Market Propelled up In-spite of Tighter Lending Standards
Since 2009, sales in the Sarasota Real Estate Market have been propelled despite banks making it difficult to finance purchases. What I noticed (once I charted the annual numbers) is that this market would slump along if folks didn't feel strongly enough about the great values and figure out other ways to purchase. The number of sales listed as "all cash" represent almost two-thirds (61%) of all sales. This year's cash sales of 6,706 units exceeds the total number of sales for 2007 (6,360). There is a lot of money coming off the sidelines and it seems many have decided to come back to real estate. With abysmal rates being paid out by banks and many who feel the stock market is top heavy, the 50% drop in real estate prices here are a great place for some to invest or buy now for retirement later.
Sales this year (10,536) are on par with the last boom year of 2005 (10,999). Lenders have pretty much made it so difficult to finance and buy that the cash buyer has come out. While banks are lending less, cash buyers are buying more. The reality is lenders will eventually loosen up standards a bit in the coming years. Other potential buyers hurt by the downturn will start to have credit scores improve as well. The benefit for today's buyer is that any future loosening will allow more buyers to purchase a finite commodity; it's the law of supply and demand. I would expect to see the ones stepping up today to be rewarded in the future.
Naturally, no one can predict the future. In May of this year, I posted my belief that the market bottom was behind us. We have had a steady increase in units sold since 2007. One of the big differences for 2012 is that inventory hovered around the 4,000 mark for most of the year which represented about a one-third reduction in inventory. I also observed much of the high end properties being sold. Our earlier predictions have certainly held so far.
Sarasota Real Estate Group
- Cash Sales in Sarasota are King
- Sarasota Sales Break Out - April 2012 (Predicting the bottom is behind us)
- Sarasota Real Estate Projections for 2012 (Sept 2012)
The obligatory disclaimer. We are not investment councilors and cannot for-see unknown disruptions to the market. We only offer this opinion based no past activity and share these facts for your consideration.