2013 was a great year for Venice real estate.  This was amongst the most productive years ever, based on the total number of homes sold.  In fact, had it not been for the shortage of available homes for sale, 2013 would likely have seen more homes sold than any other year, ever.  On average there were 614 homes for sale at the end of each month in 2013, 13.6% less than 2012.  Based on closed sales, this resulted in a 3.6 month inventory of homes for sale, 22.8% less than 2012.

Median prices rose 7% in 2013, over 2012, to $169,000.  Average prices, on a square foot basis, rose 7.3% in 2013, as compared to 2012, to $127.70 per square foot.

Are these prices sustainable?  I think so.  The real run-up in prices, the boom, didn’t start until 2004.  So it is particularly instructive to review the median price at the end of 2003, prior to the boom.

At the end of 2003 the median price was $234,000.  That’s 28% more than the current median price of $169,000.  Therefore, we have quite a way to go before we approach even pre-boom levels, not to mention boom levels.  Note that at the height of the boom, December 2005, the median price was $298,000, 43% higher than the current median price.  So there is little indication that the housing market is over-heating.

It is actually surprising that in the face of a low 3.6 month supply of homes for sale, and an active year for hedge fund and foreign investors, prices increased only 7%.  In Florida, prices historically increase 3%-5% per year (2%-3% nationally).

Looking to 2014, I anticipate that as the dollar gains strength against foreign currencies and prices continue to increase, there will be fewer purchases by hedge funds and foreign investors.  Re-sales will face increasing competition from new construction, which is surging.  Supported by an economy which is recovering, albeit slowly, I predict homes will continue to increase within a 7% range through 2014.