The list of interested buyers in all price points in the Sarasota Real Estate Market continues to grow. Inventory and interest rates create the heaviest headwind in meeting the demand. However, for those prepared to strike when they find the property that ticks all their “wants” including location, condition, renovation or rebuild required, closing timeframe, etc. they are ready to make a move as soon as new properties come on the market. The majority of these are cash buyers in the high-end market, so in the low- and mid-market price point where most buyers require mortgages, things are moving a little more slowly due to high rates.

Buyers are back in the driver seat now that the go-go days during the pandemic have passed. In the luxury and ultra-luxury class of properties, inventory has returned to pre-pandemic levels. That means that sellers need to get back to making necessary repairs before listing and be prepared for contingencies in contracts again.

Despite the growing listings pace, the months of supply of luxury inventory is 4.5 months, which is still below the threshold of at least 6 months of properties for sale to reach a balanced market. The pipeline of buyers for me and my other brokers who operate in the upper tier of the market has many ready, willing, and able clients. I see our market maintaining steady sales and moderate price appreciation in the months ahead.

The seasonality of sales has been somewhat disrupted as so many would-be buyers haven’t yet found their new property in Sarasota and are staying active in their search. Though there were more buyers in the area during the traditionally busier spring season, eager buyers with cash offers are still looking for their ideal home. The pace of properties going under contract in the luxury tier since the start of 2023 is 225% higher than same period in 2019 and nearly twice the total year-to-date in 2021. This data leads me to believe that we will continue to see steady sales ahead.

Sale prices have been holding steady this year with a decelerated appreciation pace. A recent Wall Street Journal said, “High-end home sales have fallen back to earth” after the COVID fueled fervor around the country. However, while some parts of the country are experiencing price declines, in Sarasota luxury prices remain elevated by more than 4% year-over-year, and up 23% from 2019.

The National Association of Realtors is projecting U.S. prices to remain flat or lower in some areas of the country through the balance of this year, and growth of 2.6% in 2024. Most economic experts believe interest rates will fall to 5.5% by the end of 2023, which many hope will spur activity in the entry and mid-level markets, as well as new listings of existing homes from those sitting with 3-5% mortgages.

Limited resale inventory continues to bolster Home Builder confidence. Over the last year builders had to resort to offering incentives and lowering prices when the pace of sales slowed as interest rates increased so significantly. But that has nearly stopped because of the supply vacuum in existing homes, forcing more buyers into the new homes market. Unfortunately, due to cost, supply, labor, interest rates, and lack of affordable land for development, entry level new home construction will continue to lag well behind demand leaving an ever-growing lack of options for first-time homebuyers.

As we return to a more typical level of inventory offering buyers more choices, our region will be closer to what market experts call normalized conditions. This should bring a closing of the gap between seller and buyer expectations and keep price appreciation in check. If you are a potential seller, I strongly recommend that you review what you will need to do to prepare your property for sale and consider listing now – before we begin to see a slowing of the list-to-sale periods, as well as more buyer demands as options become more widely available.

With plenty of active buyers seeking properties in the Sarasota Real Estate Market, I remain confident that demand for high quality and well-located Sarasota homes and condominiums will keep our sales on a similar course for the foreseeable future.

Michael Moulton is a Realtor with Michael Saunders and Company.

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