Unless otherwise indicated, all data comes from Trendgraphix and the My Flroida Regional MLS for the product categories and time periods indicated.
Sales of Sarasota condominiums and homes in the $1,000,000 and over price range increased 30% in the first quarter of 2012 compared to the same quarter in 2011. The downtown area saw the largest increase with sales up 85% over last year. Siesta Key million dollar and up sales were also up strongly at +42% over 2011. Longboat Key, the area with the most million dollar plus sales last year, dropped 6% to 3rd place this year behind downtown and Siesta Key.
Inventory in this category also continues to dwindle. County-wide, inventory at the end of March 2012 in the million plus price range is down 13% from March 2011. The leaders in sales for the quarter were also the leaders in inventory reduction. The downtown market saw inventory drop 18% while Siesta dropped 16%.
The reduction in inventory along with increases in sales leaves the county with a 23 month supply compared to over 34 months last year. The downtown area has just a 14.9 month supply while Siesta is down to 18 months. Across all price ranges, the months of supply statistic improved from 8 to 6 in 2012 or 25%. The months of supply in the million dollar plus category is improving (shrinking) faster than the general market.
Unless otherwise stated, the source of all data is Trendgraphix and My Florida Regional MLS for the time period and residential property type indicated.
Unsold condo inventory in both counties is at the same level as the summer/fall 2005 timeframe. The strides made in condominium inventory reduction since the start of the crash are astounding. The table below compares today’s levels with peak inventory.
Unit sales volume was also up in both Sarasota and Manatee Counties during the first quarter of 2012 compared to the same period in 2011. Condo sales in Sarasota County increased 2% in Q1 2012 over 2011 while in Manatee County sales screamed at a 10% increase during the same period.
The Manatee County market was bouyed by west Bradenton (ZIP codes 34209 and 34210) at up 33%, Lakewood Ranch up 21% (with almost no inventory), and Central Bradenton up 18%. The only two Manatee County areas showing lower sales that last year were the SR64 area east of I-75 (Heritage Harbour area) and Anna Maria Island.
It was feast or famine for Sarasota condo sales depending on the location. The downtown market was the highlight with sales increasing 15.8% in Q1 2012 compared to Q1 2011, contining a trend started in 2011. (see blog post “Downtown Cond Buyers Spent $24M more in 2011 vs. 2010”) . In Lonboat Key, condo sales declined 4.3% during the same period. On Siesta Key, Q1 condo sales increased 21% over the prior year while in the Palmer Ranch area, condo sales dropped 13.5% during the same period.
The chart below shows that while sales increased 2% across the county, there is a noticable pattern to sales. First, in areas where the median sales price was above $200,000, unit sales increased over Q1 2011 with the exception of Lonboat Key where sales declined by 5%. Similarly, in areas where the median price was under $200,000, sales decreased with the only exception being Venice where sales grew 8%. In general, the market for the first quarter of this year was driven by luxury buyers. With the exception of Longboat, the luxury condo areas saw sales increase in double digit percentages over the same quarter last year all while inventory levels declined in double digit percentages.
CoreLogic, a leading provider of information, analytics and business services, also publishes monthly statistics on home prices. They employ a “repeat sales” methodology similar to Case-Shiller but on a more granular level. For example, data is available by state and with or without distressed sales included. You can download the CoreLogic HPI (home price index) report for January (also released in March) here.
The top line numbers for CoreLogic are generally the same, if not slightly better, than Case-Shiller. January showed home prices declined 3.1% year over year and 1% for the month . During the same period, Case-Shiller reported a 3.8% decline for the year and a .8% decline for the month. The interesting data was all in the state data, specifically:
- Florida was ranked number 3 in the peak-to-current decline at -49%. That implies that prices as of the end of January 2012 were down 49% from their highs in 2007. They only trailed Nevada (down 60%) and Arizona (down 43%). This makes sense as the big sunbelt retirement states had the biggest run ups. I think it is also a positive in that it demonstrates that most of the fluff from the run up has been raked off. Buying today is half price compared to 2007.
- The January 2012 CoreLogic HPI for Florida showed a 1.8% INCREASE in prices from December and a 1.2% INCREASE in prices since January 2011. That’s great news that conflicts with at least the 2 large markets followed by Case-Shiller. In the Case-Shiller report for January, Miami and Tampa were down 1.9% and 3.8%, respectively from January 2011. Miami was up .6% during the month of January while Tampa was down .8%.
- According to CoreLogic, 2 of our largest feeder markets (markets where we get many of our second home buyers and retirees) are still struggling in a big way. In fact, Illinois led all states with the worst January at down 8.7% for the month, pulling down their year-over-year results to down 2.6%. Ohio, another big Midwestern market that provides us with many transactions, was the 7th worse state in January at down 5.6% for the month and down 1.1% for the past 12 months.
- On the bright side, New York and Michigan both had strong January numbers increasing 1.4% and 3.0%, respectively during the month. Both states also showed modest gains year over year in January.
The Case Shiller results for January were released on Tuesday March 27th. Of the 20 markets followed, three showed prices increasing from December 2011, one market showed no change, and 16 markets showed price declines during the month.
Markets increasing or flat were Phoenix, Washington DC, Miami, and Charlotte. The best performing market for the month was Phoenix at up .9% from December 2011. The worst performing markets were Atlanta and Portland (OR) both down 2.1% during the month. The Florida markets were mixed with Miami up .6% while Tampa was down .8%.
On a year-over-year basis, only Phoenix, Denver, and Detroit showed increases from January 2011. The other 17 markets declined during the year. The best performing market for the past 12 months was Detroit at up 1.7% for the year. The worst performing market over the past 12 months was Atlanta at down 14.8%. The Miami and Tampa markets were down 1.9% and 3.8%, respectively over the past 12 months.
There is a 2 month lag between the data and the release. Furthermore, each release is an average of the prior 3 months results. The Indices are therefore slow moving and lag real time by several months. You will notice that there are abundant articles now on the internet that point to rising or at least stable home prices. Locally and anecdotally that seems to be the case here, especially in the more desirable areas.
The December 2011 Case-Shiller results were released last week (February 28, 2012). The indices revealed a 1.1% decline nationally from November and a 4.0% decline since the previous December. The Tampa market fell .2% between November and December, hitting a new cycle low. From last December, the Tampa index has fallen 4.3%. The Miami market registered a .2% increase from November to December and a 3.8% decrease from December 2010 to December 2011. Measured from their peaks in 2006, the Tampa and Miami market are now off 51% and 53%, respectively. The 20 market national composite index is just 34% off its peak. The current indices for Tampa and Miami are back to summer 2002 levels while the 20 market national composite is back to February 2003.
In the press release, S&P noted that Las Vega, Seattle, and Atlanta joined Tampa in hitting new post crash lows during December. In addition to Miami, Phoenix was the only other market to increase from November to December.
2011 was the third consecutive year of sale increases for the downtown condo market. If fact, 2011 sales were more than all years back to and including 2006 with the exception of 2007. As I have pointed out in the past, 2007 was a big year for new construction closings. During 2007 nearly 200 sales closed that were actually contracted over the previous 2 years. Without this bunching of sales, 2011 would have bested every year back to 2005.
Downtown condo inventory also continued to fall during 2011, ending the year with just 272 residences on the market compared to 324 at the end of 2010. The rate of reduction in unsold inventory has slowed compared to previous years, but the levels now stand at near decade lows anyway. Excess inventory is definitely not standing in the way of price increases.
Sales in the $1 million plus category improved dramatically during 2011, increasing 25% from 35 in 2010 to 44 in 2011.
The chart below shows 2011 sales in the top 30 buildings downtown (buildings that account for them most dollar volume) compared with the previous year.
Weighted average price per square foot dropped 3% from $297/ft in 2010 to $289/ft in 2011. However, Dolphin Tower accounted for more than all of the decline. Early in 2011 (or late 2010), the building was determined to have serious integrity issues that were causing the floors to collapse. During 2011, there were 23 sales in Dolphin Tower at an average price of just 48,739 per residence compared with 2 sales at an average price of $252,000 per residence in 2010. Computing the average sales price per square foot without Dolphin Tower (which was truly not a comparable building in 2011) would show that the weighted average price per square foot actually increased 2.9% in these 30 buildings from $298/s.f. in 2010 to $307/s.f. in 2011.
Average sale price per residence increased 7% from 2010 and excluding Dolphin Tower the average price increased whopping 17%. People are investing more dollars in their properties this year than last and getting more for their money.
Unit sales increased to 218 sales from these 30 buildings in 2011 up from 186 in 2010 or a 17% increase in the number of residences sold.
Although not obvious from the chart, total investment in these 30 buildings in 2011 amounted to $118 million compared to just $94 million last year – That’s $24 million more spent this year than last. Over $20 million or about 80% of this increase came from the Ritz Tower Residences as sales ballooned from just 3 sales for $5.6 million in 2010 to 15 sales totaling $25.7 million in 2011. The average transaction size in the Ritz Tower also increased from $1.4 million to $1.7 million between 2010 and 2011.
It is clear buyers of luxury property have gained more confidence in the downtown market over the past year.
Source is Sarasota County Property Appraiser for building and year indicated.
At the end of December 2011, the total of unsold bank owned and short sale listings was about half the level of the previous 2 prior year ends. Sales for this same class of properties were down slightly in total from 2010 and ahead of 2009. In short, demand for distress properties remains high and available inventory is at a low point. The chart below shows some of the key highlights of the distressed property market for Sarasota and Manatee County.
Also notice that the decline in distressed inventory has occurred in both bank owned listings and short sale listings. There have been numerous articles in the press about a slowdown in the foreclosure process as the lenders work through the robo signing issues. However, robo signing shouldn't have any effect on short sales coming on the market. There may be a back log of foreclosures, but in general, things are looking better.
Finally, study the two charts below. Notice the relative low median price point for all distressed properties, especially bank owned ones. The median prices indicate that half of the bank owned sales in Sarasota occurred on homes priced under $80,000.
The chart below details the distressed property market by price point.
The colored bars each represent a different year from 2009 to 2011. Each bar represents the percentage of distressed sales to total sales for that year/price point. The right most bars show all price points combined. For example, in the under $200,000 sale price for the year 2011, 52% of sales were from distressed properties. For all sales, in 2011, 40% came from distressed properties.
You can see that 2010 was the biggest so far for distressed property sales, at least in terms of the degree to which distressed sales penetrated the market. During 2011, distressed property sales accounted for a smaller portion of total sales than in 2010. Also notice that the penetration declines as prices increase. Distressed sales account for the least amount of total sales in the over $1MM price point.
However, the $500,000 - $999,999 price point has seen an increase in distressed property sales every year. This category is now just 3% points away from the lower priced $200k-$500k price point. Increase in the distressed property sales percentages in these higher price points is something to watch. Many people have been predicting that falling prices would eventually lead to strategic defaults on luxury properties, setting off a new wave of short sales in the higher price points.
The 20 market national composite Case-Shiller index lost 1.3% between October and November (There is a 2 month lag in releases, so the November index was released in January). Since last November, the same index has dropped 3.7%.
Both Florida markets followed, Miami and Tampa, lost .5% and 1.1% respectively between October and November. Compared to last November the markets were down 4.4% and 6.1%. The results for the Tampa market were particularly disappointing because the November index represented a new cycle low. The Tampa index has not been this low since the before the start of the national real estate boom.
Our local markets (Sarasota and Manatee Counties) are not included in either of the two Florida markets tracked by Case-Shiller. While it is possible that prices dropped 1.1% during November, is sure doesn’t feel like prices are falling. Inventory is scarce, not only on paper, but in “real life” -there are very few homes available to show prospective buyers. Anecdotally, there seems to be more instances of homes under contract when I call for appointments or multiple offer situations when I write offers. The level of distressed inventory is also at a post-boom low. Of course, none of these things speak to the actual prices that sellers are accepting.
However, comparing the Tampa market to our markets could be informative. The chart below details some of the relevant statistics:
As you can see, the Tampa market does have less unsold inventory relative sales than the either Sarasota or Manatee County. However, Sarasota County is below the magic 6 months of supply which is generally perceived as the line that separates a buyer’s market (above 6) from a seller’s market (below 6). But the telling statistic is the distressed inventory and sales percentages. Both Sarasota and Manatee Counties have been very efficient at clearing distressed properties from the market, Manatee County in particular. Currently, unsold distressed inventory accounts for 21% and 15% of total inventory in Sarasota and Manatee Counties, respectively. That is roughly half the ratio of distressed inventory to total in the Tampa market.
Similarly, distressed sales for the past 12 months were 45% and 33% respectively for Sarasota and Manatee Counties. Again, these results are 10% to 30% less than the Tampa market results.
In the end, all real estate is local anyway. Your neighborhood or building could be doing something different from the rest of the county or country. But just for the sake of argument, I think our markets have to be performing better than Tampa.
As explained in my recent articles on the Sarasota and Manatee County condominium markets, inventory levels are down to 2005 levels while 2011 sales of condominiums was nearly as large as 2005. During 2005 when sales and inventory were at nearly the same position, prices were moving up quickly.
So what aren’t prices moving up now? For illustrative purposes, I will use the figures from the Sarasota market. Part of the explanation is the time period shown on the inventory chart. During most of 2004, unsold inventory was around 1000 residences. In the 8 months between December 2004 and August 2005 (the first month shown on the chart), inventory had already increased nearly 40%.
A second reason is that, for whatever reason, it seems to take a long time for the market to realize things are changing. I just mentioned that inventory increased by 40% during the first 8 months of 2005. By the end of 2005, inventory would increase another third to nearly 2000 and continue to increase throughout 2006 and the first quarter of 2007. Even though the increases were fast and furious between 2005 and 2007, it took the market over 1 and half years to realize there was a problem. Prices increased steadily throughout 2005 and didn’t peak (based on the Case-Shiller numbers for Tampa and Miami) until mid 2006. By the time of the price peak, inventory levels were over 3000 residences, about triple the normal level in 2004.
It seems to take a tidal wave of evidence to swing the market. Part of what created the boom in prices was a very positive forward outlook for the market and economy in general. The market seemed to think that every retiring baby boomer was going to move to SW Florida – there wouldn’t be enough houses to go around. Now with the general woes of national and international financial markets, high unemployment, war drums beating at every turn, fears about mortgage rates increasing, etc., the background now is as gloomy as the pre-boom was optimistic. Probably rightfully so, it is going to take more than a couple of charts to move prices. It’s going to take an optimistic and energized buyer pool. And for that to happen, they (the buyer pool) has to feel that their investment is reasonably secure and that the train is leaving station again on pricing.
During 2011, there were 1242 condominium sales in Manatee County. That was the second highest year for sales in the past 8. Only in 2005 were more condominiums sold (when 1,539 sold).
Inventory levels continue to decline as well. At the end of December 2011, there were only 954 condominium residences listed for sale in Manatee County. That is about 25% fewer than at the end of December 2010.
West Bradenton (ZIP codes 34210 and 34209) sales account for about one third of all condominium sales in the county. Sales performance in West Bradenton mirrors the county – 2011 sales the second largest in the past 8 years only eclipsed by 2005. Similarly, inventory levels are down 25% from December 2010 to December 2011.
On the surface, it would appear that 2011 was a poor year for condominium sales in Lakewood Ranch. During 2011, only 93 condominiums were sold. That is the third worst year since 2004. However the decline in sales is due to the erosion in inventory. There have been very few condominiums listed for sale in Lakewood Ranch throughout 2011. Unsold inventory ended the year at just 33 residences compared to 57 at the end of 2010. At no time during the last 9 months of 2011 did inventory levels ever rise above 40.
Anna Maria Island tended to follow the county wide sales trend with sales besting every year in the past 8 except 2005. Inventory, however, has not been reduced as dramatically. At the end of 2011, there were 149 condominiums listed for sale on Anna Maria Island. At the end of 2010, that figure was 179 for a reduction of about 17%, much less than the county average.