You Probably Won't End Up Buying a Foreclosure
One common theme among today's home buyers is the need to find a "deal". Almost every buyer mentions it when talking about their needs and wants. We Realtors joke about it as we hear it all of the time. There is absolutely nothing wrong with it. If I was buying a home I would be asking for the same thing.
I just ran a search in the Mid Florida MLS for all of the sales in Sarasota county for the last 6 months. There were 3,836 sales of which 1,725 of them were distressed (short sale or bank owned). That accounts for 45% of the market which has been pretty consistent.
Out of 1,725 distressed sales (foreclosures and short sale)
- 1,535 or 89% of them closed for less than $250,000
- 1,649 or 96% of them closed for less than $400,000
- 1,675 or 97% of them closed for less than $500,000
- 1,717 or 99.5% of them closed for less than $1,000,000
In a nutshell if you are looking for a property above $250,000 then you knock a HUGE number of distressed sales. If you are looking in the luxury market or for a Sarasota beach home then you really need to forget about limiting yourself to bank owned or short sales.
Here is the good news for buyers - all of the properties that are not Sarasota foreclosures or short sales are still affected by those properties. If a seller wants to unload their house they need to be competitive with the distressed properties or they won't sell. Buyers need to realize that there are good values in the non short sale and foreclosure properties.
Overall the Sarasota real estate is a buyers market. HOWEVER, inventories are dropping while sales are rising - see December 2010 home sales surge in Sarasota. There isn't as much out there as many are led to believe. Here are some real life examples:
Let's say you want to buy a beachfront condo on Lido Key with 2 bedrooms, 2 bathrooms, at least 1,000 square feet and under $400,000. You might think there are a bunch of those for sale. Nope. There are only 4 condos currently for sale that match those requirements. 4 CONDOS. That does not sound like a buyers market.
- 8 condos for sale - Longboat Key, beachfront, 2+ bedrooms, 2+ bathrooms, 1,000+ square feet, under $400,000
- 7 condos for sale - Siesta Key, beachfront, 2+ bedrooms, 2+ bathrooms, 1,000+ square feet, under $400,000
- 7 condos for sale - Downtown Sarasota, 2+ bedrooms, 2+ bathrooms, 1,000 square feet, under $300,000
- 16 homes for sale - Sarasota county, 3+ bedrooms, 2+ bathrooms, 2,800 square foot, $300,000 - $400,000
- 12 homes for sale - Lakewood Ranch area, 3+ bedrooms, 2+ bathrooms, 2,600 square feet, under $400,000
- 11 homes for sale - Siesta Key, 3+ bedrooms, 2+ bathrooms, 2,500 square feet, under $700,000
- 6 homes for sale - Longboat Key, 3+ bedrooms, 2+ bathrooms, 2,500 square feet, under $700,000
I could go on and on.
Think about it - Let's say you had $700,000 to spend and wanted a 3 bedroom, 2 bathroom, 2,500 square foot home on Longboat Key. You would only have 6 homes to choose from.
That does not sound much like a buyers market to me
Great post - I'm going to have to look up the Tampa numbers and see if they are similar for my blog!
Thanks Liane. I bet they are. I have a handful of buyers who are having trouble finding properties. The buyers leverage is shrinking.
I understand the article very well, however what your numbers do not show is that from 2006 until 2011
there is a general markdown of property values of 40% so the people in Sarasota who are asking prices
higher than the 2006 values, which is a very large number, are inflated asking prices. Hence, the slow
down in sales from 2006.
Thanks for the comment Michael. You are correct in saying that prices have dropped. I don't think anyone would disagree with that. However, 40% is too broad of a number. Some areas more and some areas less.
I don't see a large number of sellers asking pre 2006 prices. Reality has hit most of them and they have either dropped their price or taken their property off the market.
Just to clarify from your statement - sales are higher today than they were in 2006. See the sales data below for Sarasota county in terms of units:
December 2006 - 414
December 2007 - 413
December 2008 - 586
December 2009 - 787
December 2010 - 786
The point of this post was to tell buyers that they are running out of options. They don't have the selection that they have enjoyed in the past.
Unfortunately, you convinced me enough to go look somewhere else. If the prices are still not going down, because of the market, this leads me to believe the prices are still too inflated as other areas in Florida are going down considerably.
Great article Marc. Very valuable statistics.
Chon - Sorry to hear that. Maybe the Sarasota sellers have reacted faster than the sellers in other areas of Florida. The feedback I am getting from other Realtors around the state is that their markets are similar.
Maybe Liane (Realtor from Tampa) can comment.
The market is smarter than either of us. How can you state that prices are too inflated? I don't think it's valid to lump the entire state together. For instance, how could you compare Miami to Sarasota?
Research in the market shows us that the Tampa/Bradenton/Sarasota areas along with Miami and Orlando are likely to put their properties on the market for more than what they are worth. It is also a known fact that sellers are notoriously slow to adapt to declining market conditions. Only 49% of U.S. homeowners "believe" their home's value has decreased in the past year, whereas prices have plunged for 72% of homes, according to a survey released last month by Zillow.com. Sorry, but this part of the US was identified as one of the cities with the most "overpriced" homes....keep in mind, this is not the most valuable homes, but the overpriced homes!
I checked Tampa's numbers and they were very similar - 42% were distress sales. I checked Single Family beachfront homes in St. Pete - there are only about 12 of those. We have a lot more condos available than Sarasota County however, but Tampa perhaps is a larger area than some of those tiny Keys you guys have in Sarasota. ;) Here is a blog post I did recently about the stats in Tampa Bay: http://www.lianejamason.com/featured/tampas-real-estate-statistics-things-are-looking-brighter/
Thanks Liane. It is good to hear that the Tampa real estate market is improving.
Chon - Back in October of 2009 Barbara Corcoran named Sarasota the #1 market in the country to buy a home - See the video here - http://www.thesaundersblog.com/today-shows-barbara-corcoran-calls-sarasota-the-1-best-market-in-the-u-s-to-buy-a-home/. Prices have only improved for buyers since that time. However, they do have less to choose from.
Hey Marc - Great Post. I ran Broward County AND East side Fort Lauderdale, east of US-1 (Federal Hwy) to the beach for sales 6 months back. The 2 results are very interesting:
Broward total sales: 13,834 of which 56% Distressed (7,755)
Fort Lauderdale sales: 935 of which 32% Distressed (303)
Broward under $250K: 11,179 of which 62% Distressed (6,900)
Fort Lauderdale under $250k - 466 of which 45% Distressed (210)
Broward under $400K: 12,727 of which 58% Distressed (7,455)
Fort Lauderdale under $400k: 634 of which 39% Distressed (251)
Broward under $500K: 13,137 of which 58% Distressed (7,586)
Fort Lauderdale under $500K: 702 of which 35% Distressed (249)
Broward under 1Million: 13,692 of which 56% Distressed (7,741)
Fort Lauderdale under 1Million: 870 of which 34% Distressed (299)
Broward County overall is higher at 56% versus Sarasota's 45%. You mentioned everyone is looking for "a deal", and we Realtors hear this over and over. However, as the saying goes, "Real Estate is Local." Most snowbirds/ vacation home buyers are looking for properties closer to the beach. To get the good deals, buyers have to venture further west away from the water about 30+ minutes (without traffic). Just think about lugging the lounge chairs, cooler and toys for a trip to the beach every day....
Just ran active inventory
Broward total active listings - 19,443 of which 39% are listed as distressed (7,541)
Fort Lauderdale active listings - 2,348 of which 15% are listed as distressed (348).
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