It’s no secret that Florida’s housing market has been on a meteoric rise in value and potential profitability. Many counties, such as Sarasota County, have also seen significant increases in the value of single-family homes.
But how long can we expect this general market trend to last? Let’s examine the Sarasota housing market and how it may evolve by examining future prices and predictions.
Current Sarasota Housing Market Activities
According to Redfin, the Sarasota housing market has seen a continued increase in housing prices and a decrease in home sale activity.
In addition to this price increase, homes in Sarasota currently sell after about 23 days on the market. Compared to September 2021, this is significantly longer; most houses in that month sold after just 10 days on the market.
For more context, there were approximately 208 homes sold in Sarasota County in September 2022, whereas 362 homes were sold in Sarasota County in September 2021.
What does this data tell us? It's a welcomed sign that inventory is increasing and getting closer to healthier levels. Rising interest rates and a possible recession looming could also explain why the time to close has increased, as some buyers are opting to take a "wait and see" approach in hopes that prices or rates come down. Although inventory is increasing, it's still considered low and Sarasota county is still a seller's market with steady year over year home price increases.
That all said, there is some market correction already in play. According to Redfin, 29.4% of single-family homes have had price drops before being sold: an increase of 5.1 points year-over-year.
In other words, some realtors or property owners may already be more open to negotiating with buyers than they were last year. This is good news for home buyers who want to buy in the next few months, before demand picks up in the Springtime.
Similarly, 16.3% of homes in Sarasota County were sold above the list price in September 2022. That's a 19.6-point decrease year-over-year. It shows that, contrary to some markets (in Florida and beyond), the Sarasota County housing market could be slowly shifting to a balanced market or even a buyer’s market.
Trends for the Sarasota Housing Market in 2022
All this recent housing market action is only understandable in full context with how the situation has evolved. Let's look at some detailed trends for the Sarasota housing market in 2022, particularly around the busy Spring home buying season.
Market Activity in May 2022
May 2022 shows a vital snapshot of market activity for this Florida county. For example, the median home list price for a Sarasota single-family home was up 33.2% compared to May 2021, reaching approximately $599,450. This was also up 0.8% compared to a month earlier, in April 2022.
However, May 2022 already showed some of the market trends described above. For example, April 2022 saw single-family homes’ median days on market time reach 29 days. That was 31 days by May 2022.
Some trends regarding housing availability shed a little bit of light on this development. Realtor.com said the Sarasota County housing market added over 1400 new home listings in May 2022. In comparison, May 2021 saw just 1288 home listings added.
In other words, more homes are being added to the Sarasota housing market or being put up for sale. This happened in May, and the trend continued until September 2022 or Q3 of 2022.
It could indicate that rising interest rates are starting to have a negative impact on buyer’s purchasing power. This results in less buyers in the market and an overall decrease in demand for single family homes and condos.
Due to laws of supply and demand, more houses being available have caused prices to decrease slowly or buyers to take their time browsing potential purchases instead of grabbing up new listings as soon as possible.
Downward Taper as the Year Closes
As 2022 has come to a close, Redfin’s data further describes the downward trend in housing prices that Sarasota County has experienced, along with a much more recent uptick.
For example, the median listing price for a Sarasota County home was well over $530,000 as of June 2022. But by July 2022, that price had dropped sharply to about $480,000. The median price for a single-family home in Sarasota County reached another low point of around $430,000 in August 2022, then rose to the September averages described above.
It seems that the Sarasota County single-family housing market experienced a dip and then a recovery, though not to the absolute peak of June 2022.
How Might the Sarasota Market Change in 2023?
The real question many investors ask is, “Will Sarasota County’s housing market continue to see higher house prices and longer times for homes on the market, or will both of these trends reverse?”
According to Wallet Investor, the price prognosis for Sarasota single-family homes is positive. Though they dipped periodically in August 2022, the prices for single-family homes may continue to increase well into the future, possibly well into 2023 and beyond.
Why? Even though many families or average Americans can’t afford homes in Sarasota County, that doesn’t mean there aren’t plenty of willing buyers. Sarasota County is ideally placed near Tampa, though outside the metro area. It is also one of Florida’s most popular beach vacation destinations. Because of this, Sarasota County is a popular place for second home buyers, retirees, and vacation rental investors.
Any available real estate in this area will likely continue to be in high demand, at least for the foreseeable future.
Confidence Decreases as We Look Further Into the Future
That said, prediction models like Wallet Investor’s become less reliable as one looks further into the future. 2023 is shaping up to be economically challenging for many Americans, as inflation is likely to continue rather than get better, at least for the short-term future.
That will undoubtedly influence buying habits not just for average Americans but also for foreign nationals coming from Latin America, Russia, and Canada. Simply put, money will have less spending power in 2023, in all likelihood, which could impact how and where people buy property if they buy property at all.
How Does Sarasota’s Market Compare to Florida’s Market Overall?
It’s interesting to compare the Sarasota single-family housing market with the housing market throughout the rest of the Sunshine State. For instance, there were fewer closed sales throughout all of Florida in Q3 of 2022 compared to Q3 of 2021: a difference of -22.5%.
However, the price increase trend in Sarasota County is reflected in the broader Florida housing market. Overall, the average price for a single-family home in Florida was $355,000 in Q3 2021. In Q3 2022, that price was $409,730: an increase of 15.4%.
New pending sales and new listings also decreased year-over-year. In Florida, there were 68,519 pending sales compared to 88,920 pending sales and 94,568 new listings compared to 99,666 new listings.
There is still plenty of interest in the Florida housing market, just like there must be willing buyers to continue driving prices up in the Sarasota County housing market. That said, there are fewer sales overall, and fewer new listings are being made.
What Are Some Smart Plays for Investors in the Near Future?
That depends on your goals. As noted above, it's impossible to predict how the housing market in Sarasota will evolve with 100% certainty, particularly past 2023. For the short-term future, however, a few things seem likely:
Prices for single-family homes (and other types of real estate) may see a dip but will trend upward overall
Consider buying vacant land to build on instead of paying a premium for a single family home during times of low inventory
Sales times will continue to grow, meaning deals will take longer to close
Think of the Sarasota housing market as a seller’s market, at least for now. Since there’s no telling when the market may shift to a buyer’s market, it may be wise to make your real estate deals now while prices are as low as they may be for some time.
Contact Vaster Today
Like the rest of the Florida real estate market, the Sarasota housing market will likely continue to increase for the short term.
However, the rest of 2023 is much fuzzier. Economic conditions, worldwide events, and other factors could conspire or combine to make the housing market dip sharply throughout 2023. Therefore, you should make any real estate investment decisions wisely.
Vaster can help, particularly if you haven’t invested in Sarasota County real estate. As knowledgeable Florida real estate professionals, our loan officers are well-equipped and ready to provide the advice you need and help you secure financing for future real estate deals.