The report below shows new real estate contracts for week 51 of 2017 for areas within Sarasota and Manatee Counties.
Just like last week, this was an average week (compared to last year) during what is historically one of the slowest of the year. All but 3 of the pending contracts in downtown Sarasota were from Vue closings. Lakewood ranch did nearly double from a year ago, but on a small base. Every other location was about the same as last year
An Overview of the Florida Property Taxes
About this time every year, the County Property Appraisers in Florida wrap up their property valuations for the year. In Florida, the valuation date is always the first day of the calendar year. So, in this most recent valuation, the valuation date is January 1, 2017. Many of my clients often ask if the tax value of a piece of property represents anything close to fair value. The answer is it probably never does and really shouldn’t. Here’s why:
- First, there are three values the Property Appraisers calculate each year – Just Value, Assessed Value, and Taxable Value. Just Value is supposed to represent market value. The Assessed Value reflects the cumulative effect of all the “Florida Save Our Homes” benefits that have accrued to the homeowner. The Assessed Value less any exemptions (most commonly, the homestead exemption) becomes Taxable Value. Taxable Value multiplied times your millage rate plus any non-ad valorem taxes becomes your property tax. The only value that ever has any relation to the real market value is Just Value. You cannot impute Just Value from the amount of the property tax; or solely from the amount of the property tax.
- Second, as should be obvious from the opening paragraph, the values are for January 1 of the tax year but aren’t published until near the end of that same year. Even though Just Value is an estimate of market value, Just Value is static- it is only updated once per year. Because the valuations are almost a year old by the time they are released, Just Values are, on average, 18 months old. In a market that is moving, Just Values are too stale to have much meaning.
The fact that Just Value is rarely equal to the market value of the property on any day doesn’t mean the valuation was wrong or inaccurate on the valuation date. I don’t know that Just Value is any worse of an estimate of value than the values you see on Zillow or anywhere else where properties values are determined through mass appraisal techniques. The values are just stale. If you assume the valuations are accurate as of each January 1, then the difference between the Just Value across years must be a fair representation of appreciation.
The data for the information below comes are from Sarasota County property tax records as compiled by Corelogic/Realist. The values are the Just Values for the periods and properties indicated.
2017 Property Tax Highlights for Downtown Sarasota Condominiums
- The group of 41 buildings in the report amounts to $1.7 billion in Just Value, which represents a 6% increase over the 2016 valuation. The 2016 figures were up 8% over 2015.
- The building with the highest per unit value is Grand Riviera on Golden Gate Pointe. The average residence is valued at $2.5M.
- The Tower Residences is right behind at $2.4M per residence. With 80 residences in the building, The Tower Residences is the highest valued building downtown at almost $194M. No other building is even close. The 204 residences in Alinari give it second place at about $87M.
- Last year, the most appreciated area was Golden Gate Point, where over half the buildings experienced double digit increases in their appreciation rate. The average increase was 13%. This year, Golden Gate came in at healthy 9%, but that was only good enough for second place. On Sunset Drive, directly across Gulfstream from Golden Gate Point, the value of the average residence increased 10%.
- Majestic Bay is the only building that has experienced a double digit increase in the past 3 years. Owners here have seen their Just Value increase from $1,040k to $1,711k, or about 64%, since the 2014 valuation.
- A shout out to the residents in One Watergate- the work you did on your building looks great. I can see I wasn’t the only one that felt this way. The Property Appraiser also took note and “rewarded” you with a 9% increase in Just Value (about 4 times the average along Gulfstream) or about $40k per residence.
- The area I have labeled central downtown, which is comprised 100% of buildings constructed during the previous generation of construction, is lagging the most. Over the past 3 years, the JV has increased only 13% cumulatively.
- In 2014, there were 325 residences in these 41 buildings valued at more than $1M (13.7% of all residences in the 41 buildings). By the start of 2017, 428 units were valued over 1M or 18% of the total. The increase in $2M residences was more pronounced – more than doubling from 51 (2.2% of total) in 2014 to 121 (5.1%) in 2017.
- If you are on the fence between buying a $500,000 condo and a $1,000,000 one, buy the more expensive one. Residences with Just Values over $1 million in 2014 have increased in value by 28% as of the 2017 valuation. Those under $1 million in 2014 have increased only 22% as of 2017.
This post summarizes new real estate contracts for certain areas within Sarasota and Manatee Counties for the week indicated. New Contracts (or Pending Sales) are the best measure of current demand.
Nothing ever exciting happens this close to year end. It is always a slow, below average week for activity. This week was really the same as last year if you deduct the 10 closings in the Vue that were booked this week (See the Nov. 4 Pending Report post on why the contracts were really deals from prior months).
The up trend continues with another big week of new contracts. Downtown Sarasota is not as rosy as it appears, however. Out of the 24 new contracts last week, 18 were Vue closings. See my comments in the pending report post for 11/4/2017 as to why these are likely older deals (ie created months ago but just now showing up). Still most other areas are up significantly over last year.
New contracts for week ended 12/02/2017Click here to download as pdf
Another huge week for contracts around the area.
Activity in the past 4 weeks accounts for all of the increase in contracts this quarter over last year – more than making up for any lost deals during the first 2 weeks of the period that occurred due to hurricane Irma. Every area except west Bradenton condos (down 4%) is up double digits over last year for the most recent 13 week period.
Generally a slow week compared to last year. The contracts reported in Downtown Sarasota last week probably overstate demand by 50% as 9 of the 18 new contracts were recorded in the Vue. Most likely these contracts were actually executed much earlier. See my notes from the 11/4/2017 report for an explanation. The same issue is affecting both the 4 week and 13 week figures.
This was a big week everywhere but none looking as big as downtown Sarasota. The figures for this year are distorted from 9 listings in the VUE closing this week and being entered in MLS for the first time. In most large new construction projects, only a few sample listings are maintained in MLS. This keeps MLS manageable and from being overrun, so to speak, by a single building. If all of the VUE listings were entered from the project start, Zillow would be a mess with every other listing being in the VUE.
When listings that were not previously entered in MLS eventually close, the listings are often entered in MLS at closing for agent/broker credit (as was the case with these listings). The listings still have to go through the same MLS progression. The contract date, listing date and sale date are entered the day of closing giving each the same date. Undoubtedly all 9 of the new construction listings went to contract much earlier, perhaps even in previous years. Again, there is nothing wrong with this, you just have to be aware of it as you study the results. Demand Downtown was not up 1300% last week. (Another unavoidable side result of this is that the days on market stat will be ZERO for all such listings – be leery of any broker or agent including new construction sales in their quoted days on market performance).
Get ready for many weeks like this as loads new construction starts to close.
Another interesting thing to watch with regard to new construction closings, is how much of it ends up back on the market. I will try to highlight that for you.
(Or Why Your Home Didn’t Sell)
Before reading this article, I would recommend reading my blog post: “The 3 Biggest Changes the Internet Has Had on the Real Estate Industry.”
Even in the best of times, not all listings sell. Through the end of June 2017, over 1,250 residential listings have expired across Sarasota and Manatee Counties. If you are one of these sellers, then read on for a solution next time. If you are about to put your home on the market, reading this article might help you avoid a long, drawn-out fail.
Listings end without a sale for one or more of four reasons, more or less in order of frequency:
- The asking price is too high
- The home does not show as well as it could (in disrepair, dirty, cluttered, etc.)
- Inadequate marketing
- Limited feedback and follow up
The Asking Price is Too High
Anyone can give away a home. Why should I pay a commission to someone that is just going to give the house away? You have to leave room to negotiate. What difference does the asking price make- people can always make an offer? All of these are old axioms that need to disappear into the abyss. I doubt that they were ever accurate and certainly aren’t now.
First, let’s talk about how high too high is. For starters, in the combined market of Sarasota and Manatee County for the calendar year 2016, the median sales price was a whopping 97.6% of the asking price. That’s pretty tight. On top of that, 32% of sales occurred at or above full price. So if you are priced $1 above the market value, you are overpriced compared to about a third of the market. If you are priced more than 2.4% above the market price, you are overpriced compared to half the market. Who will notice this? Don’t worry; only the prospective buyers will know. Read on.
Market price is usually estimated before you put your home up for sale by analyzing recent sales (not asking prices for homes that haven’t sold). The idea is to compare your home to those that sold and make adjustments for differences that would have a meaningful impact on market value, things like air-conditioned space, levels of upgrades/updating, view, number of bathrooms, etc. If the comps are selected correctly, the adjustments should net to a small number (less than 10% of the price). The larger the adjustment, the more difficult time you will have with price (the more difficult it will be to make prospective buyers see that same value).
Finally, consider that today’s buyer is probably the most market educated person in the room when it comes to the market for your home. If someone has been considering an offer on your property, then you can bet they have looked at dozens of homes online, seen many in person, and made countless comparisons between homes. If there is too much fluff in your price, at best, you will make other listings look like deals (see next section in this article), or at worse, they will never consider your listing because you have it priced out of their range (even though you would gladly sell it for a price in their range).
To recap, pricing high will not work, and there is no reason for it. As demonstrated in the data, buyers will pay at or above full price. You don’t need to lard up your asking price for any reason.
The Home Does Not Show Well
You can’t just blow this off, even in a great sellers’ market. Builders spend hundreds of thousands of dollars staging a single home. They wouldn’t do this if it didn’t add to the bottom line. The good news is that you don’t have to spend much money. But you will have to devote time and elbow grease.
The idea here is not to spend thousands updating your home with the latest fads but doing common sense things that cost little and will add thousands to your selling price. Most home improvements do pay off, including ones you make right before selling. Your home doesn’t need to look new and modern to sell, but it should be (and look/smell) neat, clean, and well-maintained. Maintenance is different than improvement. You don’t need to replace your 20-year-old laminate cabinets and counter tops with solid wood and granite. But the cabinet doors shouldn’t be hanging from one hinge and counter top should not be delaminating. Carpet is fine if it is stain free and not threadbare.
A must-read for anyone about to sell a home is Martha Webb’s book, Dress your House for Success. You can get it on Amazon for about $5.00. I could add nothing to what Martha has created in her book. So, rather than just repeat what she says, I will send you free her 13-page guide to dressing your house for success. Just visit scottnorris.com/order-your-copy-of-dress-for-success and order your free copy of Martha’s checklist. Enter your mailing address, as the checklist is copyrighted. I can only mail you an original (no email).
Inadequate or Ineffective Marketing
Most people, agents and consumers, know the internet is a popular place to search for homes and every listing should be on the internet. That assumption is correct, but there is much more to it.
Each year, the National Association of Realtors conducts a national survey designed to track trends in the real estate industry. The results are compiled and published in an annual report, titled “Profile of Home Buyers and Sellers.” Consider these survey results from the home BUYER section from the 2016 report:
- How did you first learn about the home you eventually purchased
- 51% – Internet
- 34% – My Real Estate Agent
- 8% – Yard Sign
- 5% – Friend, Relative, Neighbor, Knew the Seller
- 2% – Homebuilder
- <1% – Print media, direct mail, open houses, all else
- Value of Website Features – % very useful
- 89% – Photos
- 85% – Detailed info about the home
- 55%- Floor Plans
- 50% – Virtual Tours
The biggest and, unfortunately, most common mistake made in marketing is the photography. You would think that, with pictures being the most helpful item to consumers, photography would receive the most attention 100% of the time. Yet, countless listings treat the photos like they don’t matter. Either the quality is horrible, critical shots are missing (like the view, even in waterfront listings you see this), or only a couple of pictures are provided. All listings should have the photography professionally shot and the maximum photos allowed should be uploaded. Cell phones or cheap digital cameras can never get the lighting right and don’t have a lens wide enough to shoot small rooms (you usually end up with pictures of furniture).
The next biggest issue is often half-hearted and hurried attempts to complete the listing, which leads to only the mandatory MLS fields being entered, with a couple of meaningless phrases entered in the public remarks section. Detailed information about the home is the second most helpful item on the list above. The MLS data is used to syndicate the listing across the internet. It needs to be completed and hit all the big selling features of the property. The public remarks section is critical because it will likely be read first.
The internet has made the yard sign a huge tool for sellers. For years, real estate agents have hung sign riders with a web address, where consumers can obtain pictures and other info about the home. However, current technology is to offer a number and property code on the sign that, when sent as a text by the consumer, will instantly deliver pictures and ad copy about the home to the customer’s smart phone. No fumbling with a long URL; just text a 6-digit code to a 5-digit number and all the data and pictures are immediately texted to you, all while you are sitting in front of the home.
Feedback and Follow up
Feedback comes in a variety of forms. The best is from a conscientious agent that has just shown the home. However, with the internet, everything is quantifiable. Each week provides little pieces of the puzzle in online showings, emails sent, emails opened, saved as favorite, number of showings etc. Looking at all these items each week will often point to some form of action required.
As you will read in the blog post referenced at the beginning of this article, the internet has sped up the sales cycle. By the end of the first 7 days, virtually everyone looking for a home like yours will know about it. By the end of 30 days, all interested enough to visit your home will have done so. Each week after week 2, your showings, online views, and calls will drop off significantly. Depending on the time of the year and the seasonality of your area, the decline in showings could be to where you receive more showings in the first month than you do the rest of the listing period combined. That’s why follow-up is so critical. If you are getting online views but no showings, showings but no offers, something is wrong. You need to reevaluate things quickly.
As in the Sarasota property tax article I posted last month, this post analyzes the change in the Property Appraiser-determined Just Values (market values before any exemptions or Save Our Homes cap) between 2015 and 2016 (latest available data). The Property Appraiser equates Just Value with market value. Since the valuations are always AS OF January 1 of the tax year, the change in value discussed relates to calendar year 2015 (the change in value that occurred between January 1, 2015 and January 1, 2016). The 2017 valuation should be finalized later this year.
Also in the Sarasota post, I characterized the Property Appraisers valuation as good as any I could have derived, at least in a reasonable amount of time. The Florida PA offices revalue every property every year using a mass evaluation technique. The process is to assign a value to large sections of land and then use statistical techniques to allocate that value across individual parcels with each section. At first, the methodology sounds rough, especially compared to the typical Realtor® market analysis approach, where recent sales are analyzed and adjusted based on differences between the homes being sold and the subject property. Furthermore, the big swings in appreciation rates between buildings and across years in the schedule below cast doubt on the validity of using the Property Appraiser’s valuations for anything other than coming up with a tax bill.
However, consider that many condominium communities on Longboat don’t have a sale every year. In fact, of the 92 communities listed on the schedule below, only 70 had sales in 2016. This means, for over 23% of the buildings, anyone appraising for any purpose would have to rely exclusively on sales in the surrounding area – much like what the PA office does. So wild swings or not, the PA calculations may be the best.
Whether the tax Just Value derived from the Property Appraisers’ approach is anywhere near the real market value is anyone’s guess. The same thing also can be said about the Standard & Poors/Case-Shiller numbers, generally the basis for all media reports of appreciation and taken as fact. They both are the result an estimation process.
In summary, the County PA offices figures (Just Value) are what I summarized below. I refer to the changes in value as appreciation as though it was a certifiable fact. You can make your own decision about the validity of calling this market appreciation. All references I make about appreciation here will be the year-over-year changes in Just Value.
Summary of Property Tax Just Value changes Longboat Key
The overall level of appreciation on Longboat Key condominiums during 2015 was 4.8%, down slightly from the 5.9% in 2014. Buildings on the west side of Gulf of Mexico Drive increased 5.2%, while those on the east side increased 3.7%. The Manatee end of the Key increased 8.6%, while the Sarasota end increased only 3.8%.
Other notes on the rate of change:
- Condominiums in Bay Isles increased 3.6% or .8% better than other bayside communities on the Sarasota end.
- Island-side condominiums in Longboat Key Club increased 2.2%, just a little more than half the average rate of all Sarasota-end communities on the west side of GOM.
- The 2 age restricted communities changed as follows:
- Case del Mar 8.3% or .5% points less than the average Manatee County west-side-of-GOM average.
- Spanish Main 11.9% or about 4% points above the average Manatee County east-side –of-GOM average.
Percentage Change in Longboat Key Taxable Values by Condominium Building
This is the schedule I was referencing in the opening paragraph, regarding the variations between buildings and years. Some of the swings are hard to believe. Look at Harbour Links as an example. In 2014, Just Values increased 56%, on average, in that community. The next year, they dropped 11%. It is hard to believe the market works this way.
But it could. The only sale in Harbour Links during 2014 was for $425k, which worked out to $241/ft. The Just Value of this property on 1/1/2014 was $335k or $140/ft. The new valuation on 1/1/2015 came in at $596k or a 78% increase in Just Value.
To recap the history of this property:
1/1/2014 – Just Value is set at $317k ($132/ft)
6/19/2014 – sells for $425k ($177/ft)
1/1/2015 – Just value is set at $596k ($249/ft)
On the surface, it looks like the PA overshot the value. I am sure the new owner thought the same.
However, the next year (2015) saw 2 residences sell in Harbour Links for $576k and $528 ($241/ft and $334/ft), a range that makes the 1/1/2015 Just Value of $596/$249/ft for the 2014-sold-home seem more reasonable (effectively saying the buyer got a great deal).