Sarasota Housing Market Trends

According to the latest housing price forecasts from Fiserv Lending Solutions, a provider of mortgage and consumer lending services, prices in the Sarasota housing market will rise by 3.1% in 2006. The median price of Sarasota homes in the third quarter of 2005 was $222,000, and between the third quarter of 2004 and 2005, sales rose by 40.3%, top three in the rankings published by Fiserv. Sarasota housing market was only edged out by Phoenix and neighboring Naples in terms of the change in sales price within a one-year interval, between 2004 and 2005. Comparing this with the corresponding projection for 2005 to 2006, there is an indication of a dramatic deceleration of the market. The rates are slowing down and if conditions remain as they are at the moment, Sarasota housing market is bound to equilibrate in the years to come. Fiserv generally forecasts a significant stagnation in housing prices for the United States in 2006. Overall median home prices will only inch up by 1.5% this year. Many metropolitan areas in the United States will experience drops, including some of the largest, and most expensive, ones such as Los Angeles (down 3%), New York (down 2.43%), and Washington (down 1.9%).

Officially, the Florida Association of Realtors report that the statistics for the second quarter of 2006 showed “signs of a market adjusting to a better balance between buyers and sellers.” All over Florida, existing-home median sales price rose 9% to reach $254,800 in the second quarter; the corresponding number a year ago was $234,500. In a more recent account, Bradenton Herald reported on August 23, 2006 that existing home sales continued to tumble throughout Florida in July. Every market in the state showed a decrease in the number of homes sold as compared to last July but only Naples saw a bigger drop off in sales than the Sarasota housing market. More recent numbers released by the Florida Association of Realtors confirm that sales in Florida dropped by 49% and home prices are starting to follow suit. Housing prices fell 11% from where they had been in July 2005, where the median cost of an existing home was $338,100. The median price for July 2006 was $302,100.

In the Sarasota housing market, residential home sales were down by 39% compared to last year, with the median sales price barely moving up from $317,800 to $318,500. Condo conversions also dropped 20% in price. A most likely reason for the general decline of prices is the difficulty in selling overpriced homes in the Sarasota housing market. No amount of advertising has ever sold an overpriced property.

Derrick Barwick, senior vice president of de Morgan Communities, figures that it will take the better part of a year for inventory in the Sarasota housing market to balance with demand. But even then, the statistics will not return to the headstrong 2004-2005 levels. The National Association of Home Builders also indicated that the Sarasota housing market is likely to remain depressed for the remainder of 2006. Evidently, the Housing Market Index for August 2006 declined seven points to 32, the lowest level reached since February 1991 when the measure was at 27. Only Housing Market Index figures above 50 indicate that more builders view sales conditions as good than poor.

The National Association of Home Builders has been doing the survey for 21 years. It weighs the perception of builders with regards to sales expectations for the next six months as either “good,” “fair” or “poor.” Corresponding scores for each component are then utilized to extract the Housing Market Index. For the Sarasota housing market, all three components fell in August.

With these trends, erosion in the Sarasota housing market activity to continue through most of 2006 before hopefully stabilizing by 2007.