Looking ahead: Real Estate

EAST COUNTY — New Manatee Association of REALTORS (MAR) President Deeana Atkinson, set to take over this month, has managed her Coldwell Banker office in Bradenton for 12 years.

At the beginning, things were great. Realtors sold homes using only a pen and a pad.

“We were making lots of money,” Atkinson says. “It was very exciting. Then, it just stopped.”

In a five-year stretch during the mid-2000s, Atkinson’s office lost half of its income.

Banks extended credit like candy, builders overbuilt, and the economy tanked.

But the story behind what’s causing the latest uptick in the real-estate market, this one more steady than a boom — and also, area Realtors, developers and salespeople say more safe — is complex. And buyers may face a lack of inventory because of it.

Manatee County had 4.3 months’ supply of inventory as of Nov. 12. That figure represents the time it would take to sell all available homes if no new ones entered the market. Economists consider six months’ inventory as the equilibrium. Anything below it means it’s a seller’s market.

“That usual rise in sales in January might not happen,” says Kathy Valente, a Realtor at Michael Saunders & Co., in Bradenton. “People are just outbidding each other for homes, so some are priced out of the market.”
Still, the 2013 real-estate market looks good for real-estate agents and builders.

In Manatee County, as of Nov. 12, the median sales price for single-family homes rose 32.1% over the same time the year before, according to data compiled by the My Florida Regional Listing Service.

That’s compared to only a 9% increase in the median sales price for single-family homes statewide.

The MAR credits the rise in prices to the easing of foreclosures and short sales, meaning distressed properties are dragging prices down less than in recent years.

Closed sales on single-family homes rose 42.4% in Manatee County from 2011, more than the 25% increase in the state, while new listings for our area also jumped 19.9%, compared to an 8.1% increase in Florida.

In Lakewood Ranch, the market looks even better.

Jimmy Stewart, vice president of sales for Lakewood Ranch Communities, reports 479 new home sales, or buyer retail contracts, as of Oct. 31. He expected that figure to rise to roughly 550, which would make it the highest since 2006 and a 45% increase from the year before.

Re-sales in Lakewood Ranch are at a historic low; 62% of all home sales in 2012, as of Oct. 31, were new homes. Stewart reports 9% distressed properties, less than the Sarasota/Bradenton overall average of 16%.
As of the end of October, Lakewood Ranch had 304 homes under construction, a figure that ranks second out of all master planned communities in the state, according to Metrostudy.

“They’re back,” Stewart says. “There was pent-up demand. People were waiting, and now the media has come out saying it’s OK to buy Florida real estate now. And the numbers back it up.”

Here’s a more detailed look at the 2013 real-estate market.

Builders
Pat Neal, of Neal Communities in Lakewood Ranch, has seen this movie before.

But this time, it ends differently, he says.

For one, the Federal Reserve chose to stimulate the market by setting interest rates for a 30-year mortgage at around 3.5%, a historic low that experts expect to last through 2015.

Neal also points to pent-up demand.

The University of Florida Center for Demographic Research says one-sixth of 78 million baby boomers will live in Florida at some point.

According to Neal’s research, this means there will be about 264,000 new people per year in Florida, or about 115,000 homes of demand in that time.

“We are at the beginning of a really strong real-estate cycle,” Neal says. “This time it’s real and safer. The banks have introduced more comprehensive credit constraints. Lenders are smarter, builders are smarter, and consumers are smarter.”

Neal believes the state will go back to 2004 levels of housing (about 140,000 homes were built in Florida), but not to the overbuild situation, which occurred in 2005, 2006 and part of 2007.

In 2013, Neal Communities expects to close on 680 sales in 2013, up from the 480 projected for 2012. Its average closing price jumped to $277,011 in 2012, from $223,020 a year earlier.

Area builders say they have fewer suppliers for materials and labor, which forces prices to go up — for the developer and the consumer — but could mean a potential shortage in homes priced for the middle class.

“There will be a home for people, but it might be at different price than they want,” Neal says.

Neal has no shortage of options with flat labor, concrete, roofing and lumber, but he’s paying more for skilled trades, such as electricians, plumbing and framing labor, which requires serious math.

Electricians and plumbers flocked to places such as Texas and Michigan, chasing the demand, which made it more important for Neal to build relationships with local suppliers.

“It’s a serious problem,” Neal says. “I’m behind on seven projects because of it.”

Carlos Beruff, of Medallion Homes, says suppliers raise prices to protect thinner margins.

He says factories shut down during the recession and, as the economy recovers, choose to run their existing plants at full capacity 24/7, instead of opening new ones. Hurricane Sandy also compounded the supply problems, with the increased need for materials to rebuild damaged homes.

It all combines to increase prices for builders, who struggle to build at the pace of 2005-06.

During that year, according to Beruff, Sarasota/Manatee had 9,000 starts, a number that dropped to 800 three years ago before inching up to 1,800 to 2,000 in 2012.

“We (builders) can’t keep up with the demand now,” Beruff says.

But, Beruff anticipates more market improvements, adding Medallion Homes already pulled 210 to 220 building permits for 2013, compared to 170 in 2012.

“Consumers know buying a home is the smartest thing they can do right now,” Beruff says. “It’s a steady, solid recovery, but it’s slow. If the public loses confidence, business will shut down.”

Consumer demand
Ron and Judy Anderson are downsizing. The couple recently sold their home in St. Charles, Ill., but still maintain a condo in Tampa. It took six months to sell their home in Illinois.

After spending one-and-a-half days searching in Venice and Pinellas Park, the Andersons toured Esplanade in Lakewood Ranch in their quest to find a home.

“There’s plenty of supply,” Judy Anderson says. “There might be too much to look at. My eyes are boggled right now. It’s a great time to buy.”

Ted Daytz and Arlene Midkiff, of Chicago, recently retired. They were attracted to the Sarasota area for its culture.

While on vacation for a week, the couple recently looked at homes in Lakewood Ranch’s Central Park.

“We like a lot of the homes here,” Midkiff says. “The prices are very attractive, especially compared to Chicago.”

Daytz and Midkiff, who also are considering homes in Palmer Ranch and Venice, have real estate to sell up North before they commit to a new home.

“When the timing is right, we will pull the trigger … maybe,” Daytz says.

Stewart sees people similar to the Andersons and Daytz and Midkiff walking through his sales centers every day.

He sees early retirees and empty-nesters sitting on a lot of cash and ready to buy. Atkinson sees a similar trend; she says 67% of buys from her office came from cash.

Stewart also sees couples who want to buy a second home, who warmed up to the re-sale market and now feel confident they can sell existing property.

Demand for 16,000-square-foot “ultra luxury” homes, as Stewart calls them, continues to increase — Lake Club sold 31 homes in 2012, compared to 14 in 2011.

Lakewood Ranch works with 16 homebuilders to meet the demand, a task that Stewart admits is harder now, but for which his company is prepared.

“We’re (Lakewood Ranch) the safe guys,” Stewart says. “We continue even during downtimes to improve our infrastructure and our product offerings.”

To that point, Lost Creek Apartments, a 272-unit complex that started leasing in January 2012, is at full occupancy, according to its leasing office.

Still, demand outweighs supply, and that’s partially by design, Stewart says.

He always stays guarded with an eye toward the 2005-06 failed boom.

“We wanted to get back to normalcy,” Stewart says. “Spikes one way or the other are not good. You have to adjust. We are very low on our inventory now, which we intentionally try to do. People have to realize there is a demand now. Activity breeds activity and a sense of urgency. We’ll be fine.”

Big picture
Atkinson says properties are being snatched off the market quickly — sometimes too quickly.

“We had three sets of buyers come in recently but no inventory to show them,” Atkinson says. “If there was a good buy, it’s gone. It’s kind of exciting that it’s happening like that again, but it’s different, and it’s frustrating to buyers.”

Real-estate owned properties, or bank-owned homes that were foreclosed on and are released back into the market for resale, have started trickling into the area, Atkinson says.

Atkinson also sees short sales becoming more regular and closing faster.

The Bradenton market has more investors — many coming from Canada, Germany and Great Britain, who use the homes as vacations spots — but less flipping.

“Everything that everybody does nowadays in the real-estate field, from working with title companies, to mortgage companies, to new builders and residential real estate, is about trying to be really responsible so we don’t get to that place where we were before,” Atkinson says. “We suffered a long time because of poor decisions.”

It all leaves her with an inconclusive forecast.

“It’s kind of hard to say where we go, but we’re not going backward,” Atkinson says.

Contact Josh Siegel at [email protected].