Alison & Raul Elizalde

Sarasota Realtors

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Following up on my previous newsletter, this month I focus on how prices for similar properties changed in various neighborhoods of Sarasota over the course of the year. I compared selling prices for Sarasota homes and condos in the last quarter of 2005 with the last quarter of 2006.

 

The media reported a significant price drop in Sarasota real estate prices for the year, and last month I argued that this drop, although real, was probably overstated due to measurement problems. Coming up with an accurate price drop measure is difficult because properties that sold at the end of 2005 were not readily comparable to properties sold at the end of 2006.

 

For example, if one year most sales are of waterfront properties and the following year most sales are of mobile homes, the median price would register a massive decline. Yet, this does not necessarily mean that the price of any property has gone down; only that buyers, a year later, decide to purchase cheaper properties.

 

Because the collection of properties that sell at different times is not exactly the same, calculating the exact price change is virtually impossible.

 

To minimize these problems, I compared homes and condos in Sarasota that sold a year apart fitting very strict definitions, i.e. within a narrow range of square footage, number of bedrooms, age, and so on. Not all areas in Sarasota had enough property sales to make relevant comparisons, but I have found a few areas that had a meaningful number of transactions to provide a reliable estimate.

 

Here is what I found:

 

Area	Median Price Change (4Q05-4Q06)	Median $/SF change (4Q05-4Q06)
Central Sarasota (Between Fruitville and University, US41 and I75)	-3%	-6%
Central Sarasota (Between Clark & Bee Ridge, US41 and I75)	-12%	-16%
Central Sarasota (Between Bee Ridge and Fruitville, US41 and I75)	-18%	-13%
Lakewood Ranch	-20%	-21%
Gulf Gate	-16%	-13%
Siesta Key, Bayside Condos	-9%	-3%
Longboat Key (Gulfside and Bayside Condos)	9%	2%

 

With the exception of Longboat Key condos (more on them later) all areas showed a median price decline. The same is true for the median price per square foot, which is possibly a more accurate measure. Central Sarasota homes fell unevenly, with the area between Bee Ridge Road and Fruitville Road showing the largest decline. A possible reason for this is that this “East of the Trail” area was popular with investors during the heyday. It might be that prices a year ago were somewhat inflated because of this, or that this year investors are willing to take a price cut to unload their investments quickly. In general, the presence of investors lead to wider price swings.

 

Lakewood Ranch, an area that saw explosive growth in recent years, registered the largest drop in this sample of Sarasota real estate areas. Possible overbuilding might have been a reason. Every single month since 1/05, the number of properties for sale in Lakewood Ranch has been higher than the previous month, showing an 11-fold increase in listings from 56 homes to 612 in less than two years. Inevitably, this kind of supply puts a lot of pressure on prices, which is reflected in the sizable price drop I measured.

 

Longboat Key condos seem to have bucked the trend since the median price change shows an increase. But the factor here is that in the last quarter of 2006 many of the condos sold were on the Gulf side of the road or had access to the beach. In the prior year, however, condos of the same size and age were sold exclusively on the Bay side of the road, which are less expensive. This is a real-life example of how numbers alone can be misleading. I included Longboat Key condos in this analysis just to illustrate this point.

 

All this reaffirms my previous month conclusion that the 18% median price drop reported in the newspaper does not explain much. Every neighborhood in Sarasota has fared differently. I also continue to believe that this number is probably overstated when applied to the entire Sarasota real estate.

 

When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. Our track record, added to the unsurpassed reputation of Michael Saunders & Company as the premier real estate company in Florida's Gulf Coast, give you the peace of mind you deserve. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.

 

Call us today at 941-350-7904 for a consultation, and visit our website, www.sarasotapropertyconnection.com, for monthly updates on the Sarasota real estate market.