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.
I have looked at appreciation by building a couple of times since starting my blog. In the past, I have calculated the average sales price in each building over the course of a couple of years and compared one year to the previous to get the appreciation level. The trouble with this approach is the limited number of sales in each building. There are not enough sales during a single year in most buildings to add a shred of validity to numbers.
So, this year, I am taking a shortcut that should make things a lot more interesting and, I believe, more accurate. I will use the Just Value figures from the Property Appraiser. The Just Value is supposed to be the market value of the property before any exemptions or Save Our Homes reductions. There aren’t many details about the process the Property Appraiser uses to calculate Just Value (read about it here), but the results can be no less accurate than auto-valuation models used by Zillow or other websites.
The biggest negative about using the Property Appraiser’s figures is timing. We pay our property taxes in arrears. The last tax bill we paid, sometime between November 2016 and March 2017, was for the calendar year 2016. The valuation date for that year’s tax bill was as of January 1, 2016. The comparison I am making here is between this 2016 valuation and the 2015 valuation. The appreciation I refer to is what occurred during calendar year 2015. This timing issue is also the biggest reason people think the tax valuations are always wrong. If you expect them to represent the current value of your home, they are always wrong. The tax values are always somewhere between 10 and 22 months stale.
Finally, in the interest of word economy, I will refer to the change in the Just Value as appreciation. It may not reflect the real change in market value of the properties being discussed and would probably best be described as what it really is – the change in Just Value as published by the property appraiser.
Appreciation by Building and Area of Downtown
The chart below shows the buildings that account for most of the sales downtown. I have grouped the buildings by area of town. The one thing you can say about the numbers is that the property appraiser did not paint everyone with the same brush- The rates of appreciation varied considerably.
The hottest place to be in 2015 was almost anywhere on Golden Gate Pointe. While the area tied the group (of 2) that was adjacent to Ritz Carlton Drive, Golden Gate was home to the seven buildings with the most appreciation. Every building with an appreciation rate above 15% was on Golden Gate Pointe. All but 5 buildings on Golden Gate experienced double digit appreciation.
Interestingly, the central downtown and North Trail buildings brought up the rear, with each area showing a 3% appreciation rate. Except for the Renaissance, the 8 buildings in these 2 groups are made up exclusively of buildings from the previous wave of new construction.
Waterfront/view was apparently not the sole driving force in the appreciation. In terms of quality views and the percentage of residences in each building with high-quality water view, I don’t know that many places can beat Condo on the Bay. The buildings are so close to the bay that on a sunny day the inside of every residence looks blue because of the water reflecting in through the sliders. Yet the appreciation rates were a fraction of most other Bayfront buildings like ones on Gulfstream or Golden Gate.
Apprecaition Based on Beginning of the Year Just Value
This one is interesting and explains a lot about the schedule above. Here, I went residence by residence, regardless of building, and sorted each residence into 4 groups based on the 2015 tax values (as of 1/1/2015). The schedule below shows you appreciation ranges grouped by the beginning of year Just Value. Properties that started 2015 with over a $1M Just Value appreciated 50% more, on average, than properties valued at under $1M.
I have done several posts on this subject, and the results are always the same. The higher the value (on average), the better the property appreciates, the lighter the hit it takes in a downturn (the only 1 I have ever witnessed anyway), and the faster it bounces back after a setback. So, if you are considering the purchase of a luxury property, you can write this chart in the “reason to buy” column. The million-dollar condo you considered but missed out on last year will have a neighbor on the market asking about $100k more this year.
People that put off upgrading also didn’t do themselves any favors. Consider people thinking about an upgrade from their existing home. Maybe they are just seasonal visitors, but are considering the sale of their homestead and getting something larger, nicer, or with a better view to live here full time. The chart below shows how prices moved against this group during 2015.
Let’s take two people, both wanting to move up from existing properties but at different price points. One person owns a condominium downtown valued at $750k and is looking to sell that and buy a different condominium in the $1.5M range for a permanent home. The second person is doing the same thing but at higher price points – going from a $1.5M property to a $2.5M property.
At the beginning of 2015, the parties above must come up with $750 and $1M, respectively, in addition to the sales proceeds from their existing homes (closing costs excluded). By the end of 2015, they would need $850k and $1,125k, respectively, to buy the same properties they were considering at the beginning of the year. The spread increased by $100k and $125k under these two scenarios, due to difference in appreciation rates between the properties. This is a 13% increase in the amount of money each would need to raise to buy the same condo a year apart.
Again, the figures here are nearly 2-year-old tax valuations. If you have questions about the current market value of your property, call a real estate professional.
Downtown Sarasota pending condominium sales are up 40% over last year for the past 13 week period. Existing home sales accounted for most of the increase, up some 36% over last year. New constructions sales for the past 13 week period were less than 10% of total sales
Longboat Key pending condo sales were up 13% over the past 4 weeks and 26% over the past 13 weels. Pending sales were down most of the season and worked their way back to even with last year by the end of April. Most of the increase came during June.
In the Lakewood Ranch area (not all homes in the 2 zip code area are in Lakewood Ranch) pending home sales were up 14% over last year for the past 13 week period. New home sales were flat during this period so the entire increase came from resales. New construction pending sales are a much larger component of total sales than in Downtown Sarasota. For both 2017 and 2016, the last 13 weeks had 62 pending new construction sales or about a quarter of all home sales in the area.
A strong May and June is making for a huge second quarter.
The West Bradenton condo market was down for the week and only up 1% for the past 13 weeks largely due to the lack of inventory. May ended with just 257 condominiums on the market, not world record but low none the less. Worse, however was the lack of new listings during May. Only 51 condos were listed during May in West Bradenton, the least amount in any month over the past 10 years.
The big quarter in Downtown Sarasota is being powered by resales. While new construction pendings were up big (10 this year vs only 1 LY), existing home sales were up 35% with huge increases in the over $1M price points.
Click here to download pdf of report.
Pending sales (new contracts executed) are the best indication of current demand. The pending report provides a current week, 4-week, and 13-week view of this important statistic across 6 markets by price point range. The biggest difference between pendings and actual sales is timing. The contract or pending date is the date the contract was executed. The contract is not considered a “Sale” until it closes, on average, about 30 days after the contract date. Another difference is that not all pending sales close.
Pendings for the week ended June 10, 2017
This was another solid week, compared to last year, in nearly every area followed. Bad weather must have sent people shopping, rather than beaching.
The “over a million” price point in downtown continues to grow. For the past 13 weeks, pendings with prices over a million dollars amounted to 20% of the total. Last year, they accounted for only 16% of all pendings. For the past 4 weeks, the top of the market listings has accounted for 27% of all pendings Downtown, compared with only 8% last year.
If you have your home on the market or are thinking about putting it on the market, it’s always interesting to look ahead at what the next few weeks may bring. The consensus is that the third quarter is slow, but that’s not the case everywhere.
The chart shows last year’s percentage of pending sales by quarter. There is surprisingly little seasonality in any of the markets, other than Longboat Key. Even the Longboat Key condo market is not horrible. Last year, 66 condos went to contract in the 3rd quarter, compared to 91 in the 2nd quarter. That works out to about 22 per month in the third quarter, compared to 30 per month in the second quarter. Next quarter should provide plenty of opportunity for a well- priced listing to find a buyer.
Downtown Sarasota Condominium Market
Sales are up about 15% year-to-date with inventory down about 7%. Still, using the average monthly sales so far this year, there are almost 8 months of inventory on hand which would generally be considered a buyer’s market.
It has taken longer to sell a condo downtown this year with the median marketing time coming in at 73 days compared to 53 during this period last year. While there are not stats available on the median age of an active listing this time last year, the 134 day median age this year seems old, especially compared to the 73 day median marketing time.
As I mention every time I discuss the Downtown market, the new construction market is disguising the strength of the downtown market. New construction projects are taking contracts and reservations on new condominiums that will not close (nor considered a sale) until later this year and into 2018 and 2019.
Longboat Key Single Condominium Market
During May, condo sales on Longboat surpassed last year for the first time this year. On paper, sales for the year are still down 21%. However if you remove the 16 new construction sales last year (as most were contracted during 2015), sales on existing homes are down about 14% year-to-date.
The good sales month along with lower amounts of new listings, large numbers of withdrawn and expired listings coming off the market improved inventory dramatically over last month. At the end of May the market had about 7.7 months of supply.
LONGBOAT SINGLE FAMILY HOME MARKET
While sales here are up 20% year-to-date and inventory down about 12%, there is still a large amount of unsold inventory for the current rate of sales. Additionally median days to contract has ballooned from 89 days last year to 128 this year. The median marketing time for an unsold listing is currently 183 days.
Lakewood Ranch Single Family Homes
The first neighborhoods in the new Waterside Village are now taking lot reservations. Waterside is going to be huge with over 5000 homes. The property is about 5,500 acres with 80% left as open areas or lakes (mostly lakes). It is going to be hugely popular. Initial home builders will include Arthur Rutenberg, Lee Wetherington, Homes by Towne, and Pulte.
West Bradenton Single Family Homes
One big month and everything looks rosy. May this year beat last year by almost 50%. Year-to-date sales are up by 7%. Unsold inventory dropped to just 216 listings or only about a 4 months supply.
West Bradenton Condominiums
Sales here are down about 12% from last year but mostly do to the lack of inventory, which now represents just over a 3 month supply. The median selling price of 158k is still a great value for winter visitors or small families.
Downtown Sarasota Condominium Market
Sales are up about 14% year-to-date with inventory only up about 4%. Still, using the average monthly sales so far this year, there are almost 9 months of inventory on hand which would generally be considered a buyer’s market.
It has taken longer to sell a condo downtown this year with the median marketing time coming in at 73 days compared to 47 during this period last year. While there are not stats available on the median age of an active listing this time last year, the 114 day median age this year seems old, especially compared to the 73 day median marketing time.
Longboat Key Single Condominium Market
The sales slump continues with a 42% fall off this month compared to April 2016. However, sales last April included the closings on 16 new construction residences. Sales on existing homes fell 24%. Year-to-date, sales are off a third compared to last-year.
With only a slight drop in new listings, expired listings have tripled this year, although on small numbers. Ending April unsold inventory (Active listings) was up 26%. Using the 26 average monthly sales over the past 4 months, there is almost a year’s supply of unsold condo inventory on the market, twice the 6 months of supply this time last year.
LONGBOAT SINGLE FAMILY HOME MARKET
Completely unaffected by whatever bug has infected the condo market on Longboat, single family homes sales are on their way to a record high year. Sales are up a third over last year while the end-of-season active listing inventory is down 8%. However, the relationship between sales in unsold inventory is still high with just over 11 months of unsold inventory on the market.
Lakewood Ranch Single Family Homes
Sales are up about 7% over last year in Lakewood Ranch. MLS unsold listings are up about 5%. I say MLS here because new construction sales will likely he higher than resales and there is no way to evaluate the amount of new construction product on the market. When there is about a 100% chance that anyone and everyone that wants to build a home in Lakewood Ranch could be accommodated, how to count inventory?
One thing to watch, especially if you are or about to be selling a home in Lakewood Ranch in the near future, will be the effect of the new Waterside Village on sales, specifically the effect on resales and new construction in the other villages. Waterside has lots of water and has been receiving loads of hype. It is also the first LWR village in Sarasota County.
West Bradenton Single Family Homes
Sales are down about 5% with unsold inventory down about 10%. This represents about 8 months of supply, a slight advantage to buyers.
The a $300k median sales price and large lot sizes that are just a couple of miles from the beach make west Bradenton a great value. The development of 75th street south of Cortez Road could give prices in the rest of the area a boost as little to none of the new construction will be priced below $300k.
West Bradenton Condominiums
Low prices/great values make west Bradenton condos about some of the fastest moving properties in the area. While sales have fallen 10% from last year on about the same about of inventory, there is still only slightly more than a 4 month supply of unsold inventory. The median time on market is just 35 days.
The information in this post pertains to Downtown Sarasota Condominium sales for the 12 months ending 9/30/16 (current year/ period) and 9/30/15 (previous year/period). All data is from the My Florida Regional MLS for the time periods mentioned, ZIP code 34228 (Downtown Sarasota), and condo property style.
Demand for Downtown Sarasota Condos is increasing
The raw numbers show sales over the past year were down 1%, compared to the previous year (329 TY vs 332 LY). As mentioned in other updates, delayed closings on new construction sales more than account for this shortfall. As of 9/30/16, there were 36 pending sales on new construction residences, where the contract date was in the current year.
While these properties were placed under contract during the current period, they will not close nor be reported as a sale until the building is ready for occupancy. The contracts, however, represent true demand during the period, even though they are not reflected in the sales figures. There are also 28 pending sales from the prior period, which understated demand during that year. If pending sales were added into total sales for both years, then 2016 sales would be higher than 2015 by 1% (365 TY vs 360 LY).
Click box to see current Downtown Sarasota Condominiums listed for sale by price point
The Median Sale Price of a Downtown Sarasota Condo is increasing
The median sale price of a downtown Sarasota condominium increased 14% from $442k last year to $505k this year. Across Sarasota County, the median price of a condo only increased 8% from $190k ly to $205k ty. Clearly, “buy low / sell high” works but not as well as “buy high/ sell higher.”
If nothing else, this shows not every property gets painted with the same brush as prices move up or down. Properties in the most desirable areas do better in both types of markets. When prices are appreciating, markets like downtown and the barrier islands will increase more than other areas. When prices are falling, they will take less of a hit.
Downtown Sarasota Condos are Selling More Quickly
Another sign the market is heating up is the speed at which listings sell. Last year, 33% of all sales went to contract in 30 days or less. This year, 42% of all sales took 30 days or less to get a contract. Median days to contract for all sold listings dropped accordingly from 66 days last year to just 51 days this year (down 23%).
The Average Listing Sells Very Near the List Price
Last year, the average downtown condo sold for 95% of final listing price, which is great. However, in the prior 12 months, that figure has bounced up another point to 96%, which is phenomenal.
Most Downtown Sarasota Condos sell for Cash
Two thirds of all sales in both periods sold for cash (no financing). This is another attribute of the downtown market that supports property values. When the market crashes or interest rates rise, the owners in the downtown market will feel less pressure than those areas where more homes are mortgaged.
Inventory and new listings continues to be the story in the downtown market (as well as the entire county). At the end of the month, there were 179 residences for sale downtown compared to a very low 202 at the same time last year. As noted in last month’s post, the 10 year record low for unsold inventory is 172 residences set in September of last year. New listings for June eked out ahead last year 33 to 28 but did little to dent the 15% shortfall over the past 12 months compared to the previous 12 month period.
The struggle in finding something under $500,000 downtown is getting impossible. As of today there are just 59 residences on the market under $500,000. Twenty seven of these have fewer than 2 bedrooms and 2 baths. If you want a 2/2 under $500,000 that was built after 1985, you currently have only 8 choices.
There are admittedly new construction residences on the market right now that are not posted in MLS, probably more in total that the 179 resales shown in MLS. However, there are almost none priced under $500,000.