A significant improvement in the market for Siesta Key and Longboat Key condos bodes well for sellers.

Despite doom-and-gloom media coverage and serious problems in the mortgage front, real estate market conditions in Sarasota have undoubtedly improved compared to last year. More sales are taking place and the number of condos and homes for sale in Sarasota has gone down. This reversal of fortune is quite clear in the Longboat Key condo and Siesta Key condo markets.

The number of condos for sale on Siesta Key went down by more than 10% to 545 at the end of July from a peak of 620 during February. Condos for sale on Longboat Key declined over 16% to 420 from the March high of 503. At the same time, monthly sales increased on both Keys: the number of condos sold on Longboat roughly doubled, while on Siesta it almost tripled compared to the extra-sluggish months of 2006.

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Over the past month there has been more change in the mortgage industry than in the previous 20 years combined!  What happened to all those lenders?  How did it happen so quickly?  Is this an implosion or just an environment of change?

The answer to most of these questions lays in the “Secondary Market” of mortgage lenders.  Each lender needs to replenish their coffers with cash to continue to lend money to homebuyers.  To achieve this, lenders package loans into large dollar amounts and “sell” them to an investor.  This is considered the “secondary market”.  Those investors then create funds that are then made available to all of us in our personal investment portfolios, thus completing the cycle of funds.  Last month several of the funds failed and now investors have no interest in buying any additional mortgages from lenders. Thus, lenders have no new funds to lend. Without lending, they have no income and suddenly these companies have no value!  Mortgage implosion!
Over the past decade hundreds of brokers and small correspondent lending groups have formed and tried to act like the major lenders. We know these as Brokers, Mortgage Lenders and even some very large names are really “Correspondent Lenders”, in other words they buy money from the wholesale divisions of major mortgage lenders, like Wells Fargo and sell them under their own name.  Click here to read more about Sarasota Property, Sarasota Real Estate articles

Homeowners may find that the proposed super exemption come with a heavy catch and will result in higher taxes.By Raul Elizalde (8/07)

The Florida Legislature in Tallahassee wants to rewrite Florida’s homestead exemption laws to phase out the Save Our Homes cap that limits annual tax assessments.

Currently, every homeowner of a primary residence in Florida has the right to deduct $25,000 from the assessed value of their home and cap its increase at the lower of CPI or 3% per year. This is known as the Save our Homes amendment.

A new plan for a “super exemption” would give homeowners a choice. They will be able to keep Save our Homes, or increase the deduction from the current $25,000 to 75% of the first $200,000 plus 15% of the next $300,000, with a minimum deduction of $50,000 and a maximum of $195,000. Voters will decide on this new measure by referendum this coming January.

Although the “super exemption” may seem a better deal for homeowners, it has a “catch”: the new deduction would be calculated from the market value of their home, not from the current assessment.

Anybody who has owned a home for a few years has been able to keep taxes in check with this 3% cap. In many cases, this is much more valuable than the higher deduction proposed by lawmakers.

In fact, for the West of the Trail/Siesta Bayside universe that I explored in my previous newsletter, the new super-exemption would result in significantly higher taxes for most homeowners.

On aggregate, the combined tax burden of about 2200 homesteaded non-waterfront homes in Sarasota I have studied in this area would increase by more than $8mm. Just 10% of the homes or less would actually have a tax advantage by switching out of the current Save our Homes amendment and into the super exemption that will be proposed by referendum in January. The average homesteaded home would face a $4,000 tax increase when switching to the super-exemption.

Waterfront homes and luxury homes on the Siesta Key bayside and in the Sarasota mainland would be vastly more affected by the new plan. While a small handful of waterfront homes would see some tax savings, the increased tax burden for waterfront Sarasota homes is more than $7mm in just the area I studied of 380 homesteaded homes.

Although each homeowner would be able to take much larger deductions than the $25,000 allowed under Save our Homes, the new proposals do away with years of appreciation caps and results in a average additional tax on the homesteaded waterfront home close to $20,000.

Those who do not currently own a home or have not lived in theirs for too long are likely to benefit from the proposed super exemption when they purchase a new home. Those who have been in their homes for a relatively longer period of time and have no immediate plans to move, however, would be very negatively impacted by the new proposals. This is especially true for waterfront Sarasota real estate.

When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. 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. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.

Call us today at 941-350-7904 for a consultation, and visit our website, www.SarasotaProperty.info, for monthly updates on the Sarasota real estate market.

The value of Sarasota waterfront homes has climbed steadily over time.

(By Raul Elizalde, 7/07)  

When talking about waterfront, it is often said that “they are not making any more of it”. That is intended to mean that the scarcity of waterfront properties is an important contributor to their sustained value and that because of it, they withstand the ebbs and flows of the general market than other properties. When it comes to Sarasota and Siesta waterfront homes, this is certainly the case.

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Demand and supply conditions for Longboat Key Condos seem better than for Siesta Key Condos, especially for Bayside units.

(By Raul Elizalde, 6/07)  

Readers might recall that last month I showed how different price brackets of real estate in Sarasota show very different supply/demand conditions. In the aggregate, single-family Sarasota homes priced well below $1mm sell more often and have less competition than higher-priced homes. The interesting fact, however, was that at higher prices the relationship breaks down: more homes sell in the $2-2.25mm category relative to supply than in the $1.75-2mm bracket, for example. This finding reflects the much-larger supply of Sarasota homes at the lower range, while the volume of past sales is roughly comparable I also warned that these findings are applicable to all Sarasota County homes as a whole, but every area is different and has to be analyzed on its own. Siesta Key and Longboat Key condos illustrate this point well. Gulfside condos in Siesta Key and Longboat Key have a roughly similar pattern of inventory accumulation for prices below $1mm. On the basis of the last 12-month sales volume, both Keys have around 20 months of inventory. In the lower price ranges, both have a bit of a glut in the lower range (below $600,000). In the above-$1mm category, however, Longboat Key condos seem to be in a much healthier position than Siesta Key condos. Inventory at the higher price levels reaches the phenomenal 10-year worth of supply (around $1.1mm) on Siesta Key

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from the Sarasota Herald Tribune featuring Sarasota realtor Raul Elizalde. Raul talks about buyers who “lowball” sellers.

Sellers balk at reducing listing prices, but yield to the softer market at the closing table. (By Raul Elizalde, 5/07)

It is becoming more and more clear to sellers of homes in Sarasota that the only way to bring traffic to their properties is to price them realistically. Since many sellers are still priced too high for the current market, properties that are priced correctly stand out and get more showings than their overpriced counterparts.

On the other hand, buyers, who are becoming aware of having the upper hand, tend to make offers at significant discounts from whatever the listing price may be, sometimes regardless of whether or not the property in play was priced correctly.

What is a seller to do, then? Price the home low to bring traffic but open the door to unreasonably low offers, or price the home high to leave a hopeful cushion but sacrifice the traffic? This is a tough dilemma.

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Should buyers wait for further price drops? Signs of a bottom are near, and it’s all about psychology. Read on.
(By Raul Elizalde, 4/07)

In my November 2006 newsletter (Listing Price vs. Selling Price, November 2006 ) I looked at a common measure of the market: the ratio of Selling Price to Listing Price (SP/LP), which is reported to be around 90% for single family homes in Sarasota. The November article explained that the number is somewhat misleading, because the ratio is defined on the basis of the last listing price before a property goes under contract. Any previous price reductions are ignored.

A better measure is the ratio of Selling Price to Original Listing Price (SP/OLP). Using this ratio reveals a clearer picture of the market. As prices weaken, reductions become more common and the ratio SP/OLP decreases. Also, even without intervening price reductions, sellers become more willing to take low offers and settle for less.

Is it a good time for you to buy a house in Sarasota? Read more Sarasota Real estate updates here:

Inventories are high, but they will eventually return to normal.
(By Raul Elizalde, 3/07)

There were 4781 homes for sale in Sarasota County at the end of January. Considering that during that month only 145 sold, one could say that it would take 33 months like January to sell all those homes. This is a common inventory measure used by Realtors.

But is this the right way of measuring how long a home for sale in Sarasota would take to sell? A better measure would be to take into consideration the total number of sales for the last 12 months, not just for the last month. Because 2708 Sarasota homes sold in the past 12 months, the expected time to sell all these homes would then be 21 months.

In my opinion, these numbers are too pessimistic. On average, sellers will be able to sell their homes in a shorter period of time. Why? Because these extremely long inventory periods are calculated on the basis of recent sales, which have been abnormally depressed since mid-2006. If and when sales return to a “normal” level, then the current inventory appears much more manageable.

But what is a “normal” level?

Looking back to historical sales, the period 2002-2003 appears to show consistent monthly sales averaging 400 single-family homes per month. After that, during 2004 and the first half of 2005, sales levels increased to 450 per month, only to fall below the trend during the second half of 2005 and 2006 to the current levels of just 234.

If we assume that the 2002-2003 level of 400 sales per month was a more “normal” market, then under “normal” conditions the current inventory of 4781 units would take 12 months to sell – that is, an average of 6 months on the market, which is a reasonable length of time.

The question, of course, is: when will sales return to “normal”?.

During most of 2006, prospective buyers were subject to relentless reporting of falling home prices. Why buy, if prices would be lower in a few months? Many prospective buyers, who wanted to buy, were either scared into waiting or decided to postpone their purchases hoping to get a better deal.

As this year starts, there are some indications that the psychology of buyers might be changing. In fact, preliminary sales figures for February indicate that sales of Sarasota homes are higher than those of January, even though February has fewer days and has been one of the seasonally slowest months.

A change of psychology can also be brought about by recent media headlines suggesting that the Sarasota real estate market has found its bottom. Furthermore, interest-rate futures suggest that two more interest-rate cuts are likely this year. Supported by a benign interest-rate environment, the built-up demand from 2006 may well provide a “kick” to sales that might bring the pace of purchases closer to a “normal” level and thus help homeowners sell their properties.

When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. 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. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.

Call us today at 941-350-7904 for a consultation, and visit our website, www.SarasotaProperty.info, for monthly updates on the Sarasota real estate market.

A condo-by-condo view of the Longboat Key condo market .
(By Raul Elizalde, 2/07)

When looking at real estate market conditions, it is often useful to look at the big picture. Sometimes it is best to look at the Sarasota real estate market as a whole, or at the entire Sarasota condo activity. Many times it is better to narrow it down, to the Siesta Key single-family home activity, or the luxury condo market, for example. But when properties are lumped together, some of the details that are often crucial to a good understanding of the market are lost. There is always a trade-off between looking at details and getting a sense of the big trends.

This newsletter issue, unlike many of the past issues, takes a closer look at the details. I focus today on the Longboat Key condo market on a condo-by-condo basis. I have looked at twenty-six different condominium complexes accounting for about 50% of all the Longboat Key condos for sale.

The picture that emerges from this study is that there is a very wide span of sales, turnover and inventory among these condos. Aggregate figures do not account for this variety.

For example, Players Club has the lowest inventory in this sample, at just six months. This means that if units continue to sell at the same rate in this Longboat Key condo complex, it would take roughly six months to sell them all. On the other end of the spectrum there are condos such as Longboat Terrace or Sand Cay, which had no sales in the last twelve months. This makes it very difficult to say when the units offered there could reasonably be expected to attract a buyer. These last two condo complexes are by no means alone: sellers in many other condos on Longboat key experienced the same agonizing conditions in 2006.

The number of sales did not seem to be related to the number of units in any given complex. Promenade, with 112 units, had 9 sales in the last 12 months. But Privateer, with 116, had only 3 sales. Both had, at the time of this writing, the same number of active listings (8). As a result, Promenade has a much higher turnover rate and substantially lower inventory (measured in months).

Different rates of turnover might be an indication that the marketing needs to be approached differently for each condo complex. If you would like to know how your condo stacks up against others, or to find out more about our marketing strategies, please call Alison or Raul Elizalde for a consultation.

When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. 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. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.

Call us today at 941-350-7904 for a consultation, and visit our website, www.SarasotaProperty.info, for monthly updates on the Sarasota real estate market.