It is April of 2020 and typically this month we look at Sarasota’s First Quarter Real Estate Sales numbers as compared to the same period last year. Let’s take a look at the data for January, February and March. Then I’ll touch on what we anticipate over the next months for our market.
The Numbers May Surprise You
Sales were up 17.2% from this same period a year ago. These increases were across all three months…January, February and March. It was in March that we started to experience behavioral changes- sheltering in place and physical distancing. So, seeing such a strong close to the quarter despite all the disruption is very encouraging for our local real estate market. Here are the specifics:
- Affordability continues to get smaller and smaller. Less than 25% of properties fall into this category- which are properties listed for $200k or less. 80% are priced at $500k or lower.
- The distressed market continued its steady decline. Falling 4.7% from the 1st quarter of 2019. This is good news, but we will pay attention to this number in the months ahead. I don’t, however, expect much change since most properties have a decent equity cushion. I also expect that lenders will have greater leniency than landlords, so I don’t think that a rush to sell and then rent is the healthier choice. It is still proven that owning is less expensive than renting.
- The surprise to me is our luxury market (those properties listed for $1M or more). Sales increased by 64% over the first quarter a year ago. Even if we take out the new development with the closings at The Mark (which has been under construction for 2 years and finally closed), this increase is still 25%. This shows that buyers have an affinity for the luxury product. It is 6% of the total market.
Developing New Routines
In our sphere, it appears that many are adjusting to change and are finding a new routine. Our children are back in school (albeit remotely), we continue to spend more time together at meals and catching up with family and friends.
In our business we have added more safeguards to ensure everyone’s health and well-being, and we are adapting even more technology to continue to run our real estate more efficiently with much being possible to complete virtually.
What’s on the Horizon
The first quarter results are now historical information- the real question is what to expect going forward. There are two things I think we need to look at:
(1) Buyer Behavior
Many people have extra time on their hands and are evaluating where they want to spend their time. Also, if this happens again, they are considering where do they want to be staying “safer at home” the next time this may happen. For a lot of people, it continues to be Florida in general, and Sarasota specifically.
We are seeing lots of increased buyer activity from different parts of the country. In the last couple of days, we have heard from people from the Midwest, the Northeast, and even Sarasota locals wanting to schedule in person visits in late May. This is encouraging. Also, with the increased ability to work remotely as well as many retirees, many can reevaluate where they want to be “the next time.”
(2) Pricing Changes
I believe we are going to see a slight change in pricing- perhaps a 5-10% decrease- in the interest of getting deals done. This is less about the market activity decreasing. The government is pumping a tremendous amount of liquidity into our mortgage markets, and also mortgage rates are low and possibly going lower. I just think some sellers are going to have to give up 5-10% to get deal done and move forward.
Real estate is always about location, and I think people are still asking themselves- where do I want to be? Sarasota still checks a lot of boxes for many. I think that we will see continued if not increased interest in our lifestyle here. If you have to stay in place somewhere – at least it should be in place of good weather and natural beauty.
To discuss your real estate needs- whether buying or selling please give me a call at 941.587.0740.
Stay safe and healthy!