What is happening to the Sarasota real estate market? Why is it so hot?
There are many metrics and reasons to assess what happened in Sarasota real estate market. But, regardless of the analysis of current housing trends in Sarasota, the conclusion is the same… the real estate market is hot and showing no signs of slowing down.
I have to admit even I was surprised when I read that Mayflower Moving Company’s “Housing search survey” has identified Sarasota as the number one destination for people traveling between July 2019 and July 2021. This is important. This proves something that real estate agents, builders and the construction trades have felt for some time; the demand for homes and condos has never been greater. As everyone knows, low supply and high demand tend to drive up prices, and real estate is no exception.
The New York Post called Florida the sixth district. Between September 2020 and March 2021, drivers who changed their driver’s license from New York to Florida increased 32% from the same period the year before. Florida has also experienced significant relocation from New Jersey, Georgia, Illinois and California.
But why? What makes Sarasota suddenly become so in demand? To look at phenonium, one can look at both past and recent trends.
Historical recognition and attraction
Sarasota has been recognized and awarded for some time for its pristine beaches, but the accolades and accolades go much further and describe a place that would appeal to many people, whether it be on vacation, to work and raise a family, or to retirement, Sarasota tick. all the boxes.
Sarasota recognition includes: one of the top 100 places in the world, best place to retire, safest community in Florida, # 1 Best beach, Top 10 cities most accessible on foot, 14th happiest place in America, 3rd in capital gains wealth in the United States, 6th smartest city in Florida, 1st in the United States for well-being, 11th Best City for Jobs and Sarasota Memorial Hospital is in the Top 50 Best Hospitals in the United States.
All of this recognition and publicity, combined with the good weather, beaches and recreation, along with exceptional cultural, entertainment and dining options, brings tourists back year after year, with many deciding to purchase vacation property and eventually to retire.
It is worth noting that although we all know many people who have moved to the Sarasota area, it is difficult to think about the people who have left. Once people arrive, they stay. In fact, this is exactly what has happened in my life.
Trade snowstorms for sun …
I met my wife, Jackie Bohannon on Longboat Key. We got married and moved to my hometown,
Toronto. Toronto is ranked by many indicators as one of the best cities in the world. There are many great reasons to live in Toronto. Toronto offered me huge career potential and Jackie adapted well and even started skiing.
One day after a long commute in a snowstorm, I asked why we didn’t live in Sarasota. Jackie was happy in Toronto but was of course willing to return home. I gave up a career with a multinational healthcare company and started a new career from scratch in real estate in Sarasota. I never looked back and couldn’t have made a smarter decision. My career is going well and our family has never been happier.
My experience is no different from that of many who have visited Sarasota. Sarasota will begin to see more young professionals moving here. The pandemic started this trend, the trend will continue after the pandemic.
Low interest rates, a strong stock market and low taxes
More recently, low interest rates and a strong stock market have added buying incentives. Wealthy Americans motivated by low interest / mortgage rates, increased cash flow, and the lure of low taxes were strong motivators. Wealthy Americans have benefited from a robust stock market and, in many cases, have more flexibility as to where they choose to work remotely. People are realizing that if they move out of New York, Chicago, or LA, their mortgage and tax rates could be drastically reduced. Florida, on the other hand, has no income tax.
The pandemic has changed habits
Global recognition as a premier destination combined with strong financial trends should be enough motivation to trigger an influx of new buyers. But of all things comes the pandemic, and the COVID immigration shift has begun in earnest.
The pandemic has caused people to change their usual spending habits. Expensive restaurants, exotic vacations, and travel have all been cut back. People have more money and they don’t spend it the traditional way. In addition to cutting expenses, the shift to working from home has caused people to rethink their lifestyles as well as their work environment.
Many people have started to move away from dense urban areas. Condos living in Manhattan and other major cities have lost much of their appeal. The ability to work from home has quickly changed people’s assessment of their needs and priorities. People decided If you’re going to be working from home, the ability to have an office, home gym, and go out in a warm climate was much more appealing than a small, expensive condo with shared elevators and amenities throughout. large urban centers.
Without a doubt, the pandemic and the ability to work from home have increased the recent record demand.
A change in demand …
In the past, there has been a call for condominiums as a second vacation home. The ability to lock a door and leave the home safe and maintenance free on the beach has always had a lot of appeal to buyers.
While condos remain desirable, single-family homes have seen a significant increase in demand. With the “work from home” shift. many buyers are looking for single family homes with an office and other amenities such as a home gym and private pool.
In addition to the move towards single-family homes, there is a demand for new constructions or recently renovated properties. People are moving and want or need to move in immediately. They have neither the time nor the patience to wait for a new construction or to do a renovation. Of course, there are fewer of these types of properties available and again the low supply and high demand creates rising prices. This has further escalated the price escalation far above anything seen in the recent past.
In the past two years, I have built five houses and have four under construction. Either way, the house sold well above the price point I set at the start of the project.
I have seen with my own eyes how quickly prices are rising and how much demand has increased. Bird Key in particular has become one of the hot spots for home buyers.
Motivated buyers are also changing the way offers are made to get the property they want. The unforeseen are a thing of the past. Offers are in cash, not subject to funding. Home inspections are eliminated and in some cases offers are made without setting foot on the property. Buyers are moving fast. The days on the market have been drastically reduced for highly sought after properties. There is interest from many buyers in homes and buyers should remove anything that makes their offer less attractive to a seller.
Other real estate agents are seeing similar trends, with most agents not having enough properties available to meet buyer demand.
The number of homes sold for over $! million were up 81% in February from a year ago according to USA Today. Other measures estimate the appreciation to be over 100%.
The definition of luxury was once considered to be properties sold for $! millions or more. The threshold is now $ 3 million or more.
According to USA Today, million dollar listings topped all other price ranges.
The idea of a “slow season” is a thing of the past. Realtors were the busiest during the winter months, what we used to call “the season”. This is no longer the case. The last few summers have been as busy as the peak season. Restaurants and St. Armands Circle appear to be as active in the summer as they are in March. I have found that restaurant reservations are now often required during the summer. This was not the case in the past.
Other than the 4th of July weekend, some restaurants close for a few weeks for renovations or to give staff vacations. Peak season is about to begin and there are not enough properties for sale to meet buyer demand. By not enough properties I am referring to new construction and recently renovated properties in particular. These properties in particular are driving the market trend.
All of this is happening without the addition of international buyers who have had travel restrictions due to the pandemic. I expect this group of buyers to return this season, thus increasing market demand.
Is this bubble going to burst? Is a correction imminent? Real estate has its ups and downs and I don’t think properties will continue to rise at the current rate for the next two or three years. At the same time, I don’t see a bubble bursting where prices plummet and properties remain unsold for 12-14 months.
Many of the factors that have contributed to this market will remain. The phenomenon of remote working, I think, will become as much a choice of life and family as it is a pandemic demand. Both employees and companies recognize the benefits of this structure. Some northern businesses have or are planning to relocate some or all of their headquarters to the south, and Florida offers them a lot of appeal.
Markets change for a variety of reasons and Sarasota real estate is no exception. When the market change will occur is a puzzle.
I guess for the coming season this will continue to be a sellers market and the demand will continue.
What we can count on is that the fundamentals that create the basis for Sarasota’s attractiveness and desirability in the Sarasota market will always remain strong. The natural beauty, the lifestyle, the beaches, the arts, restaurants and healthcare add to an intrinsic value that the rest of the world has noticed and are willing to pay a premium to settle down.
Ask your real estate questions to the expert …
Ask the expert is a new addition that will introduce readers’ questions related to real estate in the Sarasota area. Your questions will be answered by Jeff Rhinelander. Jeff is a real estate agent at Coldwell Banker and also works with architects and contractors to design and build residential homes on Bird Key, Lido Key Longboat Key and Sarasota. email: [email protected]