Existing home sales for Charlotte, Manatee and Sarasota Counties in September 2012 have nearly returned to the levels experienced seven years ago at the height of the great American housing bonanza of the early 21st century. According to a recent report filed by real estate reporter Michael Braga of the Sarasota Herald-Tribune, the Southwest Florida regional housing market is close to reaching a healthy balance between buyers and sellers.
The news puts Southwest Florida real estate in an enviable position, at least compared to other major regional markets in the United States. On a year-over-year basis, home sales increased by 5.4 percent. The pending sales report for September was 31.5 percent better than last year, and 2.6 higher than in August. The luxury market is doing quite well, with 63.8 percent more listings priced at more than $1 million from August to September.
A six-month supply of homes is typically a sign of a normal housing market; at least one in which homeowners can expect a steady level of appreciation. That is not exactly the case in Southwest Florida. Back in August, Mr. Braga reported that the July inventory of available homes in Manatee County was slightly over five-month levels, something that usually indicates a sellers’ market.
Josh Salman of the Bradenton Herald reported an inventory of about 4.6 months in Manatee County -once again a sellers’ market. This situation is even more pronounced in Sarasota County, where Mr. Salman reported just 3.8 months of inventory. The year-over-year median price appreciation in Sarasota County was three percent higher at just under $170,000.
The Effect on Pricing
Based on the reports mentioned above, Sarasota homeowners would normally stand to gain the most from the current market conditions. There are reports of bidding wars on some listings, but sellers must not forget that the housing market is still undergoing a recovery. One of the reasons supply in Southwest Florida is low now has to do with the shadow inventory.
Properties that are still going through the foreclosure process, or that are upside down in their mortgages, or that have not yet been listed on the Real Estate Owned (REO) portfolios of major lenders, are part of the shadow inventory. These distressed properties could flood the market in just a few weeks, thus quickly swelling the regular inventory and preventing a median price increase.
There is also the fact that real estate investors looking for rock-bottom deals are currently major participants in the housing market. In fact, many of these investors are waiting for the shadow inventory to become available so that they don’t end up paying higher prices.
The housing market in Southwest Florida will probably continue to outperform the rest of the country, but only if the real estate community and other stakeholders concentrate on making the neighborhoods as attractive as possible for first-time home buyers -the most important players in a real housing market recovery.