New construction, election season among the big topics heading into the new year
After flipping the calendar to a new decade, now is as good a time as any to examine the forecast for the real estate market. The Observer spoke with Realtors Roger Pettingell, of Coldwell Banker, and Reid Murphy to gather their expectations for local real estate in 2020.
What’s hot for 2020?
Pettingell: I’d say there’s different pockets of hot. The hottest thing out there for sure is new construction. Everybody wants a shiny penny. Coastal contemporary is the hot style that we still see, although that’s been trending now for a couple of years. So anything that’s brand new or renovated. If it’s an older condominium or an older house, it really wants to be much more renovated to be hot coming into 2020. And then in former times where you would see a lot of older ranch homes, for example, being renovated, you’re much more likely to see them torn down now and be replaced with new construction.
And part of the reason for that is that the people who have money have more money now than they’ve had in a long time. If you look at the second home market, which is a lot of the Sarasota market, it very carefully tracks the stock market. So as the stock market continues to hit new highs, so does the real estate market.
Murphy: I’m hoping beachfront. Beachfront supply is low, relatively speaking. I think the inventory in general on Longboat Key is quite low right now, so I’m hoping our high-end markets are going to do well. Our inventory is fairly low, and people are still looking for new product. So I’m hoping new products are going to do quite well this season.
What is trending down?
Pettingell: Anything that was old, below flood elevation, not the shiny penny. In the case of, say, a single-family home if it’s not renovated, what ends up happening is the land value continues to increase just like it would be expected to in a rising market, but the home just continues to decrease in value. It just depreciates if it’s not renovated.
That cycle can be broken by doing whatever things you need to do to bring it up to kind of a current market look or style. But if you’re sitting on something that needs to be renovated, and your strategy is to let the new buyer do it, expect that’s going to cost you. It might even make it not marketable. And a lot of people coming into our area, they don’t know different contractors or what the rules are for renovations or things like that. So it’s just easier to get something that’s new.
Murphy: I guess the big question is, some people are going to wonder about it being an election year. But I think we’re a little bit unique to that. But I think that is going to affect the market to some degree; it just kind of depends who it is.
What is your general outlook?
Pettingell: This was probably the busiest fall that I can remember since back in 2003, 2004. We usually have a pretty good fall, but this fall, I personally had over $30 million in sales. We continue to see a lot of people driven into our area from the feeder markets that are experiencing high taxation. So New York, New Jersey, Connecticut is a big feeder market coming here. People getting fed up with the weather, the early winter storms — I think that’s part of it. And then a lot of times in the fall, when it’s a busy fall, it’s people who are trying to get in, so that they’re here for season. So we saw a lot of that in the last quarter. … Real estate cycles are typically 10 years, and we’re in the 11th year of a real estate cycle. You would have expected to have started to see a slowdown in our area. You would have also expected that probably because some of our feeder markets are experiencing either price reductions or difficulty in selling.
There are a lot who say the New York market is fed by some of the international markets. Those are softer, so it’s causing the New York market to be softer. But it really hasn’t translated down here, and part of the reason is just because we have still a low inventory of quality properties. So if you don’t have the market flooded with lots of inventory, you’re not going to have build-up, which would be a price reduction cause. … It feels like we’re firing on all cylinders. Why would you want to be cold in Ohio when you can be down in Sarasota?
But the tax advantage of being a Florida resident, especially for our typical buyer, who is retiring or maybe selling a business or deciding to set up home in another state, we’re the place. So from a buyer’s point of view, this is a great time. And from a seller’s point of view, you always want to be selling in a healthy market.
Murphy: We have a lot of new product downtown. There’s a lot of diversity between the different islands; each island kind of has its own appeal. And so I think there’s a lot of places for different people to come to, whether they’re from up north or just coming down for weekend places in Tampa.