Is the Sarasota real estate market bottoming?

Remember back to your high school or college class about supply and demand? Basically, the price of anything s largely determine by the supply and demand. If you have a bunch of homes, gold, diamonds, cars on the market with few buyers prices typically fall. Prices rise if you have a bunch of buyers and a low supply. 

If you want to get a little more technical Wikipedia describes supply and demand as:

"Supply and demand is an economic model based on price, utility and quantity in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity. An increase in the quantity produced or supplied will typically result in a reduction in price and vice-versa."

Take a look at the chart above. It shows data for single family homes for the last 5 years in Sarasota, Florida. The light green line shows the number of homes for sale, dark green shows homes sold and the red line represents pending sales. Trendgraphix is a great tool for creating these types of charts. They really do help explain the market.

Notice what has happened since the beginning of 2007 to today. Inventories have virtually been cut in half. The number of homes for sale exceeded 8,000 and now the Sarasota real estate market is hovering around 4,000. Based on closed sales we roughly have about 8 months of inventory. That is getting very close to what is called a balanced market. Real estate industry experts say that 6-7 months represents a balanced market.

Notice the amount of sales we have had lately. They look similar to buying frenzy of 2004 and 2005. However, we are all a bit wiser now and the people buying seem to be end user primarily. Some investors are buying but most of these are people who want to live in the house. Which is a good thing.

Sellers:

Assuming no major crisis hits us it looks like better times are ahead. However, that still means you need to price your property aggressively to get action. I can see the market bottoming out, prices may increase a little because foreclosures are mostly gone and then a slow appreciation. I feel confident in saying that WE WILL NOT GET BACK TO 2005 PRICES FOR A LONG TIME!! If you are waiting for the market prices to return to 2005 levels before you sell then you will be waiting a long time. That was an abberation. A speculative bubble that could be sustained by people's incomes. When income levels can support those prices then we will get back to those levels.

Buyers:

This is a good time to start looking for a home if you wanted to be a home owner. You won't be able to push these sellers around forever. The pendulum is getting back to the middle. All of the good properties might have been picked cleaned by the time you decide that "the bottom is here!"

Call me at 941.812.6272 if I can help you buy or sell a home or condo in the Sarasota area. Visit http://www.luxurysarasotarealestate.com/sarasota-homes-for-sale.php to view hundreds of homes for sale.