2018 was a Neutral Market, balanced between buyers and sellers.  Prices for all Single-Family-Homes increased within a 4-5% range.  The average sold price per square foot rose 4.2% to $197/sq. ft.; the median sold price increased 5.2% to $282,000; and the average sold price was up 4.9% to $386,000.  The inventory of homes for sale based on closed sales averaged 4.3 months for the year; and is closing out the year at 5.3 months.  6 months is generally accepted a balanced market.

I expect the market will remain balanced throughout most of 2019, with single family home prices rising 4%, and the inventory of homes for sale increasing to a 6.5-month supply.  We are facing looming headwinds, which I will discuss below, but, I do not expect them to surface until the end of 2019/2020.

The current market has been driven by solid economic fundamentals, unlike 2003 – 2007 when excessively lax lending standards had created a bubble fueled by artificial liquidity.  When this liquidity was erased by the crash on Wall Street and ensuing federally-mandated harsh lending standards, Sarasota County, as did the nation, experienced a dramatic crash.  With the supply of homes for sale greatly outstripping demand, in Sarasota County, by 2012, prices tanked 54%, at which point it began its upward trajectory.  Today we are 15% off the peak of 2006/2007.

So, what makes today’s market different?  Quite a lot.  Interest rates have incrementally increased and lending standards since the Great Recession have normalized.  Despite recent gyrations in the equity markets including the loss of 2018 gains and a weak global economy, the economy of the US, our feeder markets up North, and Sarasota County are doing quite well.  For the US, consumer confidence is at an 18-year high.  GDP growth is above 3%.  Unemployment is at a 49 year low.  Wages have risen 2.9% year over year.  And, inflation remains under control at just about the Fed’s target level of 2%.

Sarasota County is booming.  Population is at 420,000, with over 10,000 new residents, and a growth rate of 2.5%.  AARP reports that over 10,000 Baby Boomers are retiring every day, many of them moving to the Sunshine State.  Cranes are everywhere, with major residential, mixed-use, hotels, commercial, parks, attractions and sports venues under construction or planned: from the Quay $1-billion mixed use waterfront development on Sarasota Bay; to the 15,000 acres/33,000 approved units/town center/Braves sports training facility at the West Villages to the south; and all of the construction and development in between.

All markets are cyclical, and ours is no different.   Most economists anticipate a soft landing for the US economy towards the end of 2019 or 2020.  Foreign economic conditions are worrisome as European growth slows sharply, and China struggles to contain the impact of US tariffs.  US fiscal deregulatory policy, the tax stimulus, and government spending propelled our economy.  However, by late 2019 or early 2020, its impact will subside, combined with the gradual raising of interest rates by the Fed, trade wars, and resultant increase in goods and services.  Accordingly, we are facing looming headwinds, but they should not surface until the end of 2019/2010.  Until such time, and particularly for the first 3 quarters of 2019, all indices point to a continued stable and balanced housing market, with inventory slowly growing, and prices increasing within a 4-5% range.