Alison & Raul Elizalde

Sarasota Realtors

Alison and Raul Elizalde understand the Sarasota real estate market like nobody else. Their unique understanding comes from experience, specialized research, and deep community involvement. Their commitment to client service earned them the prestigious 5-Star Award given to the best real estate agents in Sarasota. Click here to learn more about Alison and Raul.

 

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In November 2006, and again in April 2007, I explored the issue of price behavior by sellers. My approach was to look at the ratio of Selling Prices to Original Listing Prices (SP/OLP) for homes in Sarasota. This measure looks at the initial price that a property had when first listed versus the price at which it actually sells. Unlike the widely published Selling Price to Listing Price ratio (SP/LP), the SP/OLP ratio incorporates all intervening price reductions and reflects more accurately the discounts that sellers are willing to take on a property.

 

At the time I noted that sellers of Sarasota homes were willing to take increasingly deeper discounts when selling, and I suggested that this behavior was comparable to the behavior of buyers during the frenzy of 2004. Back then, buyers paid any price because it was assumed that prices were ever-increasing. Eventually, that led to an unsustainable situation. Similarly, if sellers become convinced that prices are in a free-fall and start taking discounts that are too large, the conditions for a reversal are in place. It is often the case that turning points come when one camp throws in the towel.

 

So where do we stand now?

 

 

The outlook for prices of Sarasota luxury and high-end homes – those priced above $1mm – seems to have improved since my April newsletter. As the graph shows, discounts reached 20% of OLP before turning around to about 16% of OLP. Although the ratio deteriorated slightly in the last month or so, it seems that discounts on higher-priced properties have abated. Still, no clear price recovery can be inferred from this graph.

 

Sarasota homes priced below $1mm seem to be under more pressure. While during April the average discount that sellers took versus the OLP was around 12%, this has increased to16-17% both in July and in October.

 

Can prices fall further? Certainly nothing from these graphs indicates that we have gone past a turning point toward higher prices. Moreover, the data I used does not capture auction sales that are becoming more frequent in the area and that typically entail much deeper discounts for sellers. Auction sales are still a very small portion of the total. If they become more popular, discounts might grow to significantly higher levels than what is shown here.

 

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.ExclusiveSarasota.com, for monthly updates on the Sarasota real estate market.