Some More Market Data For Number Crunchers

We are seeing an up-tick in sales activity both locally and nationally. Take it with a grain of salt though- inventory levels are still high, and there are plenty of investors out there with ARM’s or negative amortization loans that will be adjusting payments soon. I expect to continue seeing higher than normal amounts of property coming on the market though prices seem to have somewhat stabilized. On a national level, the number of homes that were pended slipped a bit statistically- about .5%. This number is actually encouraging considering the departure from the double digit decreases around this time last year (Source NAR). In Florida, a total of 11,912 homes sold in November of 2006 (the most recent month of completed statistics) while 17,088 homes sold in November of 2005. This is a decrease in volume of roughly 30%, and at the same time median sales prices slipped 3% to $242,500. David Lareah, chief economist for NAR predicts that this period of price adjustment is nearing its conclusion and that all markets will feel a lift in consumer confidence and sales in the first quarter of 2007 (Source FAR). The Sarasota market’s individual numbers were up for the first time in a while, with the November sales mark of 294 homes besting October’s numbers by 9.6%. In these sales the median was up about 3% to $315,000 (Source SAR). We are still in a tough market, but indicators show that more sales are occurring and the consumer confidence is rising. Most forecasters look for this to be the 3rd best year on the books, with activity returning to 2001-2003 or comparable levels.

A Glint of Hope in Recent Stats

For the most recent MLS sales data, most numbers continued to show a negative trend for real estate values and market strength overall. These numbers are comparing December of 2005 with December of 2006. The average sales price for a residential dwelling was down 10% with $567,412 being the average for 2005 and $510,848 being the average for 2006. Active listings went up 29%, number of sales was down 20%, expired listings were up 279%, but the promising figure for me is that the total number of listings taken was down 45% for the residential market. So we must be getting to the end of some of this inventory- it is not being created as quickly as developers are losing confidence and inventories are starting to get absorbed. The condominium market was down in listings by 40% as well showing that with less coming onto the market there may be an end in sight to this lopsided market.

What's On Tap for 2007- Sarasota Markets

To my readers I must apologize for the gap between my last posting and now- I have been working on updating www.drewrussell.com to serve my clients better and took a break from posting blogs. For my first blog of the new year, I thought I would answer the question that virtually all of my clients are asking me- and that is "where do you see the market going in 2007?"

My prediction is that 2007 will feel vaguely like 2006 except without the bleak Winter-Spring the real estate industry saw last year. The first three months of last year were so quiet that most everyone was scared of what was in store. We are on the other side of that now, and from what I can see prices are beginning to stabilize and buyers are making moves on the properties that they had been waiting for. Couple that with low rates- my last closings featured rates at 5.875%- and I see absorption increasing in the coming months. It will take us a good long while to get out of this funk, but better times are ahead in a more equalized market. 2006 was still a great year to do business. My personal sales volume was higher than 2005, and I was able to find many clients great deals on the buying side. The listing side was a bit more challenging, but many sellers who were savvy took my advice on pricing and still made large profits.

On a bit more sour note, I did serve some investors who got some bad advice from other sources and ended up losing a lot of money. That was tough to be a part of, but as amateur investors are getting flushed out of this market, so are those are wanting to sell and move back up north. Another factor that is going to affect this market greatly is the segment of sellers who are looking to make in town moves. As soon as their houses sell, they will be out hunting for new homes as well. As this market starts to slowly gain momentum, I think everyone will be surprised at the speed of the rebound- especially in unique residential sections. This does not apply as much to cookie cutter developments and condos overwrought with irrational investors.

For those of you who like cold hard numbers with your highly speculative real estate forecasts, consider some of these. In late December the Main Street Office of my company had a $20 million dollar day- that's right- $20 million in about 6 contacts- all high end sales. For the year of 2006- the worst year in several- 397 properties closed escrow for over $2 million. This shows me that there is confidence at the top of the market- and regardless of how you feel about trickle down economics on a macro scale, I do think we are going to see this confidence trickle down and help revive a weak market.

That's the update for now- be sure to email your comments to drewrussell@michaelsaunders.com.