There are many metrics and reasons to assess what has been happening in the Sarasota real estate market. But, however one analyzes the current housing trends in Sarasota, the conclusion is the same….the real estate market is hot, and shows no sign of slowing.
I must admit that even I was surprised when I read that Mayflower Moving Company’s “Finding Home Survey” identified Sarasota as the number one destination for people moving between July 2019 and July 2021. This is significant. It proves something realtors, builders and construction trades have been feeling for some time; the demand for homes and condos has never been greater. As everyone knows low supply and high demand tends to drive prices up, and real estate is no exception.
The New York Post has referred to Florida as the sixth borough. Between September 2020 and March 2021 drivers changing their driver’s license from New York to Florida increased by 32% over the same period the previous year. Florida also experienced high relocation from New Jersey, Georgia , Illinois and California.
But why? What is causing Sarasota to become in such demand all of a sudden. To look at the phenonium one can look at both past and recent trends.
Historical recognition & appeal
Sarasota for some time has been recognized and awarded for its pristine beaches, but the accolades and awards go much further and describe a place that would appeal to many people whether it be for vacation, to work and raise a family or for retirement, Sarasota ticks all the boxes.
Sarasota’s recognition includes: One of the World’s top 100 Places, the Best Place to Retire, Safest Community in Florida, #1 Best Beach, Top 10 most Walkable City, 14th Happiest Place in the US, 3rd in Capital Gains wealth in US, 6th smartest city in Florida, 1st in US for Well-Being, 11th Best City for Jobs, and Sarasota Memorial Hospital is named in the Top 50 Best Hospitals in the US.
All of this recognition and publicity combined with great weather, beaches and recreation together with outstanding cultural, entertainment and restaurant options bring tourists back year after year with many deciding to buy a vacation property and ultimately retire.
It is notable that while all of us know many people that have relocated to the Sarasota area, it is difficult to think of people who have left. Once people come, they stay. In fact, that is exactly what happened in my life.
Trading snowstorms for sunshine…
I met my wife, Jackie Bohannon on Longboat Key. We married and moved to my home town,
Toronto. Toronto is rated on many metrics as one of top cities in the world. There are many great reasons to live in Toronto. Toronto offered me with a tremendous career potential and Jackie adapted well and even took up skiing.
One day after a long commute home in a snowstorm, I asked why we were not living in Sarasota. Jackie was happy in Toronto but of course was willing to move back home. I gave up a career with a multi-national health care company and started a new career from scratch in real estate in Sarasota. I have never looked back and could not have made a smarter decision. My career is going well and our family has never been happier.
My experience is no different than many who have visited Sarasota. Sarasota will begin to see more young professionals moving here. The Pandemic started this trend the trend will continue post-pandemic.
Low interest rates, a strong stock market and low taxes
More recently, low interest rates and a strong stock market has added incentives to buy. Wealthy Americans motivated by low interest rates/mortgages, increased cash and the appeal of low taxes have been strong motivations. Wealthy Americans have benefited from a robust stock market and in many cases have more flexibility in where they choose to work remotely. People are realizing that if they leave New York, Chicago or LA their mortgage and tax rates may be reduced substantially. Florida by contrast has no income tax.
Pandemic changed habits
World-wide recognition as a destination of choice combined with strong financial trends should be enough motivation to cause an influx of new buyers. But of all things, along comes the pandemic, and the COVID immigration shift began in earnest.
The pandemic caused people to change their typical spending habits. Expensive restaurants, exotic vacations and travel all have been curtailed. People have more money and they are not spending it in the traditional ways. In addition to lower spending, the shift to working from home caused people to rethink their lifestyle as well as their work environment.
Many people began to shift away from dense urban areas. Condo living in Manhattan and other big cities lost much of its appeal. The ability to work from home quickly changed people’s assessment of their needs and priorities. People decided If you are going to work from home, the opportunity to have an office, a home gym and to get outside in a warm climate was far more appealing than a small expensive condo with shared elevators and amenities in large urban centers.
Without question the pandemic and the ability to work from home has increased the recent record demand.
A shift in demand…
In the past there has been an appeal for condominiums as a second vacation home. The ability to lock a door and leave the home secure and maintenance free on the beach has traditionally held a lot of appeal for 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 swimming pool.
In addition to the shift toward single-family homes is a demand for new builds or recently renovated properties. People are relocating and want or need to move in immediately. They do not have the time or patience to wait for 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 escalating prices. This has further added to the price escalation well above anything seen in the recent past.
Over the past two years I have built five homes and have four under constructions. In every case the home sold well above the price threshold that I had set when the project began.
I have seen first-hand how quickly prices are rising and how the demand has grown. Bird Key in particular has become one of the hotspots for home buyers.
Motivated buyers are also changing the way offers are made to get the property they want. Contingencies are a thing of the past. Offers are cash, not subject to financing. Home inspections are waived and, in some cases, offers are made without setting foot on the property. Buyers are moving quickly. Days on the market have been substantially reduced for highly sought after properties. There is interest from multiple buyers for homes and buyers have to remove anything that makes their offer less desirable to a seller.
Other real estate agents are seeing similar trends, most agents do not have enough properties available to meet buyer demand.
The number of homes sold for more than $! million increased 81% in February compared to a year ago according to USA Today. Other metrics assess the appreciation at over 100%.
The definition of luxury was once considered properties sold for $! million or more. The threshold now is $3 million or more.
According to the USA Today, million-dollar listings outpaced all other price ranges.
The idea of a “slow season” is a thing of the past. Realtors used to be busiest during the winter months, what we once called “the Season”. That is no longer the case. The past few summers have been as busy as high season. Restaurants and St. Armands Circle appear as active in the summer as March. I have found that restaurant reservations are now often needed during the summer. That was not the case in the past.
Other than the Fourth of July weekend, some restaurants close for a few weeks for renovations, or to give staff vacation time. High season is just about to start and there are not enough properties for sale to meet the demand of buyers. By not enough properties I am referring to new construction and newly renovated properties specifically. These properties in particular are what is driving the market trend.
All of this is happening without the addition of international buyers who have had restrictions on travel because of the pandemic. I expect this buyer group to return this season thereby adding to market demand.
Will this bubble burst? Is a correction imminent? Real estate does have highs and lows and I do not believe that properties will continue to increases at the current rate for the next two or three years. At the same time, I do not see a bubble burst where prices tumble and properties sit unsold for 12 to 14 months.
Many of the factors that have contributed to this market will remain. The remote work phenomenon I believe will become as much a lifestyle and family choice as is was a pandemic requirement. Both employees and businesses are recognizing the benefits of this structure. Some northern businesses have or are considering relocating part or all of their head offices to southern locations and Florida is providing them with a lot of appeal.
Markets change for a variety of reasons and Sarasota real estate is no exception. When market shift will happen is anyone’s guess.
My guess for this coming season is that it will continue to be a seller’s market and the demand will continue.
What we can bank on is that the fundamentals that create the foundation of attractiveness and desirability in the Sarasota market will always remain strong. The natural beauty, the lifestyle, the beaches, the arts, restaurants and healthcare all add up to an intrinsic value that the rest of the world has noticed and is willing to pay a premium to make their home.
Ask the Expert your Real Estate Questions…
Ask the expert is a new addition that will feature reader’s questions related to real estate in the Sarasota area. Your questions will be answered by Jeff Rhinelander. Jeff is a realtor with 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: firstname.lastname@example.org