The Suncoast Real Estate Market Remains Strong and Stable, But Not For Reasons You Might Think. 

Background: 

There’s a natural tendency to conclude that when a robust and thriving market cools even the slightest bit that it’s crashing and burning. Over the last 24 months, the Suncoast real estate market has responded to an extraordinary battery of challenges including a pandemic, a compromised supply chain, incredible housing demand, rising interest rates, exploding insurance premiums, record inflation and most recently, a major hurricane.

Throughout it all, the real estate market responded in both predictable and unexpected ways. At the onset of the pandemic, we remember asking ourselves, “How long is this going to last?”

The fall of 2019 was considered the last benchmark of a solid, healthy year for the real estate market. The keyword was ‘stable.’ By the spring of 2020, that all changed. And for what seemed like an eternity, our view of the world was from either the couch or the home office. 

The real estate market didn’t know what to do with itself. People didn’t want to go into strange homes. Owners didn’t want strangers in their homes. Masks. Gloves. Booties. Virtual Tours. Purchases, sight unseen. Glass dividers. It still seems surreal. 

The Real Estate Market Takes A Pause.

Sales, showings and overall demand slowed dramatically. For a time, the market was reduced to transactions already in progress and what seemed like mandatory relocations or estate liquidations. (Interesting side note: Housing was considered an essential service industry and real estate transactions were largely unhampered by lockdowns and restrictions.)

The Real Estate Market Goes Full Throttle. 

Between December, 2019 and March, 2022, average sales prices for the region increased a whopping 32% (reaching a momentary high of 37% in May of 2022) because an unexpected thing happened: By late summer 2020, perhaps the peak of the pandemic — people, their homes, and their workplace — were about to become one and the same. Suddenly, a significant portion of the workforce was now able to work from literally anywhere in the world.

Without question, the work-at-home phenomenon spawned a market frenzy like no other real estate boom in history. Listings Sold throughout 2021 and on into March of 2022 peaked, as did Total Sales. Actual Days On Market plunged from 2 months to barely 2 weeks. Months of Inventory went from a normal of 3, down to 1. At times it was less than 1 month.

This unprecedented demand for Suncoast real estate put extreme pressure on pricing, inventory, materials and construction costs. It was almost like a game of musical chairs, only with homes, and the music played for nearly 18 months. 

Then in the spring and summer months of 2022, the first of a series of interest rate hikes kicked in and inflation began carving away wage growth and discretionary income. The median sales price of a home in Sarasota County had reached a peak at $538,000 by October.

Naturally, interest rates hikes affected the buying power of buyers seeking financing and affected sellers by taking a significant portion of homebuyers out of play. Yesterday’s buyer could find their way into $450,000 worth of home that is now reduced to just $294,000. That’s 35% less home for the same monthly mortgage payment.

So this “Then & Now” analysis shows one very interesting outcome when you compare the metrics of 2019 to November 2022. New, Active and Pending data are very comparable, showing us what a stable market looks like. The interesting part is Total Sales volume is comparable, but with much fewer sales at much higher prices. Days On Market and Months Of Inventory are also steadily creeping back up. 

3 Things For Buyers & Sellers To Understand.

One: 

We’ve been on some listing presentations lately where the Seller asks, “Did we miss the seller’s market frenzy?” to that which we respond, “You mean 25 showings in 2 days, multiple offers over asking and an accelerated closing?” Yes.

But not really, if you consider that November’s Average Sales Price is now back in line with March’s Average Sales Price. The market is showing some pricing resilience and if the trend holds, stability in the real estate market will prevail. 

Two:

The increase in existing home inventory is already softening an overworked new construction industry. Instead of “Lot Lotteries” and monthly price increases, builders are once again offering incentives and allowances. 

As a cautionary note, the tight labor market has impacted skill levels and experience, lowering overall product quality. Persistent supply chain challenges continue to increase completion times dramatically.

Three:

With market stability comes the renewed advice to price realistically. Those who didn’t hear the music stop and are still stuck on yesterday’s pricing are pushing up the Actual Days On Market stats. Don’t be a statistic; price sensibly. With the abundance of comparable sales data supporting these higher sales prices, stick with the script. With our professionally prepared Comparative Market Analysis, you’re getting a clear picture of rationale pricing that survives today’s ever more stringent loan appraisals. 

Bonus:

There are some lending products now available to help buyers claw back some of that spending power lost to rising interest rates. Drop us a text, email or call to review the options and find a lender suited to your needs. 

Want To Know More?

If today’s market is an eery reminder of the 2008 real estate market meltdown, you’ll want to check out our companion piece: “Are The Stars In Alignment For A Repeat Of The 2008 Real Estate Crash?” The National Association of REALTORS® chief real estate economist takes a deep dive into the factors that contributed to the crash and how today’s market compares.

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