What's your home worth?
While home prices sank in other parts of the country during the recession, Sarasota real estate, cushioned by the county's affluence, held its own. For the past two years home prices in most Sarasota neighborhoods have remained stable. But get ready. Now that the economy is flexing some muscle, residential real estate in Sarasota could start flying high.
Prosperity will create more buyers, including buyers flush with cash from the long-delayed sales of their Northern homes. In the past, newcomers have often considered Sarasota real estate a bargain, especially waterfront properties. But they may soon find fewer bargains. Quite simply, Sarasota is filling up. Especially in the North County, land suitable for residential development has grown scarce. In areas such as The Meadows, unsold lots are expected to disappear in the next year. "The book is written, and the ink is about to dry," predicts Ron Moxom of Sarasota Real Estate Services.
Except for waterfront property created by the June floods, the ink dried long ago on waterfront lots. With a fixed supply and growing demand, waterfront prices have soared. A good example is Casey Key. In a recent newsletter, Michael Saunders & Co.'s Tom Stone reports, "Direct Gulf-front Casey Key land (on wide beach) has increased in value from around $3,000 per front foot to over $6,000 per front foot in less than five years." However, Stone points out, that's still one of the best buys on the Gulf coast. To the south, prices are about $10,000 per front foot on Sanibel and Captiva and more than $15,000 in Naples. Ed Neild of Michael Saunders & Co. sees a constant flow of new buyers moving from Miami/Fort Lauderdale across to Naples and up to Sarasota. "Florida east coast residents are fed up with congestion, traffic and crime," says Neild. "They are used to paying high prices, and they find Sarasota relatively inexpensive for better quality of life."
Buyers from California and Europe also like Sarasota waterfront prices; but as more of them settle here, prices should continue to rise until land values are equalized between Sarasota and Naples. Neild predicts Sarasota waterfront land values will at least double over the next five years, even if the national economy stays weak, since waterfront buyers usually have resources sufficient to shield them from recessions and unemployment.
However, both Neild and Stone emphasize that waterfront buyers (and others) will demand value for their money. "We're in a buyer's market; the days of speculation and pricing for inflation are over," insists Stone.
In the mid-'80s, inflation abated, but inflationary expectations kept the resale market strong until 1989. Finally, a combination of recession, war and the collapse of the S&L's brought the market back to reality. According to David Bouverat, a specialist in residential values with Sarasota's Key Appraisal Services, building cost indexes have not increased in Sarasota for the last three years. Indeed, in some areas building costs may have fallen, as a result of improved technology and competitive pressures on builder profit margins. But land costs are increasing, probably by about five percent annually for most Sarasota property. Lots on golf courses or in wooded areas are likely appreciating more, while some lots purchased in the mid-'80s during the speculative fever may have fallen in price.
Here's a look at how property values in some popular Sarasota neighborhoods are faring. (Information was compiled in late summer. In most cases, MLS |Multiple Listing Service~ sales figures were used; be aware that some transactions, particularly for new homes, are not included in MLS.)
GULF GATE AND SOUTHGATE: NEW RATE OF INTEREST
Since most new houses cost more than $150,000, most affordable housing is located in older neighborhoods. This year, lower interest rates allowed many first-time buyers to enter the market, and most of them looked for homes under $100,000. In Sarasota, the big beneficiaries were the affordable neighborhoods of the Gulf Gate and Southgate areas.
During the first six months of 1992, more than 80 homes were sold in Gulf Gate, at an average price of $97,000. Another 74 homes were sold in Southgate, at an average price of $91,200.
"These are safe, convenient neighborhoods with houses that are well-maintained and hold their value," says Gil Schultz of Coldwell Banker. "While resales were slow in 1991 because of recessionary fears, the market has rebounded this year. Properties are selling close to their listed prices, and they spend fewer days on the market."
UNIVERSITY PARKWAY CORRIDOR: HOT STUFF
Manatee County has a diversified economy, jobs for young professionals and supports residential growth on both sides of the interstate. Families who work in Manatee and want to be close to Sarasota's amenities -- or those with Sarasota jobs but Manatee budgets -- have made the neighborhoods near the county line and along the University Parkway Corridor (University Park, Longwood Run, Palm Aire, Cedar Creek, Country Oaks, University Pines) a hot spot. Residents have three new shopping centers, a newly widened parkway from the airport to I-75 and easy access to downtown.
Gloria Waters of Neal & Neal says in Palm Aire, which is typical of these neighborhoods, more buyers are looking. "Buyers with properties priced at market values can expect a contract within 30 to 60 days," she asserts. And prices seem to be rising. For the last year, detached single-family homes sold between $71,000 and $236,000, with an average price of $131,000. Pending sales, however, range from $117,000 to $280,000, with an average sale price of $189,000. The average list price of homes currently on the market is also $189,000. (The average condo resale price here this year was $80,000.)
Two nearby developments should accelerate the growth of property values in the University Parkway Corridor. The extension of Honore Avenue from The Meadows to the Parkway will integrate The Meadows with the other corridor neighborhoods. And the Schroeder-Manatee Ranch project is going to create a huge new urban-residential complex at the end of University Parkway, extending east of I-75 into Manatee County.
PALMER RANCH AND THE OAKS: THE PRICE OF AFFLUENCE
In Sarasota County, urban-zoned residential development is limited to the land area west of Interstate 75. APOXSEE, the county's comprehensive plan, envisions residential growth flowing south toward Venice, Englewood and North Port. Right now, new residential development to the south stops at Palmer Ranch, a wedge of urban-zoned property that fits between I-75 on the east and Oscar Scherer State Park on the west. While most of the action at Palmer Ranch is in new homes (Stoney Brook and Huntington Point), Deer Creek and Prestancia, two of the first sections to be developed, now have active resale markets. Tad Murray of Palmer Realty reports that in the last year, Prestancia saw 59 sales with prices ranging from $250,000 to about $500,000. Deer Creek had 35 sales, ranging from $185,000 to $365,000. In both neighborhoods, new homes accounted for 30 percent of the total sales. "Resale values are limited by the prices of comparable new homes in the same neighborhood," explains Terri Derr of Michael Saunders & Co. "Prices will remain stable until Deer Creek and Prestancia are completely developed. Then, look out."
Murray sees a "fairly active market with resales up 10-15 percent from January through May." He notes that 25 percent of houses resell in 30 days; 50 percent in 60 days. "Homes that sit on the market do so because of unrealistic, inflated prices."
Ed Neild of Michael Saunders & Co. specializes in property in The Oaks, another still-developing upscale community just a few miles away. Prices started out high here, and a small speculative boom pushed them higher; those who bought a few years ago at the end of the boom have probably seen their property values remain stable at best. But things are settling down here, says Neild, and prospects are good for stable appreciation. "For the last few years, there has been appreciation in the prices of desirable lots. While prices vary from lot to lot, land on the bayfront and on the golf course has been rising by about 10 percent a year." With lot prices ranging from $85,000 to $225,000, land appreciation account for most increases in property values (resales averaged $611,000 last year). Neild says there are still some good values left on homes between $410,000 and $2.6 million.
THE KEYS: SOME BIG SURPRISES
Historically strongholds of Sarasota real estate values, the keys had a mixed year. While nearly everybody agrees the lure of living on a tropical island will keep prices rising over the long term, each of the county's barrier islands has a different personality, and some are selling more strongly than others.
Terri Derr says that Longboat Key's cosmopolitan buyers aren't flinching at the prices there. During the last year, 82 homes were sold on Longboat, with prices going from $125,000 to about $1.1 million. Of 12 houses now under contract, four are priced above $900,000. Derr notes that "the Longboat Key market never really suffered, but for upper-end houses, 1992 should be exceptional."
"Siesta Key is also having an exceptional year," says Kim Gilliland of Cascade Realty. "In 1988, there were 83 single-family homes on the market and 343 condos. Today there are 176 homes but only 164 condos. During the last year, over 350 condos have been resold, at an average price of $200,000. The condo inventory is at an all-time low."
In all, 131 homes were sold, for prices of $130,000 to over a million. Bruce Winter of Elizabeth Lambie Real Estate notes, "The million-dollar properties on the water are not selling well. For example, Sanderling has about 21 percent of its homes for sale, with few buyers." Winter suspects that "a big deterrent to waterfront lots is the additional $75,000 in legal and permit fees needed to build or remodel extensively. And with Gulf property valued at $4,200 per front foot, they may not want to take the chance of having the permits denied."
The big news of Casey Key, reports Lloyd Johnson of Shaw Johnson Realty, was road restoration and installation of a stairstep cement seawall system for beach stabilization. "It's removed a stigma |since flooding and erosion in the No-Name storm of 1982~ that's been holding down property values," he says. Still, when the cheapest lots run around $250,000 to $325,000, values haven't been held down too much. Figures compiled by Tom Stone show that in the first six months of 1992, 13 homes sold for an average price of better than $625,000. This compares with 11 homes at an average of $605,000 in 1991.
On Bird Key, "the time to buy is now," says Candy Swick of Candy Swick Realty. "Prices on Bird Key have fallen about 25 percent over the last two years, with average sale times between nine months and a year." Swick is cautiously optimistic that the worst is over. "After the slowest spring in a long time, the market is finally moving again." MLS statistics show that there were 32 sales on Bird Key during the last year, while 50 homes remain on the market. Three sales were above a million; the lowest price was $160,000.
St. Armands and Lido also had some declines in resale values, according to Swick. In the two areas, there were combined sales of 24 homes, with prices between $95,000 and $1.5 million. Another 50 homes remain on the market. "The average list price is actually rising," says Swick. "But this is misleading. All the really great bargains were sold, and only higher-priced homes remain to be sold."
TRADITIONAL NEIGHBORHOODS: VARIETY AND VALUE
Older neighborhoods west of the Trail include the museum area (Indian Beach/Sapphire Shores), Harbor Acres and Oyster Bay.
Because these neighborhoods have waterfront areas, prices are often highly skewed, with million-dollar properties on the bay and more modest prices inland. Deborah Pitell of Michael Saunders & Co., says prices in the museum area range from $45,000 to $1.75 million. More than 60 homes were sold last year, with an average price of $151,000. Buyers include "professionals, academics and retirees," says Pitell.
Harbor Acres, Oyster Bay and the surrounding areas attract professionals, too, especially medical staff and physicians. The market is thin, with 13 homes selling last year and only 19 currently on the market. Sales prices varied between $131,000 and $1.39 million; the average price was $512,000.
With low interest rates, an improving economy and land prices in North Sarasota ready to take off, smart buyers are already out there looking. October is traditionally a slow month, especially before a Presidential election -- which makes it a profitable time to buy. And even if you're not in the market, it's nice to know that in a year wracked by recessions, wars around the globe and election-year hype at home, you can still believe in Sarasota real estate.
Dr. Dana Stevens is director of Austin Economics, a Sarasota-based consulting firm, a mortgage broker with Avid Mortgage Services and an adjunct economics professor at Manatee Community College.