EAST COUNTY — Andrew Beecher, a 26-year-old father of three, and his wife, Amanda, wanted a home to live in forever, but for a while, all they had were daydreams of what could be — a bedroom to decorate for their newborn girl, a fenced yard for their dog to play.
“We would get our heart set on a house and, before we learned we were outbid for it, we pictured what we would be putting in that house,” Beecher said.
When he began his search three-and-a-half months ago, Beecher had a budget — below $250,000 — maintained good credit and had an idea of what kind of home he sought: a yard with a least .25 acres, four bedrooms, a bonus room and a peaceful view.
By the end of his search, after living with Beecher’s parents since they sold their first home in Parrish, they had left Manatee County.
After a frantic search of 20 to 25 homes in Manatee County and others farther north, and failed bids on four homes, the Beechers signed a contract for a $270,000 home — over budget — in Riverview.
“My advice would be to don’t do it (enter the market for a home),” Beecher said, only half-joking.
Overwhelming demand — though healthier and somewhat projected — and higher labor prices coming from fierce competition for their services — has left Manatee County with a record-low inventory of homes. Florida Realtors reports that as of Sept. 1, there is a half-month supply of inventory (resale) in Manatee County.
Economists consider six months’ inventory as the equilibrium. Anything below it means it’s a seller’s market.
“It is no surprise inventory is at its lowest levels since bubble time,” said Drayton Saunders of real-estate broker Michael Saunders & Company. “It’s evident in the condo market, and it’s evident in the single-family home market. It’s been a fast turnaround — to where you had a surplus, to now there’s a waiting list.”
The competition, and the higher prices that come with it, should encourage people sitting on their homes to put them on the market, but there will definitely be some — particularly first-time buyers — left out of what real-estate professionals call an “extreme phase” in a return to normalcy.
“Buyers have to work a lot faster now,” said Deeanna Atkinson, president of the Manatee Association of REALTORS. “Your first offer has to be your best offer. There’s no time for fooling around.”
The driving force behind the drive for homes is simpler than the boom, when banks over-extended credit, builders overbuilt and flippers kept flipping.
People want to buy a home to live in it.
“What drove real estate before was the next hottest way to make money,” Saunders said. “What’s driving demand is different now. This is healthier demand. This is a return to home ownership.”
The safe place — for some
Lakewood Ranch, long a micro market with median home prices currently at $473,500, represents less of a return to home ownership, but more a retreat to a safe place.
As of Sept. 18, Lakewood Ranch had 102 homes available on the resale market, six times less than during the bust.
That number had been less than 90 as recently as July.
Retirees and baby boomers are flush with cash — 50.1% of 345 resale purchases here this year have been cash buys — and coming to Lakewood Ranch to invest.
“Lakewood Ranch is different than the rest of Florida,” said Jimmy Stewart, vice president of sales for Lakewood Ranch Communities. “It’s a safe investment. We’re not going anywhere.”
To keep that promise, Schroeder-Manatee Ranch, Lakewood Ranch’s developer, is working “fast and furious” to bring more lots to market.
Stewart says Lakewood Ranch has 339 homes in various stages of construction.
“That’s huge,” Stewart said. “I’ve never seen it that high.”
Little to no distressed properties are for sale here — there are 16 currently.
That trend has coincided with a push for bigger lot sizes to the point Stewart says you need to put $40,000 down on a home in Lakewood Ranch just to be in the game.
Average sales price in the high-end Lake Club, where 26 homes are under construction, tops $1.2 million.
“You better have serious income that exceeds your debt ratio,” Stewart said. “It’s always been the case here, but it’s tough for first-time buyers out there.”
Bridgewater, a 280-home project by Lennar that SMR viewed as a “replacement” for the sold-out Greenbrook neighborhood, will have model homes open in late October.
The Windy Hill section of Country Club East, with homes starting at $400,000, has 37 home sites under construction, including 22 with a golf-course view.
“Not a lot of communities sell more new homes than us,” Stewart said of the ninth best-selling master planned community in the country. “We will still have that, even with the low resale inventory.”
One prominent builder says he’s having a hard time keeping up with demand.
“I started in this business in 1968, and I have never seen it like this,” said Pat Neal, president Neal Communities in Lakewood Ranch. “I have 100 homes under construction now, and I can’t get them done fast enough.”
For Neal, the race for homes is a story of retirees feeling comfortable selling their homes up North and coming here to retire.
“There is almost no new-home inventory,” said Neal, who says 80% of his new home sales go to empty nesters and retirees. It usually takes two to three years for supply to be absorbed. I didn’t expect it so quickly.”
He’s paying more for labor on homes for sale in his 13 communities (not including those under allocation), and he says he’s passing it on to the consumer.
“Someone comes to our construction site and offers our laborers more money and they put their hammers in their belt and leave,” Neal said.
Carlos Beruff, founder of Medallion Homes, says the inventory shortage is less dire.
He sees a potential shortfall for new-home inventory in 2014, but calls the conditions today “not crazy yet.”
“This is just the ebb and flow of our business,” said Beruff, who says he is bringing a new product online off Tallevast Road in the first half of 2014. “Builders are coming back to life. There’s plenty of activity.”
A silver lining
Saunders always saw a silver lining to the pain of the bust.
At the beginning of the recovery, mostly Canadian investors chipped away at overstocked inventory in 2011 and bought low-priced homes.
Inventory slowly shrunk, to four to five months’ worth in January; prices went up.
The Federal Reserve kept interest rates near zero, but tightened controls, and qualified homebuyers began looking for a place to live.
“That’s a healthy recovery,” Saunders said. “You won’t get a home if you can’t afford it. We are dealing with a very informed buyer. They won’t pay a ridiculous price just because.”
These smart buyers duke it out for homes $150,000, and less, and the winner often ends up paying more than expected — like Beecher did.
They also don’t find much better luck in the apartment market.
“Apartments are even more on fire,” Atkinson said.
Those higher prices — everywhere — may not be unique.
“It’s not a mini bubble because prices are matching up to historical levels,” Saunders said. “But, in not too long, the question will be about the general affordability of the Sarasota area. We’re not there yet. But the sense of scarcity is front and center.”
The Beechers are happy to have found the home they always wanted.
“To sell your first home where you have memories and buy a new one to create more memories is pretty exciting,” Beecher said.
Contact Josh Siegel at firstname.lastname@example.org.