Sarasota Home Sales Momentum Continues


SARASOTA, FLORIDA, September, 27, 2013 – Single family home prices in the North Port-Bradenton-Sarasota MSA have been registering double-digit annual growth rates for the past six months. However, these gains shouldn’t serve as a disincentive for prospective home buyers, particularly the would-be first-time homeowners. Attractive interest rates are still being offered and fuel the potential for further gains.

The median home price in Bradenton and Sarasota counties in June rose 13.8% to $198,000. This pace approximates the 13.9% clip during this year’s first quarter which saw a $180,000 median price for the period. In assessing these gains, it is important to put them in the context that they were coming off from very low price levels. Prices and interest rates remain relatively low despite the recent spikes seen in both segments.

Tempering factors foreseen

For the entire Florida state, median home prices in June advanced 15.1% to $175,000. This marks the 18th consecutive monthly statewide year-over-year gain in single-family home median sales prices. At this exact price level, Bradenton/Sarasota homes for sale as listed in the MLS have floor plans from about 1,100 square feet up to3,000-plus square feet, featuring two to three bedrooms.

price trend graphic

Sarasota Bay Real Estate also observes that the pace of price gains may be tapering off. After a 23% gain this April which sent the median home price to $202,946, the pace is now back at the low teens experienced during the first two months of this year.

Moving forward, the realty company expects that the previous large price advances cannot be sustained, particularly with the recent increases in mortgage rates. Sluggish income growth should also help temper any further steep rise in home prices, the firm says. It adds though that thinning market inventory will continue to exert an upward pressure on prices.

Investors shying away from market

The company likewise notes indications that institutional investors are starting a pullback from the home market due to the rising prices and heightened competition which eventually diminish their desired home-run returns. This pullback bodes well for buyers by increasing the available choices on the market. In recent years, investors have been gobbling up foreclosed homes at high discounts, refurbishing and “flipping” or reselling them for a handsome profit. Others saw the significant growth in rental demand as an opportunity to convert into rentals the distressed single-family homes that they amass, thereby earning a substantial yield on their investment.

A deceleration on such ventures, however, was indicated in the recent Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. It showed that in May, the share of investors in home purchases dropped to 20% from 22% in April, the sharpest decline in three years. Future investor activity, as indicated in the Investor Traffic Index, likewise declined for the third consecutive month this May.

The same survey, too, showed that current homeowners and first-time home buyers took a greater share of home purchases in May at 43.8% and 36%, respectively. One take from all these is that there is a robust demand from individual buyers whose wants and needs vastly differ from the institutional investors. Recognizing these current demands of individual buyers can be best ascertained if prospective home sellers work with realtors knowledgeable on the current market dynamics.