Sarasota Real Estate: Observations from Q1 2010 and Projecting Forward

So, with one quarter of 2010 in the books where are we?

The good news is buyers are in the Sarasota property market, and they are also predominantly focused on distress (bank owned and short sales) and value.

What’s driving our market? Pent-up demand and rising consumer confidence amongst buyers who do have solvency and/or are gainfully employed.

Pent Up Demand in the Sarasota Property Market

Last month I attended the world’s largest real estate investment forum in France. One of my takeaways, as it relates to both the global and our local Sarasota property market, is that there is indeed pent-up demand in the residential markets.

From 2000-2002 the yearly average for housing units sold was about 8500 per year. This number provides us a context from before the boom. The prices in our market peaked in mid-2005 and have been declining for more than 4 years. From 2006 to 2008 purchases hovered around 6000 units. Many potential buyers who were solvent and looking for Sarasota Investment property have been waiting as they suspected continued depreciation. In 2009 we were back up to about 8,200 units sold, good news for Sarasota Realtors.

If a reasonable average for sales is 8,000 units per year, then the Sarasota property market needs to average at least 9000 unit sales per year for the next six years to catch up with the purchases that were put off over the past few years. There were 2,200 units sold in Q1 of 2010, so projecting forward we are paced to sell 8,800 units in 2010.

The bottom line here is that there is pent-up demand in the market, and this means there are buyers, but they are of the cautious variety. They are ready to make Sarasota property purchases, but only when they believe that they are getting a good value and trust their Sarasota Realtor.

Sarasota Real Estate Market: Getting Back on its Feet

Sarasota as a community is not doing particularly well in employment terms. The unemployment rate was 13.4% in January, and 13.1% in February. Looking at it from the other vantage point, however, there still remain 86.9% who are gainfully employed and are feeling better about their prospects of stability as across the country there is a sense that companies are making money again.

Many in this segment are willing to channel their pent-up demand into buying properties for sale in Sarasota. Another factor driving our market is the fact that we remain a much sought-after resort town, there are still many solvent buyers coming from out of town to purchase Sarasota investment property.

Lower Price Points Selling Faster in Sarasota: Buyers Look for Value

Over 91% of the sales on Sarasota property occurred under $500,000. While value can be had at all levels there is clearly more comfort at the lower price points. This is illustrated by the fact more than 2/3 of sales in Q1 2010 were under $200,000.

And finally, what about bank-owned properties and short sales? These made up more than 40% of the overall closed transactions and are one of the main areas buyers are looking to find the value they want in foreclosed homes in Sarasota.

My Conclusions after an Encouraging Start to 2010?

1. Buyers are looking for value.
2. All buyers purchase with the intent of buying low and selling high.
3. Residential real estate in Sarasota will rise ahead of employment numbers because there has, and will, continue to be strong interest from out-of-town buyers.

So after a turbulent few years, and with a huge re-adjustment in pricing, it now looks like the Sarasota real estate market is healthy and growing steadily. As NBC’s Today show highlighted, it is also the best place in the country to get value on real estate. It looks like shrewd buyers will continue to get great value on properties for sale in Sarasota, and good opportunities to buy into this fantastic community throughout Q2 2010.

Call with any real estate questions: 941.587.0740.