this goes a long way towards the extra costs such as insurance, appraisals, etc. that are involved in buying a home.

Value

The second factor driving consumer decisions is VALUE. Sarasota property is now often selling at prices more consistent with six years ago, which means buyers are getting great historic value.

Other properties in today’s market offer the perception of getting a lot for your money, which is another type of value. Today’s buyers are not paying a premium even for the best properties; they are, however, not buying the better properties at clearance sale pricing either.

Available Mortgage Products

There are FHA (Federal Housing Administration) programs that aim to help provide all US citizens with housing and are very healthy. We’ve seen buyers purchasing homes with as little as a 3% down payment. On a $150,000 home, a buyer may only have to come up with $4,500 cash (and they still may be eligible for one of the tax credits).

At the same time, the cost of money right now is similar to the 1940s when the government was trying to stimulate home ownership after WWII. Borrowing money at or below 5%, when you are able to buy homes at prices from many years earlier, is good value.

The future’s bright for Sarasota Investment property

For those who are going through troubling financial times, the road ahead may be longer than they want and for those doing okay Sarasota investment property offers great value and security on their money.

Sarasota is a beautiful place, with a great environment, marine life, and arts scene. It’s a wonderful place to live and raise kids. I am very positive on Sarasota as a community and therefore my outlook on the real estate market is partly sunny with fewer clouds in the not so distant future.
Call with any real estate questions: 941.587.0740.

Lee Mirman from Investments In Sarasota will address radio audiences on the state of the Sarasota housing market. His discussion will answer the question “What happened in Sarasota Real Estate in 2009?” with actual data on real estate sales and market values relative to prior years. He will also present the three key factors that will positively influence local real estate sales in 2010.

Lee Mirman is a real estate broker with thirty years of experience in the Sarasota market. Lee holds a Duke MBA in finance and was recognized as a “Hero of Small Business” by US Congress in 2009. His experience as a venture capitalist, and with JP Morgan Chase bank combined with his lifelong relationship with Sarasota make him uniquely placed to offer expert advice on the Sarasota market.

Lee will appear as a guest host on “Gail Shane & Friends” on WTMY 1280am from 4 to 5 pm. The show will air on Sunday, December 20, 2009.

Investments In Sarasota’s mission is to provide real estate sales and investment services with superior analysis and insights of local trends. The company was awarded Sarasota Magazine’s Five Star Real Estate Award: Best in Client Satisfaction for two consecutive years. This recognition comes from operating with the utmost knowledge, skill, and integrity.

In my experience, real estate agents are people-magnets at cocktail parties and family barbecues if they can answer this 64 million dollar question.

I’ve been involved in Sarasota real estate for thirty years and my experience tells me that in today’s real estate market there is simply nothing more important for any realtor than local market knowledge.

Local Market knowledge: Deal maker or breaker

In a short sale, the local knowledge and experience of your Sarasota Realtor become even more important; in fact, it’s critical to the success or failure of the deal. Your choice of agent will ultimately determine whether or not you get your dream home in Sarasota, NBC’s number one place in the country to get value on real estate.

Your agent needs to have the experience and skill to know exactly the true value of the property, and what it’s worth to you. As I reiterated during my recent presentation in Congress, for my business and any small business with integrity, it’s all about the people you have on board and the relationships you build. Nowhere is this truer than in a short sale situation.

With the current re-adjustment of real estate values in Sarasota, short sales are becoming more and more common. In my business short sales and foreclosure sales account for about a quarter of all sales: that’s 955 single-family homes out of the 3,825 currently on the market.

So what is a Short Sale?

A short sale can be defined very simply: where the Property sells for less than is owed to the bank.

For sellers, a short sale can be a sad affair: the end of the American dream of property ownership, with negative credit effects, and possibly a big debt left over to the bank. But for the shrewd buyer with the right advice and agents, short sales can be a great way to get a good deal.

In today’s unique real estate environment many buyers are asking for the lender to accept less than is owed and forgive the borrower the difference on the loan. This decision is down to the lender and it requires a lot of paperwork and appraisal to get that decision made.

If you’re looking to buy a property that is in this process be prepared to wait out the wrangling, and make sure you’ve got the right agent to help you get your offer accepted.

Short Sales vs. Foreclosures

The key difference between short sales and foreclosures is in a foreclosure the bank takes ownership of the property and forces its sale to recover losses. Whereas, a short sale is a delicate negotiation between the property owner and the bank or lender to recover as much as possible from the property’s sale towards the loan owed to the lender.

A Deal I just closed

I just closed a property that I had listed for two years. The property was mispriced and trailed the market for some time. Finally, we had a buyer willing to buy the house for $1.2 million, but the lender was not ready to accept it.

Fast forward 15 months and the lender took 280,000 dollars (23%) less.

Why?

In this case, the first buyer was willing and able, the lender had all of the required info to make a decision, and the appraisals supported the offer, but the lender was not ready. 15 months later I worked with a negotiator at the same lender with years of experience who is paid for performance. The difference: We went from contract to closing in 60 days for 280,000 dollars less.

Like all things in life, a short sale is all about the people.

My Advice for Anyone looking at a Short Sale Property?

You need three things:

1. Patience: Short sales can go through as quickly as 60 days, but more typically take up to six months. The buyer has to be prepared to wait out the process as the bank and the seller hammer out the details of what the lender is prepared to accept.
2. The right Real Estate Agent: Like any real estate deal a short sale is all about the people. Make sure your Sarasota realtor has a lot of experience with short sales. An experienced real estate agent will keep the deal on track by being persistent and negotiating constantly with the lender or seller’s agent. That relationship is absolutely critical to the success of a short sale.
3. Local Market knowledge: Your realtor needs to have intimate knowledge of the Sarasota property market to know the true value of the home. Often short sales attract a lot of interest and because they are done with sealed bids you need to put in a bid that is attractive to the lender.

Give us a call with any real estate question you may have: 941.587.0740.

Almost daily I get the following question(s): how is it going, how is business? “It is going great,” I say. “Business is good and it’s a lot of work.”

It has been four years since Sarasota real estate has been repricing. And this year especially Buyers really believe that we are at or close to some sort of a “bottom.” Part of this can be attributed to the aggressive pricing of bank-owned and short-sale properties. Many of these properties are now listed at liquidation prices, like a going out of business sale, “everything must go.”

This is so prevalent that on Tuesday, October 6. Barbara Corcoran of the NBC’s Today Show proclaimed that Sarasota, with its beaches and sophistication, has repriced so much that it is the # 1 place in the entire country to get a good value.

For the willing Buyer there are some great values and opportunities. Don’t rely on NBC, call us (941.587.0740) and you can see for yourself.

The cost of land across many global markets is down. In areas like Florida or Costa Rica, the opportunity to develop this land is likely one or two decades out as absorption rates have slowed yet long term demand for more temperate climates will continue. I believe there is a real opportunity to take advantage of the current prices, harness this vacant land AND the emerging market for renewable energy by building out solar farms and selling back the energy to a number of potential customers.

On February 3rd, I attended the Effective Energy Policy conference in Florida’s capital city, Tallahassee. Eighteen international speakers addressed a large audience of industry advocates, policy makers, lobbyists, manufacturers, and financiers. I have been following the industry since 2006 as a number of our institutional clients want greater industry diversity in their investment portfolio. I have been developing a business model where solar panels are placed on large tracts of vacant land and the electricity created can be sold either to the local utility, municipalities, or large institutional users like hospitals or school systems.

In Florida, Governor Charlie Crist is working aggressively to put an energy policy in place that will create energy independence, reduce utility fees and create jobs from an emerging industry. Ironically, Florida as the Sunshine State lags behind most of the states in solar deployment and usage. This type of macro policy making would have an obvious impact on the scalability of this emerging market.

Free market forces are already at work, though, as there are municipalities already coming up with solutions or incentives towards this end. Individual municipalities are developing their own policies because their own constituencies demand it. Sarasota County, as an example, has the audacious goal of powering 50% of the county’s residential water heaters by solar energy within five years. (Note: it is estimated that 40% of ones energy cost is just from the water heater) In Gainesville, there is a program in place that guarantees prices to anyone that wants to sell electricity back to the local utility. There is already opportunity for early adopters.

Looking outside opportunities in the US, we are working with institutional clients who are keenly interested in Foreign Direct Investment. I will elaborate more on this in my next article, however suffice it to say that countries where we see strong opportunities- such as Abu Dhabi, Costa Rica, and Germany, are all at various stages of renewable energy policy. Costa Rica currently gets 85% of its electricity from hydroelectric power and they are in the process of developing a policy so that they can actually export electricity. Right now I believe there is another opportunity to place solar farms in areas of that country to help meet their own growth and development needs.

I will soon be meeting with the largest manufacturer of photovoltaics in the world, a German entity, as well as the largest financier of renewable energy systems, based in Paris. As global warming and national security advocates work together on green policy, my team and I are working on one of the common threads underlying this shift, the real estate underfoot, both in the United States and abroad. If you know of individuals or institutions that are looking to diversify into new geographies and industry, I’d like to talk to them.

Each year my family and I take a trip to an area where cell phones don’t get signals and there are no tvs. This year we were in the remote lake region of northern Maine hiking through the splendor of fall foliage. If I had come out of the forest and turned on the TV on September 29th I would have seen the stock market down almost 778 points. The sky was falling! If I had emerged from that same forest on October 13th I would have heard that the stock market was up 936 points. I may have thought that we had achieved world peace.

The financial decisions we make with respect to our own lives are uniquely personal. I believe there are far more important factors to base these choices on than the day-to-day fluctuations of the market. Let not the TV be a distraction from the fundamentals.

Sarasota is a distinct real estate market with a very robust appeal to Americans and foreigners alike. This town with its warmer weather, intercoastal and Gulf boating waters, spectacular natural beauty, and rich cultural scene is as attractive as ever. Many buyers are drawn here irrespective of the external economic climate. The fact that many properties are selling when the correct value is reached is a testament to the long-term stability of Sarasota Real Estate.

I do want to emphasize that local Real Estate has undergone a very important correction and re-pricing for the last 3 years. Over this time properties that may have changed hands at around $1 million are now selling much more appropriately around $700,000.

I think that there is still too much inventory to declare a bottom to the market, though there are some real estate brokers and indices that say statistically we have arrived there. I do see, however, there are a lot of really good values on homes. In some areas, we are seeing pricing at the 2001-2003 levels. The properties that require work are getting the biggest price reductions. I advise my clients that when they find something that really meets their needs- they should negotiate aggressively and if they can come to terms, make the purchase.

For those buyers who like what Sarasota has to offer, I believe it is a good time to stay familiar with what’s available. We can refine our search and notification criteria to target exactly what you are interested in. This will help you keep tabs on a few of your favorites and then make your own conclusions.

These are my thoughts, let me hear yours at 941.587.0740 or lee@investmentsinsarasota.com.