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.
The chart below shows condominium sales by year for all of Sarasota County. Before you study the chart, remember that 2005 and 2007 were big years for new construction closings. Several buildings closed all of their contracts in a matter of months in each of these years. The contracts were signed over the course of the 2 years during which the buildings were being constructed. So even though the sales show up in 2005 and 2007, they generally reflect demand over the over the prior 2 years. For the more popular buildings, the sales contracts could have all been taken within a few weeks of announcement- possibly all 2 years before actually closing. The net take away here is that the sales figures for 2005 and 2007 over state demand by 300-400 units in each year (my estimate).
So now look at the chart. Condominium sales peaked in 2005 and crashed to the ground in 2006. But they have increased every year since with the exception of 2007. As discussed above, it’s possible that true demand in 2007 was flat or perhaps worse than 2006 because of the timing of new construction sales. Similarly, 2004 could have been the peak for demand in this chart as 2005 closings also overstated demand. Regardless, the sales trend since the crash has been impressive and generally uninterrupted. In fact, it is likely that more contracts for the sale of condominiums were signed in 2011 than any year since 2004.
Even more impressive and positive from the stanpoint of price improvement is that inventory levels have been declining all the time sales have been increasing. Unsold Sarasota condominium inventory ended 2011 with just 1503 residences on the market. That is down 2% from the November 2011 ending number and 25% below unsold inventory as of December 2010. It’s an unbelievably low figure as the chart below shows.
Inventory levels are and have been at 2005 levels since fall of 2011. There is less selection available to buyers now than since August 2005.
The October Case-Shiller numbers released last week for October 2011 were down from September in 19 of the 20 covered in the report. Only Phoenix showed an increase (up .3%). Tampa and Miami were down .5% and 1.2%, respectively. The 10 and 20 market national composite indices were down 1.1% and 1.2%.
Since last October of last year, every market is lower except Washington DC and Detroit. The DC market is up 1.3% since last October while Detroit is up 2.5%. I would say that the upswing in Detroit is because the only direction the index can move is up, however, it managed to drop 3.5% from September. If this trend continues, Detroit will be negative on the year. The current index for Detroit is now at 71.0 which means that today's home prices in Detroit are 29% lower than they were on January 1, 2000. After eleven years, home prices are down 29%.
The biggest and only double digit loser for the past year is Atlanta at down 11.7%. Atlanta shares the stage with Detroit in being the only two markets where prices are under January 1, 2000. Atlanta's index is 91, indicating that home prices have declined 9% over the past 11 years. The Tampa and Miami markets are down 6.1% and 4.0% since last October. The 10 and 20 market national composite indices are down 3.0% and 3.4% on the year.
The Standard and Poors Case Shiller indices measure the change in home prices across 20 markets. The indices are computed monthly with a 2 month lag (October indices are released in December). The indices are computed such that prices on January 1, 2000 equal 100. The percentage change between any two points in time can be measured by dividing change in the index by the index in the earlier period. For example, if the index for this month is 110 and the index for this month last year was 100, then home prices have increased 10%, at least as measured by the index. You can read more at Standard And Poors website.
Across ZIP code 34236, 30 condos sold in the month of November 2011. That is 10% (or just 3 more) than the previous November. For the last 12 months, sales have been essentially flat with 308 residences selling compared to 311 in the previous 12 month period.
Although inventory has ticked up slightly in the past 2 months, levels are still very low by historical standards. The number of residences listed for sale in downtown Sarasota is 13% less than the same time last year and only slightly higher than we ended season with this past winter.
Looking at the market price point shows that most of the interest is at the extremes – properties below $300k and above $1 million are both up double digits in the past 12 months compared to prior 12 month period. The near opposite is true of everything in between- in all 3 categories between $300k and $1 million, sales have declined (most by double digits).
The inventory by price point shown in the first 2 columns of the chart above illustrates just how thin things are. Most buyers start with a price range and the ranges are typically tighter that the categories I have charted above. That means the starting point, before talking about view, updates, features, location within downtown, etc., is going to be a very low number.
Results by building
The chart below provides sales and inventory information for some of the more popular buildings in downtown. As you study the chart be carefull about any assumptions regarding the sales per square foot numbers shown. In most cases, there aren’t enough data points (i.e. sale transactions) to conclude anything about the numbers. One thing that is clear from the chart, however, is that the current volume of distressed inventory for sale downtown is virtually nil.
Choppy is what best describes the past year of the Case-Shiller Home Price Indices. Since peaking in August 2006, the 20 market National Composite index declined for 33 months in a row. That’s represents a decline in home prices every month between August 2006 and April 2009. During this period the index declined from a value of 206 to 139 or about 33%. The indices for Tampa and Miami declined about 41% and 48%, respectively, during this same period.
source is S&P Case-Shiller Home Price Indices for September 2011 (released in November 2011)
Since April 2009, the 20 market national composite index has bounced around moving up for 3 or 4 months then down for 3 or 4 months. Currently the national composite index stands 2% higher than April 2009. So the general trend through all of the choppiness over the past 2 and half years has been up. The Florida indices have continued to decline during the past 2 and half years. Since April 2009, Tampa and Miami are down 10% and 5% respectively. However, most of this decline happened early on in the period. For 2011, both Florida indices are down only about 1%.
This choppiness is more or less what you would expect at some turning point in the market. Either they market is taking a breather before going lower or the period of price declines is about to be over. I think the foreclosure story will be the deciding factor here and may be what is contributing to the price fluctuations. Read my post on Distressed Property here to get more details.
Foreclosure inventory continues to decline as does short sale inventory, both at a pace that is more rapid than the decline in overall inventory. At the end of November 2011, distressed inventory (total of bank owned and short sale listings) of homes and condominiums in Sarasota was 17% of total inventory, down from 19% this time last year. For the past 12 months, sales of distressed inventory have been 40% of sales down from 45% over the previous 12 month period.
In Manatee County the numbers are even more pronounced. Distressed inventory is now just 22% of total inventory, down nearly a fourth from the 28% last November. Sales of distressed inventory were 46% of total sales over the past 12 months compared with 48% over the previous 12 month period.
Like most things to do with real estate, foreclosure sales and inventory are not slathered equally across the all areas, as the chart below shows.
Here’s how you read the chart:
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The % of Co. Distressed represents the % of total county distressed sales and inventory occurring/present in the area. For example, during the past 12 months this year, 13% of all Sarasota County distressed sales occurred in Englewood. And, as of November 30, 2011, 18% of all Sarasota County distressed inventory listed for sale was located in Englewood.
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The % of area’s total represents the penetration of distressed property sales and inventory to the total of all sales and inventory for the area indicated. Again, looking at Englewood, distressed sales for the past 12 months accounted for 61% of all Englewood sales while distressed inventory listed for sale in Englewood accounts for 22% of all single family homes and condos listed for sale in Englewood (compared to 40% and 17% for all of Sarasota County as shown on the top line).
If you know anything about the area, it will only take seconds to see what’s happening. There is a direct relationship with property values and foreclosure concentration. Sarasota, in general, has more luxury property than Manatee County and overall, a higher average transaction size. Sarasota County also have a lower penetration of distressed sales and inventory. Within Sarasota County, the luxury areas of Longboat, downtown, and Siesta have fewer than half the penetration of distressed sales and inventory as the generally lower priced south county areas.
The same is true within Manatee County as well. Lakewood Ranch and Anna Maria Island have higher prices and fewer relative distressed sales and inventory than the rest of the county.
If the “next wave of foreclosures” is the only thing that can slow the recovery, then you should feel some relief if you own property (or are considering buying property) in one of the luxury areas. At least to date, those areas have been somewhat insulated from the entire foreclosure morass.
Manatee and Sarasota Single Family Home Market
Unless otherwise stated, all data in this article comes from Trendgraphix and the My Florida Regional MLS for the product categories and time periods described.
November was a huge month for single family home sales across both counties. Manatee County Single family home sales increased 9.5% over November 2010 while Sarasota County was up 17% over the same period. For the past 12 months, Manatee County single family home sales are up 8.7% over the previous 12 month period while Sarasota single family home sales are up 3.6% for the same period. Both Counties should easily beat all sales records back to and including the year 2006.
While inventory has ticked up some in the past 2 months, levels are still in the historic low range. We will have fewer homes on the market to start this season than we ended with last season.
Manatee And Sarasota Condomium Market
Unless otherwise stated, all data in this article comes from Trendgraphix and the My Florida Regional MLS for the product categories and time periods described.
The general for trend Manatee and Sarasota condo sales remains positive. From the floor in late 2008, the summer selling seasons (typically the lower volume months) have mostly been higher than previous years as have the peak seasons (winter and early spring months). During last winter season, sales came within just a few sales of reaching boom-time peaks.
While November sales in both counties were 4-5 residences less than the previous November, the past 12 months of sales for both counties is up nicely over the previous 12 month period. Specifically, Manatee County condo sales are up 4% in the past 12 months while Sarasota condo sales are up a healthy 10%.
If anything slows down the condo sales train in Sarasota and Manatee, it will be the lack of condos available for sale. Both counties have around 40% of the inventory on the market than was available for sale when inventory peaked.
That being said, both counties experienced an increase in condos available for sale over the prior month. Unsold Manatee condo inventory closed November with 963 residences, up from 946 listed for sale at the end of October. Similarly, Sarasota County saw unsold condo inventory increase to 1554 residences at the end of November compared to 1507 listed for sale at the end of October. This is largely a seasonal phenomenon as sellers start to place their homes on the market in advance of our annual influx of winter visitors. The same increase happened in November 2010. Even with this increase, Sarasota County inventory levels now are still 15% less than we ended season with last year (9% less in Manatee County).
Manatee and Sarasota Condominiums
Unless othewise stated, all data in this article comes from Trendgraphix and the My Florida Regional MLS for the product categories and time periods described.
The general trend Manatee Condo and Sarasota Condo sales remain positive. From the floor in late 2008 the summer selling seasons (typically the lower volume months) have mostly been higher and peak season (winter and early spring months) have all been higher. During last winter season, sales came within just a few sales of reaching boom-time peaks.
October was mixed with condo sales in Manatee County declining 8% from October 2010 levels while Sarasota County condo sales increased 25% over the previous October.
If anything slows down the condo sales train in Sarasota and Manatee, it wills the lack of condos available for sale. Both counties have around 40% of the inventory on the market than was available for sale when inventory peaked. In fact, the next sales peak we have to climb in Sarasota is back in December 2005, when 260 condos “sold”. I place sold in quotes because many of the sales were from the closing of new buildings that were completed in late 2005 and all sales closed in December. December is historically a weak month for real estate sales. But even so, there are 40% Sarasota condominium residences on the market now than in December 2005.
Manatee and Sarasota Single Family Home Market
Sales of Single family homes in both counties is the same story but to a lesser and more varying degree. In Sarasota, the recovery seems much stronger overall with the slope of the sales line being much steeper since the floor. However, sales in the past 12 months in Manatee County are up 7% compared with just 1% for Sarasota County during the same period. October was a strong month for both counties with Manatee County increasing 10% over October 2010 and Sarasota County up 13%.
As with condos, the lack of homes available for sale could stall single family home sales. The recovery has been predicated on buyers getting the great values on great homes in great locations. As inventory falls, the likelihood of finding that perfect home falls. In a more typical market, this might push prices higher. However, ours is a market of second home buyers (especially condominiums) and second home purchases are 100% discretionary. If the perfect home isn't available at a great price, there may be no urgency to buy.
