A market with mixed messages, but still a good one
By Natalie Gutwein
I consider it a compliment when someone asks me, “What’s going on in the market?” People have always asked me this question but, lately, it’s the first thing people say to me. The last two years have been absolutely insane in the real estate market. I’ve been doing this since 2004 and I’ve never seen anything like it.
Things started to change around November 2021. We couldn’t get properties on the market fast enough — every listing had multiple offers, no inspections, as-is contracts, people paying way over list price. It was an all-out dog fight.
Our frenzied market peaked in April of 2022. At that time, 51.4% of the single-family homes sold in Sarasota and Manatee counties were sold above list price. As of February 2023, that number has dropped to 8.9%, which is more in line with a “normal” market.
If you look at the average sales-price-to-list-price ratio, it’s currently about 97 %. But that doesn’t really tell the whole story. List prices have dropped 10 to 12% (depending on the product), making the sold price at 97% actually 13 to 15% below what they would be if list prices were still at the March/April 2022 level.
The charts in this column show the months of inventory broken down by segment. The segments in both single-family homes and condos under $500,000 up to $2.5 million are still in a seller’s market. However, our market is incredibly oversaturated in the $5 million-plus price point. In single-family homes there is 30 months of inventory and in condos there is 46 months.
Time on the market in the $5 million-plus in both single-family and condos has increased significantly. It’s not that demand has fallen significantly but the inventory has risen faster. Homes in the $400,000 to $1 million range are still seeing multiple offers, as we are so low on inventory in that sector. We are still seeing high-demand products, like a $1.5 million nicely renovated beachfront condo getting multiple offers.
So, what does all this mean? For what should you prepare yourself if you are a buyer in this market? Have a proof of funds available if viewing anything over $3 million. It’s been a standard in other markets for years, but is now standard in ours. Know that many lowball offers will probably be ignored (especially under $2.5 million). The inventory in our market is still incredibly low in those segments.
High-end luxury buyers, especially those looking at condos over $5 million, have leverage. The inventory in that market is saturated. The Multiple Listing Service currently shows 46 months of inventory, but that’s only tells part of the story. Most of those listings are new construction, and developers only list a small percentage of their inventory on the MLS. If every available unit was listed, the actual months of inventory available would skyrocket.
So, what if you’re a seller? What do you need to consider?
Price is more critical than it’s been in years. Few buyers are willing spend their time looking at homes that are overpriced and are not likely to throw in an offer on one either. The high-demand product is a much-more narrow market segment than in years past.
Condition and updating are critical! Buyers are ignoring homes that need updating because they know a project that would have taken six months in years past could be a year-long project now.
People are going to buy and sell real estate no matter the overall global conditions. You don’t have to think that far back … 2008 to 2011. However, demand points will shift. Homes that draw a premium will shift. Product and location demand will shift.
The bottom line: The market is sending out mixed messages right now. Rising interest rates, bank failures, inflation and stock market volatility have slowed the market a little, but it won’t hit here like it does in other areas of the country. People who have planned their entire life to retire in Florida are still buying here, no matter what is going on in the rest of the world. We’re still selling sunshine!
Stay sunny, Siesta.
(Natalie Gutwein, a Siesta Key resident, is a licensed Realtor with Sotheby’s International Realty’s Judie Berger Team and is also a member of the board of directors of the Siesta Key Association civic group.)
Author: Natalie Gutwein