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Castles in the Sand

Does anyone know what’s going on?

Written by Louise Bolger on . Posted in Business, Castles in the Sand, Real estate | Development.

I recently spent a weekend with some good friends, all of whom were either involved in real estate sales or still are. Naturally, there was a lot of conversation about soaring home values both here in Florida and on New York’s Long Island, where we are all from. The question kept coming up, what does everyone think about the future of the market? Not surprisingly, these four smart women with a combined 150 years of real estate experience didn’t have a clue and neither do the economists.

We’re starting to see signs around the country that the market may have peaked in some places. More properties are coming on the market, which could level off the appreciation rate. However, since all real estate is local, only looking at specific regions will tell the story, and we are going to look at Manatee County’s statistics for March.

But first, almost every homeowner in the country is sitting on what could be substantial equity in their homes. The definition of equity is the difference between the market value of your property and the remaining mortgage debt against the property. There is something called tappable equity, which is the amount of equity homeowners can access while retaining at least 20% equity. Nevertheless, it can still be a lot of money, which begs the question: What should be done with all the equity?

Every homeowner’s situation is, of course, different. Less affluent borrowers may want to take out home equity loans against their equity to pay off higher-interest debt or to fund college tuition. But wealthier homeowners are frequently purchasing second homes to use for future retirement or investment opportunities.

If your decision is to sell and cash out, make sure you have a plan for where you’re going to live. Chances are, if you even find a property to purchase, it will be a much higher value than you anticipated, and rentals are also few and far between.

Now back to Manatee County statistics for the month of March as reported by the Realtor Association of Sarasota and Manatee.

Single-family home sales were down 20.2% from last March, but the good news is new listings are up 6.2%. However, values were way up – the median sale price broke another record of $525,000, up 32.9%, and the average was $703,385, up 31% from last March. The time to contract is five days and month’s supply of properties is 0.6 months.

Condo sales were down 39.9% but new listings are up 2.5%. The median sale price was $320,539, up 30.8% from last March, and the average sale price was $394,151, up 31.5%. The time to contract is also five days and month’s supply of properties is 0.7 months.

Obviously, there appears to be a positive change in new listings compared to last year. The hope is that if this trend continues, available inventory will start to level off. The big question is, will increased inventory result in lower sale prices? With properties going into contract quickly towards the end of the traditional selling season, the sale prices over the next few months may tell the story, but don’t bet on it. The number of buyers out there just waiting for new properties to come on the market will take a long time to go through, and even higher interest rates will, in my opinion, have little effect on most buyers in our waterfront area.

If my experienced friends didn’t know what’s going on in the market, why should you or any other buyer or seller? Whatever your decision is to do with your newfound wealth, don’t make that decision until you know all of your options. If you’re selling high, you’re also buying high.

Just saying.

Castles in the Sand

When will the real estate market return to normal?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

The definition of “normal” is conforming to a standard; usual, typical or expected. This statement in no way resembles the real estate market we find ourselves in, and even economists whose job it is to know these things have no real clear idea of when “normal” will resume.

Last week, we published the January Manatee County real estate sales and, of course, we had another record-breaking month for both Sarasota and Manatee counties. For the third straight month, median prices have increased month over month in the two-county region. Single-family home prices increased year over year by 36.6% to a median of $464,500 in Sarasota County and an increase of 29.7% in Manatee County to $480,000. Condos also had large increases; Sarasota’s condo median sale price was $350,000, up 15.8%, and Manatee County’s median condo sales price was $301,000, an increase of 30.3%.

In addition, according to the Realtor Association of Sarasota and Manatee, the Sarasota and Manatee housing market starts off the year with the lowest level of inventory reported in January. Nevertheless, January had more new listings than closed sales in both counties. Sarasota had 811 new listings and 553 sales, and Manatee had 712 new listings and 539 sales.

It remains to be seen if this trend will continue. And, as prices and interest rates go up, there should be additional supply. Homeowners are likely watching the market carefully, trying to determine the best time to put their home on the market before the leveling off begins, if that, indeed, ever happens.

Nationally, the median existing-home sale price for January was $350,300, an increase of 15.4%. This is well below what we’re experiencing in Sarasota and Manatee counties. Generally, all over the country, the housing market continues to be booming, with an 18.8% increase for the 12 months ending in December, according to the annual S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices around the country. Phoenix had the fastest home-price growth in the country for the 31st straight month at 32.5%. Tampa posted the second-fastest growth rate at 29.4%.

First-time buyers are having a terrible time trying to compete with cash buyers and investors. The share of first-time buyers in the market fell to 27% in January from 33% a year earlier, according to the National Association of Realtors. If we are ever to return to normal, we need those first-time buyers. They are the engine of the real estate market, buying the homes of established homeowners who either want to move up or retire. Without them, we’re stuck in a real estate fantasy land that won’t end well.

These are a lot of statistics to wrap your brain around, and we are in a kind of time warp that we know is going to end, but we just don’t know when. Ideally, there will be a slow leveling-off, but based on the beach and road activity this past month, there are many out-of-state visitors here and a good percentage of them are interested in buying property.

Normal may be in our future – but not just yet.

Castles in the Sand

Buyer and seller remorse

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

The definition of remorse is a deep regret for a wrong commitment. In other words, you said, “I do” and the next day decided “I don’t.”

When it comes to real estate commitments, it can be a little more complicated than personal commitments, at least when it involves money.

Buyer and seller remorse is fairly common and sometimes leads to the end of real estate deals. In today’s fast-moving market, buyers are jumping at practically anything with a front door and a couple of bathrooms. This can lead to making the wrong decision both financially and personally for you and your family.

There are consequences if a buyer is remorseful and breaches a contract of sale after all parties have signed and the appropriate cooling-off period is ended. This is usually three business days, while the attorney review usually takes five business days. To begin with, the seller may be entitled to the earnest money that was put down at the time the contract was signed. Depending on the culture of the area of the sale, this is generally 1% to 3%. But in today’s market, that amount can be far higher, making it that much more difficult for a buyer to back out.

In addition, sellers can sue for damages if the buyer’s actions have caused personal and monetary inconvenience. The worst case would be the seller suing for specific performance or demanding completion of the transaction. However, generally in a situation like this, especially in this market, the seller would just accept the earnest money and put the property back on the market.

Sellers, too, can have remorse for the same reason – a fast-moving market. There is a lot of incentive to sell a house today. Selling prices are at an all-time high, certainly the highest in many decades, and sellers feel the pressure to cash out and move on. The problem comes when there is nothing to move on to, which is when the remorse moves in.

Again, after the review deadlines are gone, a seller breaching the contract may be more complicated. Buyers may have already put their lives in motion in their new home. Enrolling kids in school, accepting a new job and setting up movers all are considered if the transaction ends up in court.

Sellers, of course, should offer to refund the earnest money and reimburse any of the buyer’s expenses incurred because of the cancellation. Buyers can still sue for damages or specific performance, again forcing completion of the sale, but good luck with trying to get someone to move out of the home who doesn’t want to.

On another note, there has been a task force organized by the Florida Bar with recommendations relative to condominium association regulations. This has been sent to the governor and includes tightening up reserves with an eye towards potential future repairs, engineer inspections and mandates, and owner voting regulations, to name a few. This task force is the result of the tragic collapse of the Champlain Towers South in Surfside and in general the age of Florida condos. More than 912,000 condo units in Florida are at least 30 years old, according to data from the Department of Business and Professional Regulation, and all may be at risk.

As far as buyers and sellers, none of the above options are good and the best way to proceed with a contract of sale is to make sure this is the best choice for you. Once you have made a contractual commitment, whether you’re a buyer or seller, “remorse” can be a dirty and expensive word.

Castles in the Sand

Resident spirit or creaking house?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Halloween is this weekend, so it’s time to discuss the prospect of your house having a real live spirit who has taken up residence. Well, maybe not real live, but a spirit with an agenda.

Many homeowners believe they are sharing their homes with a spirit. They may see actual images or something that looks sort of like a spirit, or they may hear unusual sounds or talking. I’m not here to tell you that there are no such things as spirits who refuse to leave what once was their home, but chances are what you’re hearing are normal sounds and noises unique to every home.

When you move into a new house, it may take a while to figure out that the dripping noise you’re hearing isn’t your roof about to collapse, but the condensation from your air conditioning system. Likewise, houses – especially new construction – may take a while to settle. If you hear what you swear are footsteps from the upstairs bedrooms it may be just the wooden framing taking a little stretch and not the inhabitants of the Indian burial ground next door.

On the other hand, sounds could be a subtle warning of impending problems. Appliances are notorious for creating noise when something in the motor is thinking about giving up. Loud compressors in your refrigerator and dishwasher pumps that you’re starting to just notice could be a warning, as well as the never-ending running toilet.

There are so many noises coming into your home from outside sometimes it’s hard to tell if it’s in the house or out. Trees and bushes scratching the windows, small animal claws and pecking birds can certainly drive you crazy. If you live on the water, get used to boat engines, snorting dolphins and jumping fish – it’s all part of the charm and not part of a haunting.

There are, however, homes where the owner truly believes and may even have proof of hauntings. The house used in the movie, “The Conjuring,” in Rhode Island is currently on the market. The present owners have turned their home into a little business by allowing paranormal investigators to spend the night on the property. It’s apparently a nice little business and one they hope to pass on to the new buyers.

One thing that’s not haunted are the Manatee County property values, so here are September’s from the Realtor Association of Sarasota and Manatee:

Single-family homes closed 4.5% fewer properties than last September. The median sale price was $430,000, up 22.9% from last year, and the average sale price was $580,073, up 21.9% from last year. The median time to contract was 48 days, down 29.4% from last year, and the month’s supply of properties is .08 months.

Condos closed 26.4% fewer properties than last September. The median sale price was $285,000, up 29.5% from last year, and the average sale price was $321,810, up 6.9% from last year. The median time to contract was 6 days, down 85% from last year and the month’s supply of available properties was 0.6 months.

Cash offers are still very dominant in the single-family market, up 53.4%, however, condo cash offers dipped a little – by 6%. September was a slower month, not untypical for this time of year, with sale prices a little flat but with inventory so low we can expect that to turn around quickly as the season begins in full force. The Realtor Association of Sarasota and Manatee is calling September the “calm before the storm,” so get ready for another record-setting real estate season.

As far as your current home, understand your home’s sounds and investigate anything that sounds out of whack before calling the ghostbusters. Enjoy Halloween and the friendly goblins at your door.

Castles in the Sand

Once-in-a-generation housing shortage

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

If you thought the national housing market was complicated, you might want to sit down, because there’s more to this story.

On June 16, The National Association of Realtors (NAR) published a disturbing report about the deficit of available housing. That report was researched and authored by the Rosen Consulting Group and indicates an under-building gap of 5.5 to 6.8 million housing units since 2001, spanning everything from single-family homes to rental units. This is considered a once-in-a-generation crisis, but the question is, how did this happen?

The report says that from 2010 to 2020, new home construction fell 6.8 million short of what was needed to replace aging units. Limited supply has been a driver of rising housing prices for both renters and buyers, complicated by an increase in demand during the COVID-19 crisis. New home construction surged in the early 2000s, then building activity slowed during the 2007-09 recession after the financial crisis. The industry never got back up and running to its previous level before the pandemic hit.

The supply shortage became worse during the past year as builders slowed construction in some regions and delayed purchasing land because of the pandemic. All of that, combined with low mortgage interest rates and remote work, has led to unanticipated demand for single-family homes. At this point, the consensus is that it would take a decade to close a gap of 5.5 million units.

The NAR report goes on to say that the lack of new construction and under-investment has led to an acute shortage of available housing that is a detriment to the health of the public and the economy. They say the gap is so enormous that it will require a major national commitment to build more housing of all types and they are attempting to persuade lawmakers to include housing investment in any infrastructure package enacted. This could include removing barriers to new construction and creating incentives for builders and investors to pursue new housing development.

The NAR’s chief economist, Lawrence Yun, says there is a strong desire for homeownership across this country. However, the lack of supply is preventing too many buyers from moving forward, thus requiring dramatic action to close the gap.

May’s Manatee County sales statistics are out as reported by the Realtor Association of Sarasota and Manatee, so let’s take a look.

Manatee County single-family homes closed 66.1% higher than last year and cash sales were up 168.9%. The median sale price was $400,000, up 23.1%, which is almost the same as the national increase of 23.6%. The average sale price was $567,549, up 38.8%, the median time to contract was six days, active inventory was down 71.7% and the month’s supply of properties was .06 months.

Condo sales were up 112.7% more than last year and cash sales were up 250%. The median sales price was $243,595, up 5.9%, and the average sale price was $312,244, up 19.4%. The median time to contract was nine days, active inventory was down 78.5% and the month’s supply of properties was .06 months.

Regardless of these surging numbers, the president of the Realtor Association, Alex Krumm, points out that Florida real estate remains on par or less expensive than the markets from which people are moving. This is keeping our market very desirable and active with little change in sight.

A once-in-a-generation crisis sounds extreme and we in Florida may not feel it to the same degree as people in other regions of the country. But for many, it is a disruption of a life-long goal and for others, it is a more serious crisis.

Castles in the Sand

Where are the downsizers?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Long ago and far away, homeowners getting ready to retire would sell their family home to younger families looking to move up and purchase a smaller less expensive property. There was also this crazy notion of sales contracts containing a contingency on the buyer selling their home. Well, in case you haven’t noticed, those days are long gone.

The real estate market is so hot that homeowners frequently don’t want to sell because buying another property, even if it’s a smaller one, is too challenging. Retirees don’t want to risk the stress of finding something they’re comfortable living in and certainly don’t want the hassle of competing in the current market. Therefore, they’re not moving, which is feeding into the low inventory rates all over the country, freezing up the market.

Retirees also have plenty of good financing options without selling, should they need to tap into their equity. Refinancing both mortgage amounts and terms at today’s low rates will give them money in their pockets to offset the expenses of continuing to live in their homes. And, of course, reverse mortgages continue to be a viable option for some seniors. In addition, switching from a 30-year amortization to a 15-year amortization would help to accumulate more equity down the road when seniors may be more comfortable selling.

There are plenty of financial opinions on whether retirees should carry a mortgage or not and everyone’s financial position is different and should be analyzed by a professional. With interest rates historically low and the stock market continuing to grow, many financial advisors will be pro-mortgage and advise to invest in the stock market, instead. For retirees with an income that is sufficient to cover the monthly carrying charges of financing, this could be the obvious decision.

There are many benefits to owning a home, whether you decide to continue carrying a mortgage in retirement or pay it off. With the new tax regulations, writing off the interest on a home mortgage is not as advantageous as in previous years, but again, everyone’s situation is different.

What isn’t changing for most homeowners is the capital gains exemption when you sell your home. The way the capital gains law stands now is single tax filers get an exemption of $250,000 of net gain on the sale of a primary home. Married couples filing jointly get an exemption of $500,000 of net gain on the sale of a primary home. This exemption can be used more than once by sellers who meet the requirements as often as every two years.

With the sale prices of homes accelerating daily, there will be plenty of homeowners who will exceed their exemption limits. However, homeowners can increase their cost basis and lower their gain if they make improvements to their homes over the years. This does not mean repairs – it means improvements on landscaping, renovations and extensions to the property. If you’re not sure what qualifies and you need these extra funds to add to your cost basis, you can find exactly what the definition of “improvement” is on the IRS website.

There will probably be a change to the capital gains laws, including primary home capital gains exemptions, coming soon. However, many sellers with gains within the $250,000 to $500,000 limits won’t be affected. Capital gains above those limits will depend on income level and other factors in the proposed tax bill.

Maybe my memory of things past is fuzzy, but wasn’t buying and selling homes more civilized years ago? It was certainly less stressful, but here we are with tons of equity and the worries that go along with it.

Castles in the Sand

The explosion of the millions

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

As we all know, the real estate market has gone from fundamentally shut down to an unparalleled explosion of demand for housing all over the country, and particularly in Florida. Buyers and real estate professionals are trying to maneuver their way through the maze of historic low inventory and pent-up buyer activity. The result of all this is outsized prices pushing buyers and creating bidding wars.

Recently, buyers have added different strategies to set themselves apart. For instance, cash is king, and if you have it or can borrow it, your offer will put you in the top tier of buyers.

Buyers love non-contingency offers; that means no mortgage as we discussed, but also no home inspection. It’s a good strategy if you’re comfortable with the property, especially if you know something about home construction.

One of the newest strategies out there in this market is an escalation clause in your offer. In order to be competitive, buyers are stipulating that they will top any offer from another buyer up to a certain level. This at least keeps you in the game and gives you an opportunity to improve your offer.

In addition, it’s always important to be flexible, but in this market, it’s essential. Get yourself in a position to change your desired closing date to fit the schedule of the seller as well as accepting any little quirky changes that may come up.

Finally, don’t wait if a new property comes on the market – be prepared to act quickly.

Now let’s look at the million-dollar-and-over market in the three cities on Anna Maria Island and in Cortez. This analysis will cover February, March and April closed sales as reported on the Manatee County Property Appraiser’s website and properties that are currently on the market or pending from realtor.com.

Cortez closed three properties over $1 million; one for $2,250,000, one for $1,215,000 and one for $1,075,000. The last three-month analysis showed two properties over $1 million.

The city of Anna Maria closed 31 properties; one for $4 million, three for $3 million or over, five over $2 million and 22 at $1 million or over. The last analysis showed that Anna Maria closed 41 properties.

The combined cities of Bradenton Beach and Holmes Beach closed 58 properties; two over $4 million, two over $3 million, 10 over $2 million and 44 at $1 million or over. Last time, 39 properties were closed.

Available and pending properties as of this writing are, of course, a blowout again, so here we go: Cortez has a property listed at $4,750,000, the highest I have ever seen for a single-family home, and there is land listed for $1,300,000. The new development, Hunters Point, has seven properties listed from $1,300,000 to $785,000, three of them over $1 million. Last time, Cortez had three.

The city of Anna Maria has 46 properties over $1 million; one over $6 million, two over $5 million, two over $4 million, three over $3 million, 14 over $2 million and 24 over $1 million. The lowest-priced available property in the city is $995,000. Last time Anna Maria had 31 properties available.

Finally, the combined cities of Holmes Beach and Bradenton Beach had 67 properties listed or pending over $1 million; one over $6 million, two over $5 million, two over $4 million, six over $3 million, 20 over $2 million and 36 over $1 million.

I’ve decided that after 15 months of ending my column with “stay safe,” it’s time to put this phrase to bed. Not that we still shouldn’t protect ourselves and our family from COVID-19, I just feel it’s time to be more positive. Besides, we now have a new “stay safe” to contend with –  hurricanes. Here’s hoping we have a safe season.

Castles in the Sand

Are we in a boom or a bust?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Happy tax day! Well, maybe not, since tax day has been extended another month. With so much going on in the world and in the country, it’s easy to forget about some things that are traditional and ingrained in our psyche, like April 15 being the most dreaded day on the calendar.

Until a few years ago, April 15 represented a real benefit to homeowners with mortgages. Mortgage interest on primary homes and secondary homes has always been a staple of the real estate industry. Buy a home, take out a mortgage and deduct the interest at the end of the year. However, because of a change in the tax code, deducting mortgage interest may not be as attractive now to homeowners with an increase in the standard deduction and a cap on the deductible amount of mortgage interest.

Believe me, this is not a reason not to purchase a home and take out a mortgage. Mortgage rates are historically low, even if they have ticked up in the last two months. But finding a home to purchase right now will be a challenge with or without a mortgage.

Today’s real estate market is making history every day, breaking records on sales prices and eating up every single property that comes on the market. Are we in a boom, or are we getting ready for a bust? Typically, you could ask five different economists and get five different answers, but most of them now will say that longer-term trends are at play that should keep the housing market hot.

Why is this? For one thing, even with the pandemic on the brink of being over, COVID has forced the workforce to rethink where they live and why they live there. People who moved last year weren’t just thinking of a temporary place to escape during the pandemic, but a real re-evaluation of their lives, and that’s not going to change.

Millennials are also a big influence in the future real estate markets. They are chomping at the bit to buy a home, start families and settle down in a community. But unless their grandparents’ generation finally sells their forever homes, there will be no forever for this generation.

Countries around the globe that are experiencing the same type of housing market have the same worries about the same type of bubble. However, the consensus is that the buying is being driven by real demand rather than speculation, with families looking to upgrade to larger properties in suburban areas as they work more from home.

What’s going on now is the inverse of the previous housing boom in the mid-2000s. At that time, lending standards were downgraded, allowing buyers to purchase properties beyond their means using risky mortgage products.

According to the National Association of Realtors, between 2006 and 2014, about 9.3 million households went through foreclosure, gave up their home to a lender or sold as a distress sale. We are nowhere near that type of activity; in fact, mortgage qualification standards are at the highest they have been in most of our memories. The biggest threat to the housing market now is mortgage rates going up substantially and a serious lack of inventory, which will slow down sales considerably.

At least for this year, you can put off the only thing besides death where you have no choice. As for me, I’m facing it dead on and paying up on April 15, but that’s me – why spend another month thinking about the inevitable? Stay safe.

Castles in the Sand

No inventory, no sales?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Remember last March – the week the country shut down – and you raced to the supermarket to stock up on food and toilet paper? My biggest shock was going to Publix on March 17 and seeing about a quarter of the usual supply of fresh meat in the store’s coolers and empty shelves for paper products. I thought, “This is America; where is all the food?” and realized then that life can turn on a dime, or, in this case, on a virus.

Thankfully, we’re almost out of the COVID crisis, but the fallout from this past year will go on for some time, changing lifestyles, work habits and in particular, the real estate market. By now everyone knows that the COVID year has been abnormally good for the housing market. The combination of the ability to work remotely, record-low mortgage rates and the desire for individuals and families to move into less densely populated areas has flooded the market with buyers racing to find a new home.

In addition, working remotely was largely available to higher-income workers who generally make up the majority of homebuyers. Unfortunately, lower-income workers who may not be able to do their jobs remotely have suffered, as well as young millennials who have become priced out of buying their first home.

Florida has benefited from the migration from other states this year – particularly people moving from the northeast who were hit badly by the virus and have endured strict lockdowns. Also, the Florida Realtors Association has recently reported their agents across Florida are seeing a higher number of new clients from California looking for a less expensive lifestyle with the benefit of the good weather they’re accustomed to. Orlando is seeing a flood of buyers from California as well as Miami attracting venture capitalists and finance companies.

The downside of all of this activity is, of course, the lack of inventory. As reported last week, the supply of single-family homes in Manatee County at the end of February was below one month at .09 compared to February 2020, which was 3.4 months, down 73.5% from last year. The National Association of Realtors reports the inventory level nationally was down 29.5% from last February, therefore, Manatee County is way down compared to the national level. The number of sales in Manatee County in February was up by 12.8% compared to the national number of 9.1%, proving that our inventory is being gobbled up as soon as homes hit the market.

Thrown into this potpourri of housing shortage and pent-up buyers is the fact that the mortgage rates have ticked up. The average rate for a 30-year fixed mortgage has risen to 3.09% recently from 2.65% earlier this year, according to Freddie Mac. In addition, they anticipate it is likely to head higher still. Nevertheless, most economists feel this is just a blip in what will continue to be a great housing market that can tolerate an uptick in rates, which will likely remain historically low.

In addition, economists project that Americans have saved during the pandemic – as well as improving their credit positions – and are sitting on a nice pile of cash. As more segments of the economy keep opening and the economy improves, more buyers will be in a strong position to purchase homes even with slightly higher mortgage rates.

I personally never want to see empty shelves in supermarkets again, but I would also like to see an improvement in our level of inventory. As previously stated, prices will go up and sales will go down unless we can convince homeowners across the country that now is the time to list. Stay safe.

Castles in the Sand

Commissions vs. technology: Local knowledge rules

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I’ve never met a seller who didn’t cringe a little at closing when the brokers’ commission checks are cut. They know intellectually that brokers have to be paid, but they frequently never really think they were worth the money, especially in today’s world of fast technology.

The yin and yang of this is that, yes, anyone can go online and see pretty much every property listed in the areas they’re interested in. However, what about the ones that aren’t listed yet? Don’t think for a minute that brokers who are tapped into the community they do business in don’t know about properties that may be coming on the market; who’s getting a company transfer, who’s retiring, who’s getting divorced, and all other kinds of life events that cause people to sell their homes.

This information is great for buyers, but it’s also great for sellers. Local knowledge is even more important in today’s real estate market where inventory is very low, and homes sell in days with multiple offers. If you as a seller have a broker who has cultivated qualified buyers for your specific type of home, you may think their commission was money well spent. Experienced brokers bring that knowledge to both buyers and sellers – it cuts both ways.

In addition to knowing their market, brokers are a wealth of information not found on online real estate listings. In Florida, the majority of transactions use contracts written by brokers, developed by the Florida Association of Realtors, therefore avoiding legal expense. They are also in a position to advise sellers on ways to improve the appearance of their homes and recommend small maintenance and clean-out jobs, all of which enhance that vital first impression.

Despite my opinion of the value of a real estate broker, there are plenty of others who don’t agree, including on-line brokerage companies. These brokers are influenced by the fact that the National Association of Realtors reports that 44% of new home buyers begin their home search online and are attempting to acquire a larger percentage of the market.

Another month has passed, and the Realtor Association of Sarasota and Manatee has come out with its February sales statistics and it’s another record-breaking month.

In February, Manatee County closed 12.8% more single-family home sales than last February, and cash sales were up 10.5%. The median sale price set a new record at $380,000, up 16.9%, and the average sale price was $553,312, up 35.6%. The median time to contract was 13 days compared to 47 days last year, and the month’s supply of properties was .09 compared to 3.4 last year.

Condos were also up in all areas, closing 23.2% more than last February, while cash sales were up 21.1%. The median sale price was $230,000, up 9.5%, and the average sale price was $272,932, up 11.3%. The median time to contract was 34 days compared to 39 last year and the month’s supply of properties was 1.1, compared to 4.5 last year.

With the inventory as low as it is there will be an impact on the number of sales going forward this year, which will continue pushing the sale prices up even more. There are a lot of buyers out there who will be very disappointed in the coming months if things don’t turn around.

If it makes sellers feel any better, commissions charged by boat brokers surpass home sales by about 4%. And just like home sales, the prices are going up and the inventory is going down.

I always thought a computer could never take the place of a real live person when it comes to the largest purchase and sale of your life. Time will tell if I’m right. Stay safe.

Castles in the Sand

And the million-dollar beat goes on

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Well, here we are again; three more months have passed as we fight our way through the biggest pandemic in more than a century, but Anna Maria Island’s real estate market hasn’t blinked.

The price point on the Island and in little Cortez is holding steady and even growing, especially in the over $1 million range, but how did we get here? Before we analyze the $1 million and over sales and listings for the next three months, let’s review what has happened in the state of Florida this year.

The real estate market all over the country is booming, but Florida in particular is doing great, with thousands of people moving into the state every week. Apparently, U-Haul is the authority on migration trends in the country, and according to their 2020 report, Florida is number three in the country for one-way U-Haul rentals. This is in addition to many airlines adding direct flights to Florida during the winter. Practically every day, Sarasota-Bradenton International Airport reports either another airline flying out of Sarasota or added flights to existing schedules.

Although we have one of the largest senior populations, the Florida death rate from the virus is in the middle of the country’s rates, and well below California and New York – two other states with large populations, but fewer seniors. This plus having the state mostly or partially open during this time is encouraging people to relocate.

In addition, business migration to Florida, particularly in the finance industry, is increasing because of taxes, weather and the ability of people to work remotely. The state reports that 35 large businesses have moved to Florida since the pandemic began. All of this has increased home sales 20% statewide in the last six months of 2020 while raising the median sales price by 14.4%.

So, let’s take a look at the $1 million and over sales and current listings as of this writing in Cortez and the three cities on Anna Maria Island for November, December and January. Closed sales are from the Manatee County Property Appraiser’s website and those currently on the market or pending are from realtor.com.

Cortez closed two sales, one at $2,500,000 and one at $1,215,000; in the last comparison, Cortez also closed two properties in this price range. The city of Anna Maria closed 41 properties, one over $4 million, two over $3 million, 15 over $2 million with the balance $1 million or over. Last time, Anna Maria closed 42 sales. The combined cities of Bradenton Beach and Holmes Beach closed 39 properties, one over $6 million, one over $4 million, one over $3 million, 12 over $2 million and the balance $1 million or over. Last time, there were 40 sales.

On the market or pending as of this writing in Cortez, there are three properties over $1 million; the last time there were eight. The city of Anna Maria has 31 available or pending; one over $6 million, four over $4 million, seven over $3 million, five over $2 million and the balance over $1 million. Last time, Anna Maria had 42 in this category. The combined cities of Holmes Beach and Bradenton Beach have 81 properties on the market or pending, three over $5 million, two over $4 million, six over $3 million, 20 over $2 million and the balance $1 million or over. Last time, there were 70 properties.

Two other impressive numbers are that almost half of the properties listed on realtor.com for Cortez and the Island are pending. In fact, in the city of Anna Maria, there were only two properties below $1 million and both were pending.

See you in three months for another update. Happy St. Patrick’s Day. Stay safe.

Castles in the Sand

Cold month, hot market

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I have always found real estate to be a very exciting profession. What other job allows and encourages you to peek into people’s closets and check out their favorite shampoo? And right now, real estate professionals are super excited, as they should be – just look at these numbers.

There are few words to describe the Sarasota and Manatee housing market, but “sensational” is one of them. According to the Realtor Association of Sarasota and Manatee, closed sales increased year-over-year by 23.6% across the two-county market. So, let’s look at the Manatee County sales for January, also reported by the Realtor Association of Sarasota and Manatee.

Single-family closed sales in January were 25.6% higher than in January of last year. The median sales price was $370,000, up 12.3% (just to review, the median is the midpoint of sales; half the homes sold for more, half for less). Also, $370,000 is the highest median sales price for single-family homes recorded for Manatee County. The average sales price for single-family homes was $510,940, up 21.4% from last January.

The median time to contract single-family homes was 17 days, down from 41 days last year; this means that half the properties available were in contract in more than 17 days and half in less than 17 days. New listings are down 20.9% and the month’s supply of available properties was 1.1 months, down 67.6% from last year.

Condos closed 20.5% more this year than last. The median sales price was $231,000, up 10%, and the average sale price was $284,037 up 19.9%. For condos, the median time to contract was 40 days compared to 50 days last year, and new listings are down 35.8%, with a month’s supply of properties at 1.6 months, down 66%.

If you think Manatee County is getting too difficult to buy in, don’t think that Sarasota is much easier. Single-family home sales increased by 17.9% in Sarasota and condo sales increased by 32.6%. In Sarasota, the median price for single-family homes was $340,004, up 14.9%, and condo prices were up by 9.1% to $302,250. Essentially, whether you’re looking to buy in either Sarasota or Manatee counties, you’re in for a difficult process. The combined inventory including both property types in the two counties declined by 59.9%.

Alex Krumm, president of the Realtor Association of Sarasota and Manatee, had a couple of things to say about the market when the January numbers were released: “Our sales tend to be strong through fall and winter, but what we’re seeing right now is unprecedented. There are far more buyers than sellers, which reinforces the trend of rising prices and competition in our marketplace.”

He goes on: “Waiting to purchase is a mistake right now. Home prices are increasing at an incredible pace with no sign of slowing, and sellers can take advantage of a very favorable climate to fetch good prices and great terms.”

And to add another log on the real estate fire, the Mortgage Bankers Association anticipates home purchase originations will grow to a record level in 2021 and mortgage rates will stay historically low, generating an even more competitive real estate market.

Living on the edge waiting for properties to close can be stressful for real estate professionals in a normal real estate market, but what we’re experiencing now is far from normal. What is stressing out real estate brokers now is finding properties to sell.

I guess plumbers may have less financial stress and are also welcomed in people’s bathrooms, but where’s the excitement there? Stay safe.

Castles in the Sand

Real estate outside the box

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

The first time I heard the expression, “think outside of the box,” was in a real estate seminar when I first moved to Florida. It’s a thought process that can be applied to almost anything in life, from romance to home renovations. But in the real estate market we’re currently in, it has a whole different meaning.

Buyers are in the most challenging real estate market in decades. The severe shortage of inventory is pushing sale prices so far up that many buyers ultimately get eliminated. Even buyers who are well qualified to purchase at higher prices are being outbid on multiple home offers. With the competition fierce, every buyer is looking for an edge, and some are very creative.

Not too many years ago, buyers who wanted to take that extra step in enhancing their offer would write a personal letter to the seller complimenting their lovely home and making their case for why this is the perfect fit for them and their family. Well, not anymore. Now, buyers are structuring clever ways to make their offers more appealing to sellers. Sometimes, this creativity is sparked by memorabilia around the home or other subtle indications of the sellers’ personalities. Buyers have used videos, a promise of donations to favorite charities and even offers with a numeric sequence that will appeal to the seller.

Is any of this worth a try? Maybe – appealing to individual egos and sentimentality can’t hurt. But it still all boils down to money, and no matter how you dress up your offer, unless it’s competitive in price and terms, chances are it won’t make a difference.

Speaking of money, our hot market is spurring a number of bidding wars all around the country. Ken Johnson, a real estate economist at Florida Atlantic University, warns getting caught up in a bidding war and buying at the top of the unusual market we are currently in could be a mistake, especially if your purchase is not a long-term investment.

However, most real estate professionals believe this seller’s market still has a long way to go, assuming interest rates stay down, which is predicted based on signs from the Federal Reserve. Most economists believe long-term shortages will continue, but even if inventory starts to go up as the virus stabilizes, there is still plenty of pent-up buying energy to sustain the market for a long time.

Nevertheless, trying to win in a bidding war takes a lot of due diligence to verify your over-asking offer is the right thing to do. Study up on recent sales and potential changes to the area and calculate how much work the home will need; it is easy to get taken over by the frenzy.

On the other hand, if you’re stepping back from improving your offer because you think the house may come back on the market, think again. There is not too much of that happening, especially since there is an abundance of cash offers. The Manatee County sales statistics for December showed an increase of 44.1% in cash offers for single-family homes from last year and 19.5% for condo sales. So, if your hope is that the property will not appraise for mortgaging purposes because there aren’t comparable properties available, you will probably be disappointed.

Real estate buying is all about finding the right balance. Do not be afraid to walk away if a particular property isn’t working for you. Sometimes you have to kiss a lot of frogs before one turns into a prince. Outside the box thinking has never been so important. Stay safe.

Castles in the Sand

New construction surges

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Practically every week there is a trend in the real estate market directly related to the COVID-19 pandemic. The health crisis has taken over every aspect of our lives, but it appears that housing and real estate values have been especially impacted. The latest effect is the shortage of building lots to meet the demand for new construction.

The U.S. Commerce Department has reported that new home sales rose 19.1% in volume in the first 11 months of 2020 compared with the same period in 2019. Even little Cortez has been affected, with two lots sold and one currently on the market in the past six months per realtor.com.

With the shortage of previously-owned homes on the market, record low interest rates and the desire for more space during the pandemic, builders are running out of land. Some builders are limiting the number of sales they put in contract, worried they won’t have enough buildable land to start construction on. Land development is a long and expensive process that involves permitting and infrastructure planning long before a shovel goes in the ground.

This demand is also likely having an impact on green buildings according to the American Institute of Architects. Their goal was to hit “net zero” construction by 2030, however, they have a long way to go and few of their members are meeting their goal. The majority of people just aren’t asking for green construction.

To complicate the new construction industry further, investors – sometimes partnering with builders – are building tens of thousands of houses expressly to rent. Their bet is that the housing culture has changed enough this past year with individuals and families embracing suburban living to keep the demand for single-family homes increasing.

In addition, because of the demand for single-family homes, prices have soared, and in spite of low mortgage rates, availability is unaffordable for many. It’s projected that newly-constructed homes sold straight to investors will exceed 5% over the next few years, up from the historical average of approximately 1%.

When I went online at the Realtor Association of Sarasota and Manatee’s website so I could report on the December sales statistics, the first thing I saw was “single-family homes flying off the market in Sarasota and Manatee.” So here are the numbers on homes in flight.

Sales of single-family homes were up 41.6% from last December. The median sales price was up 6.8% to $357,900 and the average sale price was up 14.5% to $496,984. The median time to contract was 60 days, down 33.3%, and the month’s supply of homes is 1.5 months, down 54.4%.

Condo sales were up 45.1% from last December. The median sales price was up 19.5% to $239,000 and the average sales price was up 52.4% to $365,012. The median time to contract was 26 days, down 43.5%, and the month’s supply of condos is two months, down 51.2%.

According to the Realtor Association of Sarasota and Manatee’s president, “This is one of those weird moments when it’s a great time to sell, but it’s also a great time to buy. If this trend continues, and data is showing that to be the likeliest forecast, then sellers can get top dollar in record short timeframes, while buyers can lock in record low interest rates and buy a home that is going to be worth much more in a year from now. And if they do both, then they can get the best of both worlds.”

The best of both worlds doesn’t come along very often; enjoy while you can. Stay safe.

Castles in the Sand

Real estate sales surge continues

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Happy New Year, are we all just about done with this year? I certainly am. Nevertheless, Anna Maria’s real estate market is not done, and this year has been an immensely successful one in spite of the pandemic.

Anna Maria’s popularity has exploded during the last 10 years, much of it fueled by newspaper and magazine articles about our “Florida Postcard, Old Florida” island. The latest love affair with Anna Maria is in Coastal Living Magazine’s end-of-year issue, just in time for tourist season, if we indeed have one this year. Coastal Living has written before about Anna Maria, but this particular version has to be the purple prose of Anna Maria stories.

The writing is so elaborately infused with the glory of our beaches, “near-dizzying,” the lure of Pine Avenue “hums with the old and the new simultaneously,” with restored homes that are now galleries, restaurants, bakeries, museums and bike rental shops.

Now, to be fair, all of this is true, but if I were reading this right now in snowy shut-down New York City, I would be fighting my way down I-95 to get here. In fact, I might just fight my way over the Cortez Bridge to see what I’m missing. I think it’s great that all of the businesses mentioned in the piece are getting credit and exposure for making Anna Maria such a sought-after island, but “double-decker building of delights” – please. I’ll let you figure out which restaurant they mean.

Practically every month this year, when I review the closed sales numbers in Manatee County, I get excited, and this month is no exception. So, let’s look at the November Manatee County closed sales reported by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 40.3% more properties in November this year compared to last year. Cash sales were up 52%, the median sale price was $350,500, up 7.2%, and the average sale price was $463,015, up 15.6%. The median time to contract was 19 days, up 55.8% and the month’s supply of properties was only 1.6 months, down 51.5%.

Condos closed 58.9% more properties in November this year compared to last year. Cash sales were up 77.4%, the median sale price was $237,250, up 10.3%, and the average sale price was $265,013, up 5.3%. The median time to contract was 34 days (no change from last year) and the month’s supply of properties was only 2.3 months, down 45.2%.

The month’s supply of available properties hit a new low, meaning if you’re looking for a single-family home or a condo, you will have slim pickings. Because of this, the median and average sale prices continue to push up with no end in sight. Fortunately, with mortgage rates also at an all-time low, buyers can qualify for a higher amount of financing. In addition, the percentage of cash transactions is extraordinary. Cash continues to be king and will easily make or break a deal. I expect December’s numbers will be slightly lower based on the surge of COVID-19 infections combined with the holidays, but we’ll see if that’s true.

Finally, I would be remiss if I didn’t acknowledge the recent Longboat Key sale of $16.5 million – the highest registered sale in the history of Sarasota and Manatee.

Even if my writer’s critical eye has taken some exception to Coastal Living, I’m still happy they wrote about Anna Maria. It’s good for business and great for real estate. I just wonder what George Emerson Bean and Charles Roser would have thought. Happy New Year and stay safe.