At the risk of having all of Anna Maria Island and most of Manatee County mad at me, it looks like our current housing market is a bit of a pig. Pigs can be adorable, or they can be nasty, so I hope that our pig is trending to the adorable side.
The Realtor Association of Sarasota and Manatee published its year-end real estate market report a few weeks ago. Their job is to analyze the Sarasota and Manatee region and to put the best possible spin on the data.
Their position is that the market is transitioning toward a balance following the significant disruptions of the pandemic years. Certainly, there is increased time on the market and higher inventory. Nevertheless, this is a sign of normalization of the market similar to the pre-pandemic market of 2019.
They point to median sale prices being well above 2019 levels but there are still price declines from 2023. Transactions are slower with longer time to sale and longer time to contract increasing year-over-year. As we know, inventory has increased, shifting toward a more buyer-favorable market. According to the National Association of Realtors, existing home sales fell 0.7% in 2024 from the prior year.
Nationwide, U.S. existing home sales fell in 2024 to the lowest level since 1995. Much of this is due to higher interest rates, which just topped 7% a couple of weeks ago, a psychological tipping point. Higher home insurance rates all over the country and property taxes are adding to the pain of buyers, and we are yet to see the effect that the storms and fires will have on homeowner insurance.
Since the country is still trying to dig out of a recession, the weak housing market is just adding to that problem. Everyone in the real estate industry – including contractors, furniture retailers and appliance stores – is hurting. It will also have an impact on the Federal Reserve’s decision on lowering interest rates.
I’ve talked about this many times, but although to a lot of buyers 7% interest rates are incredibly high, they’re not. The real estate market has survived years with double digit rates and people still bought houses. The financial markets are very fluid and homeowners can always refinance down the road if there is a drop in rates.
One other piece of news I found that I thought was worth mentioning is California residents looking to Florida as either a temporary or permanent relocation. There has been a flurry of California transplants trickling into Florida for a while to escape high taxes, so it’s not surprising this may be increasing.
Brokers have reported a lot of inquiries from California residents who need immediate housing or some who were already interested in the Florida market and are now getting serious after the wildfires. Florida is one of the top locations the fire victims are looking at for refuge along with Texas, the Carolinas, Tennessee and Nevada.
Anna Maria Island in many ways is perfect for California residents with our beautiful beaches and many available properties to invest in. If indeed we see this activity, keep in mind these buyers are high-end buyers and are smart, so don’t overprice properties.
My usual optimistic outlook about real estate is waning a little. I’m probably suffering the same malaise as so many of us. However, after four months, it’s time to get back on the horse or the pig and move forward.
