Single Family & Condo Sales Report in Sarasota County
Home Sales: The economic story of the year.
Man plans, G-d decides. We get comfortable and begin to think we are in control or at least some degree of control in setting the agenda for our lives. Then the unexpected happens. Geopolitical/economic events. Reality steps in. What is known becomes unknown. We halt in place. Some freeze, others fall, but most reassess and redefine their plans.
An extraordinary year it has been. Looking back at 2020 and forward to 2021, a walk down Memory Lane is in order.
On March 15, 2020, at the onset of COVID and the Governor’s initial restrictive orders, I published the following in this Report:
“The next few weeks will be telling about the trajectory of the virus. If it spreads quickly, it will change behaviors. In many ways, it already has, as large public gatherings for sports, cultural and recreational events, religious assemblies and schools are being cancelled. During this period of uncertainty, the stock market correction, the decline of the 10-year yield (although that will translate into lower mortgage rates), the susceptibility of jobless claims from a global growth slowdown limiting travel and consumption, and containment policies implemented in America may, initially, slow sales. Already there are reports that some snowbirds are planning to return home earlier than Easter, the traditional end of the “in-season”. Sellers have considered putting off their plans to sell their home. Similarly, some Buyers will choose to insulate themselves and not look at homes. But it will be short-lived. Government and private industry will coalesce to forge relief. Although the development and production of immunity vaccines will not be immediate, as therapeutics and containment policies achieve positive and measurable results, emotions will ease. As we learn and adapt, become accustomed to the precautions to take with calculated risk, the initial panic from the fear of uncertainty will subside. Confidence will rise, market volatility will stabilize, life and business cycles reset”.
Reset we did. Within 2 months, on May 10, 2020, I wrote:
“Home sales are poised to outperform the economy this year. Whereas housing led the way into the Great Recession of 2007-2009, this time it will lead us out. In the six years leading up to the housing crash of 2007, homes appreciated 56.2%. In the last six years homes appreciated a comfortable 31% [Source: Black Knight]. The growth in home prices has not been fueled by easy access to credit. It has been a simple case of supply and demand. Home prices are not inflated. 53.8 % of all homes in the US have at least 50% equity [Source: CoreLogic], $177,000 the average equity of the mortgaged homes [Source: CoreLogic], and 37% of all homes are unencumbered by any loans [Source: Bloomberg].
Although the Labor Department reported that the unemployment rate jumped 14.7% in April, Sarasota County is a retiree, soon to be, or in many instances second career by choice or to supplement a fixed income. Further, millennials, the largest demographic ever, greater than baby boomers, are coming to prime home buying age. Home sales will be further fueled by historically low mortgage rates”.
In my May 10th commentary I further studied pending sales, a forward-looking indicator of coming closed sales. I reported that:
“There have been 298 pended sales for the first 9 days of May 2020, a staggering 70% increase from April 1 – 9th, the early stages of the stay-at-home order. Buyers are out, sales are happening. However, sellers are tepid, thinking now is not the time to sell. Accordingly, there are relatively few new listings. When pended sales outpace new listings (which they are), inventory will be low. When inventory is low, as it is, home values will be stable, even in a “crisis”, and susceptible to increasing. It may seem counterintuitive, but buyers do not have many choices these days. This affords a genuine selling opportunity”.
In a quickly escalating market, on May 21st I further updated pended sales covering May 1 – 20, 2020, and postulated:
“All indicators point to home sales close to outpacing the same time last year. The housing market will lead the recovery. The supply of homes for sale is declining more dramatically than homebuyer demand. Notwithstanding the depths of the slowdown from the coronavirus shutdown, with great speed and alacrity home sales have recovered. Based on the first 20 days of this month, homes are going under contract faster and negotiations are more competitive than it was last year at this time. After the initial 30-day shock of the coronavirus pandemic, I see no evidence that the COVID-19 crisis is adversely affecting home sales. Rather, it is accelerating the decision of our feeder markets up North to move to the Gulf Coast”.
There have been many naysayers … friends, customers, clients and associates. No matter. Clarity over agreement. Facts first, then opinion. By the end of May it was clear that for housing in Sarasota County we were in a V-shaped recovery. On June 7th I reported:
“As Realtors we have continued to service the needs of buyers and sellers. Sellers accelerating moves to adjust life’s cycles. Millennials entering the market and fostering buyers to sell their homes in our feeder markets, anxious to move to our area and begin their retirement. Many were renting for the season and are now ready to purchase a home and move here permanently. In March and April, amidst initial fear and uncertainty, many buyers and sellers understandably moved to the sidelines. In April new listings and purchase contracts (“pended sales”) dropped 42% from the same month last year. Nevertheless, within 6 weeks things began to change. In the second half of April, while new listings continued to lag due to health and safety concerns of homeowners, internet use, page views, social channels, showings (virtual and live) and pended sales (homes under contract) began to rise.
By the end of May there were 1,215 pended sales, 4.9% higher than last year, 73.5% higher than the prior month, April 2020. Buyers essentially stalled for the first month and a half, March to mid-April, at the outset of the corona era. But they are here now. And they are buying. There is a lack of inventory, new listings are down 16.7% from May 2019, but the direction is heading north. There were 32% more homes listed last month than April 2020. Nevertheless, it will have a deminimus effect upon the supply of homes. Home inventory will remain low. Home prices will rise. Low supply and high demand have been a constant. It was a constant before Corona. It has been a constant during Corona. It will remain a constant after Corona”.
Today the first of millions of health care workers were inoculated with the vaccine. Before assessing the perceived challenges of 2021, review the charts below, a comparison of home sales in Sarasota County, the past 12 months (December 2019 to November 2020), compared to the prior 12 months (December 2018 to November 2019). Source: Trendgraphix.
The revelation is that home sales in Sarasota County is the economic story of the year. Notwithstanding the pandemic, there were approximately 10% more sold single homes in 2020 versus 2019, sold prices up about 10%. Condominiums sales even stronger, almost 18% more sold homes, selling at a 12% premium to the same 12 months one year ago.
Luxury single family and condos, over $1M, off the charts. In 2020 almost 50% more single family homes sold in 2020 versus 2019, and at an approximate 5% increase. Luxury condo sales were even more compelling, in part. Roughly 80% more sales, although sold prices stayed constant. However, level sold prices compared to last year is due to 2019 high six-figure condos moving over the $1M price point, than a push back on prices in the luxury condo market.
2020: a wild ride on many levels.
Next month I will close out the final review for 2020 based on December’s data, and prognostications for 2021 and headwinds of reoccurring concern.