According to real estate industry observers, roughly one-third of property buyers and investors who committed to buying downtown condo towers during Florida's post-2000 real estate boom, now have appeared to be having buyers' remorse. "The market couldn't be more different now than two years ago. It went from one extreme to the other."
Most real estate agents agree that the upper end of the Sarasota condo market remains relatively cold. The number of $1 million-plus condos far exceeds demand, and every development is struggling to sell penthouse units. Nonetheless, real estate agents are still optimistic and very much hopeful for a rebound of the Sarasota condo market.
Property Developers Are Back To The Drawing Boards
Driven by a desire to distance themselves from rampant speculation or avoid owning overpriced space, buyers are bailing from a handful of high-profile Sarasota condo high-rises. Their movement is likely mirrored by the rest of the property market across the region and the state.
Similar scenes are playing out throughout the region and Florida: Developers who had hoped to capitalize on low interest rates and perceived demand are having to reconfigure, stall or abandon projects altogether. In Sarasota alone, roughly a dozen condo developments have either been shelved, revamped or put back on the market.
The Property Market Slide Seems To Affect All Florida
Florida is not the only state imploding from the overabundance of housing supply, of course. According to state housing analysts, it was a knee-jerk reaction around the country, and just as reactionary was the total amount of new supply that was being offered by developers, who realized that residential projects provided greater immediate profitability than retail space, offices or hotel rooms.
The experts further note that demand was so strong in part because developers saw that residential development pays significantly more than a site, in the same zoning, that would be targeted for office or retail.
And the thing was, during the tremendously active period here, from 2002 to 2005, developers looked at practically every site downtown and around it as a residential site," local brokers further commented. Though many property market observers differ on predicting when the region's residential market will see a rebound, most believe that developers will have to look to product types other than condos if they hope to develop and effectively market new projects within the next five years.
Is The Market Headed For A Long-Term Slump?
Even mixed-use developments that looked like a lock to be built in 2005, like the revamped Quay known as Sarasota Bayside for example, as well as Pineapple Square, the Atrium on Ringling and Benderson Development's expansion of the 13-story Bank of America building, now seem to appear to be quite far from reaching fruition.
Some housing observes note that the market is in a coma for now, as there are too many condos, not enough buyers, and too many speculators going over the field like vultures. According to one analyst, "We're seeing a correction now from overinflated prices, caused because people thought price increases would never stop, and they did stop."
The general consensus among many home buyers, real estate brokers and analysts these days, is that the Sarasota condominium market is in far better shape than those in other places across the country.
For example, two-bedroom units at The Plaza at Five Points, started selling for around $650,000, but at present are now being resold for as much as $760,000, which represents a 17% appreciation in value, even if the certificates of occupancy have yet to be issued.
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