In last month’s article, we laid out the three major influencers driving the rise of prices in our local Sarasota real estate market over the last 6 years.
Read Part 1 of this 2 part series on Rapid Appreciation in Sarasota Real Estate.
Now the big question remains to be answered: Is the rise in prices sustainable for foreseeable future?
I believe it is, and here I tell you why!
Florida leads the US with 21% of all the Nation’s Foreign Purchases
There are significant numbers of buyers around the world that are keen on investing in US real estate. For many of these, the US is a safe haven for their money, offers personal security, and a healthy environment.
Historically speaking major cities, Like NYC, have been a better bet for foreign money. Yet in today’s world real estate market, there are few places that provide the water, sunshine, arts, culture, and lifestyle options that most people want.
Let’s look at prices in some of the world’s current desirable locations
Savvy global investors looking for English-speaking, safe havens outside the US are looking at London, Toronto, and Sydney. Median prices in these cities are between $4.6M and $1.1M depending on the neighborhood in London, $535k in the greater Toronto area, and well over $750k in the more desirable neighborhoods. While in Sydney Australia it is $720k.
Median Home Prices Around the World
In the United States, median prices in the most desirable locations are also higher. In November I attended the national Asian Real Estate Conference, and although historically Asians have been drawn to their closest ports: Honolulu, San Jose, San Francisco, and Los Angeles, these cities have become cost-prohibitive for most. Many believe that Asians will soon be a significant group purchasing Florida real estate.
We are part of the Global Economy, and Florida is HOT!
In the eyes of the global buyer, Florida is a great value right now when you compare to other English-speaking markets around the US and abroad.
If Florida can TRULY continue to diversify its economy, the long-term value is particularly compelling. Our state is developing the growth industries of the future: food, technology, healthcare, 3-D printing, and green energy. We are attracting more corporate headquarters and institutions of higher learning. If we continue on this trajectory then we may look back to say that current property prices are actually a bargain.
All of this is to say that one of the primary factors driving demand in Sarasota real estate is that it is cheap to purchase real estate here and in many cases, the cost of ownership (utilities, taxes, and insurance) is lower here as well. So if the Florida brand speaks to you prices are low, really low.
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Are Sarasota Locals/ Natives Getting Priced Out?
Sarasota has gained global recognition as the #1 beach in the United States, a top retirement destination, and the cultural capital of the state. Median prices have risen from $222,000 during the 3rd quarter of 2014 to a paltry (comparatively speaking) $236,400.
As you can see, the current dynamic is not favorable to the locals, for which Sarasota already feels very expensive. But because the price differential is so great, for outsiders our city feels like a great value. Many are taking a real look at Sarasota.
The chart below illustrates the median cost of single-family homes in certain Florida cities and compared to the chart above it is significantly less expensive to purchase here.
One additional takeaway is that with the exception of San Francisco, California all of the median prices are well below their peaks, which occurred between 2006-2008. For example, the high median price that occurred in Sarasota was $396,000.
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