SARASOTA COUNTY:

Steady as we go … with a watchful eye.

Resale Housing Report for May 2019

I expect the Fed will cut rates this year.  It will ease, not tighten monetary policy, as the economy shows signs of weakness.  In 2018 the US added 233,000 jobs per month.  But, in May 2019, it slowed to 75,000, and wages increased a tepid 3.1% from last year.  Whether it is a sign of a weakening economy or a tightening of the job market, in the face of a trade war with China, uncertainty looms.

The Federal Reserve cuts rates when it fears uncertainty in the “Market”.  Uncertainty leads to inertia.  Inertia is antithetical to growth.  A trade war brings uncertainty to the “Market”.

In Sarasota County, the home resale market is not immune to the “Market”.  Home prices continue to grow, but, since the 3^rd quarter of 2018,  at a weakened pace.  See stats below.

On June 4, Fed Chairman Powell said that the Fed is prepared to respond if it decides trade conflicts are threatening the US economy.  Other Fed officials have made similar statements.  When the Fed says it is prepared to respond to trade conflicts, that is a strong signal that the Fed will likely cut interest rates as a barrier against a weakening economy.

Sure enough, the “Market” took notice.  Following Fed Chairman Powell’s remarks, equity prices rose, bond yields fell, and mortgage interest rates went down.  Coupled with an easing of monetary policy, will it be enough to counter the impact of trade restrictions, a weakening economy, and avoid an outright recession?  I think so.

Tariffs with Mexico are no longer part of the equation.  Although China’s impact is far greater than Mexico’s (or Brexit for that matter), tech and manufacturing transfers from China to other countries are taking place.  Europe, Japan and much of the world are forming a consensus about the theft of intellectual property by China and forced tech transfer to China. US imports from Vietnam are up 38% during the first four months of 2019.  Imports have increased by 22% from Taiwan, 17% from South Korea, and 13% from Bangladesh —- while Chinese imports are down 12%.    The cost to transfer technology and  manufacturing to other countries will come at a higher cost, and as goods and services are imported to the US, their increased costs will be passed on to the consumer.  However, I believe it will not be a disrupter. The easing of the Fed’s monetary policy, and lowering borrowing costs (including mortgage loans) will absorb any material disruption .

What does all of this mean for our local Sarasota County real estate market?  As I have opined over the past few months, the Housing Market is “steady”, balanced between Buyers and Sellers.  Resales of single- family homes and condos are increasing at a historically supported 3 – 5% range.  Inventory remains low, at a 3 – 4 month supply.  Sellers are pricing their homes at fair value, and are therefore selling, on average, within 3 months of listing, and in close-proximity to the list price.  If my analysis above bears fruit, then the Fed’s anticipated easing of credit and resultant lowering of interest rates for mortgage loans will foster continued stability in the resale housing market and modest price appreciation.  Please see stats below.

Single Family Homes

Resales: May 2019

• For Sale is Neutral @ 2,841 units; Down- 9.3% compared to last month (April 2019), and up 5.8% as compared to same month last year (May 2018).
• New Listings is Neutral @ 852 units; Down -3.4% compared to last month, and up 3.8%as compared to last year.
• Sold Listings is Neutral @ 923 units; Up 11.9% compared to last month, and up 12.4% as compared to last year.
• Pending Sales is Neutral @ 893 units; Up 0.2% compared to last month, and up 20.8% as compared to last year.
• Months of Inventory Based on Closed Sales is Neutral @ 3.1 months; Down -18.4% compared to last month, and down 6.1% as compared to last year.
• Average Sold Price per Square Footis Neutral @ $209/sq. ft.; Down -0.9% compared to last month, and up 8.9% as compared to last year.

(Don’t be misled – up only 2.3% current quarter vs same quarter last year).

• Median Sold Price is Neutral @ $304,000; Up 4.8% as compared to last month, and up 8.6% as compared to last year.

(Don’t be misled – up only 2.1% current quarter vs same quarter last year).

• Average Sold Price is Neutral @ $411,000; Up 0.7% compared to last month, and up 7.9% as compared to last year.

(Don’t be misled – up only 0.5% current quarter vs same quarter last year).

• Average Days on Market is Rising – 88 days; Up 2.4% compared to last month, and up 13.5% as compared to last year; up 12.5% current quarter vs same quarter last year.
• Sold/Original List Price Ratio is Steady @ 92%; Up2% compared to last month, and the same as compared to last year.

Condominiums

Resales: May 2019

• For Sale is Neutral @ 1,351 units; Down 7.7% compared to last month (April 2019), and up 16.2% as compared to same month last year (May 2018).
• New Listings is Neutral @ 274 units; Down -18.2% compared to last month, and no change as compared to last year.
• Sold Listings is Neutral @ 303 units; Up 1% compared to last month, and up 3.2% as compared to last year.
• Pending Sales is Neutral @ 262 units; Down -6.8% compared to last month, and up 19.1% as compared to last year.
• Months of Inventory Based on Closed Sales is Neutral @ 4.5 months; Down -8.2% compared to last month, and up 12.7% as compared to last year.
• Average Sold Price per Square Footis Neutral @ $306/sq. ft.; Up 1.3% compared to prior month, and up 3.4% as compared to last year.

(Don’t be misled – down 3.7% current quarter vs same quarter last year).

• Median Sold Price is Neutral @ $245,000; Up 2.9% as compared to last month, and up 3.8% as compared to last year.

(Don’t be misled – down 5.9% current quarter vs same quarter last year).

• Average Sold Price is Neutral @ $419,000; Up 1% compared to prior month, and up 2.4% as compared to last year.

(Don’t be misled –  down 5.9% current quarter vs same quarter last year).

• Average Days on Market is Rising – 101 days; Up 11% compared to prior month, and up 5.2% as compared to last year; no change the current quarter vs same quarter last year.
• Sold/Original List Price Ratio is Steady @ 91%; Down -2.2% compared to prior month, and the same as compared to last year.