Number of new listings stabilizing, but sales outlook uncertain. (By Raul Elizalde, 4/06)
Buyers and sellers of Sarasota properties who read the local newspaper articles have had their emotions tugged to extremes. The current editorial mood conveys the feeling that the sky has fallen. Inventory has gone through the roof and buyers are nowhere to be found.
In response, many real estate professionals try this positive spin: the market has returned to a balanced normalcy where buyers have choice and sellers are forced to price their property reasonably in order to sell.
A fair and balanced review of the market shows that the number of homes for sale in Sarasota coming to market is unusually high, but likely to stabilize soon. Sales, however, continue to be depressed and it might take a while until they pick up again.
My forecast is based on an analysis of sales and listing activity for the last seven years. The basic premise is that there is a long-term trend of sales and homes for sale in Sarasota that is likely to remain in place. Under this premise, it is easy to see that there was a severe scarcity of listings between mid-2004 and mid-2005, which has reversed quickly and is only now coming back to normal levels.
This graph shows the actual levels of new listings and sales for single-family homes in Sarasota over their respective long-term trends. It shows how both sales and listings have recently departed from the trends. It also shows the listing deficit of ’04-’05 and the subsequent listing excess. This is what led me to issue a “Last Call for Sellers” in my newsletter of January 2005, where I argued that the best time for selling was the first quarter of last year as the market seemed poised for a reversal.
The same graph shows that sales are now depressed. This dip coincides with seasonally slow sales, which worsens the picture. Both the listing excess and the sales deficit should improve this summer, for similar seasonal reasons.
This graph shows the cumulative excess (or deficit) of new listings and sales with respect to trend. A very interesting conclusion is that the current flood of listings has not yet made up the past deficit. This indicates that listings will continue to come at an unusually rapid clip, although they might not be far from reaching a top.
The pace of sales, on the other hand, continues to decline. As long as Sarasota remains a destination – and the indication is that Sarasota’s profile is rising in that regard – it should only be a matter of time until this decreased sales environment gives way to the opposite situation: one of pent-up demand from all buyers who are considering Sarasota but are currently shy at pulling the trigger.
This graph shows my market forecast assuming a gradual, although somewhat quick, return to trend. This forecast might be somewhat optimistic, but it still points to a rather weak rest of 2006 where the sales/listing imbalance will put downward pressure on prices. Barring major developments, however, it also points to a considerable improvement in 2007.
In this environment, serious sellers should seek expert advice and focused marketing from the listing agent. Buyers should work with Realtors who can help them navigate the inventory list and negotiate conditions appropriate to the current market.
When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise to understand the value of a property and how to market it right. Our track record, added to the unsurpassed reputation of Michael Saunders & Company as the premier real estate company in Florida’s Gulf Coast, give you the peace of mind you deserve, whether you are looking to buy or sell a property.
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