Manatee housing boom unlike pre-recession binge

County housing market strong for sellers

cschelle@bradenton.comAugust 21, 2013 

MANATEE -- Manatee County continues to resemble a boom-era seller's market for real estate, according to the latest report commissioned by Michael Saunders & Co.

But this boom has a different sound to it.

"The way I see it, it's a property boom the way it should be," said Tom Heatherman, spokesman for Michael Saunders. "Properties have shed a lot of the artificial appreciation that was run up during the boom in ways that were left unethical as we all know."

Real estate agents are working on a 3 1/2-month supply of available properties based on closed sales in July and a 3.3-month inventory based on pending sales. Through three quarters of the year, inventory is 10.8 percent below

the same periods last year. Inventory lower than a six-month supply represents a seller's market.

That inventory is at the lowest level since June 2005 during the property boom, right before the bust, according to the TrendGraphix report, which provides a market snapshot of the Manatee, Sarasota and Charlotte county region.

Inventory peaked at 81 percent in February 2007 during the Great Recession.

Today, home builders are pacing themselves and fulfilling orders instead of building communities on speculation, and in the local market, even fulfilling orders is a challenge as builders struggle to find skilled labor.

Neal Communities completed 73 new home sales in July, which is a 66 percent increase from the 44 sales Neal had in July 2012. Those sales represent deals in their communities ranging from Manatee south to Lee County. The Lakewood Ranch-based builder is on pace for a record-breaking year.

"We are seeing a growing trend of a year-round real estate market in Southwest Florida and cash buyers who don't have to wait on the banks to finalize their purchase," said David Hunihan, director of sales for Neal Communities. "No longer are the days of a major slowdown in the summer months as buyers now are taking advantage of favorable market conditions that may not last."

During the boom, the demand drove prices up. In today's market, existing homes are being snatched up by cash buyers through investment firms and individual buyers. The investment companies are turning the homes into rentals and in some cases flipping homes, but this trend is causing a drive for first-time home buyers without cash to opt for a new home with a mortgage, area real estate experts have said.

Now, if buyers decide to flip, the bulk of them are using their own cash to buy the home instead of loans, putting more pressure on the buyers to do well, Heatherman said.

While prices are expected to increase, Heatherman predicts there will be a leveling off. With more awareness about flipping and a reduction in bank fraud, it's unlikely -- and would be unhealthy -- for prices to rise to the 2004-06 levels. Today's spike is simply tied to the supply.

"I think the reason prices are sort of spiking is because of lack of inventory, which is being mitigated by new home communities coming on line," Heatherman said. "As prices go up, sellers who were not able to sell before because they were underwater are now above water on their mortgage."

Even in the luxury market for properties $1 million and up, inventory is low and sales have remained fairly hot over the year. Manatee's 13 luxury sales in July represent a 1,200 percent increase from July 2012, and 85.7 percent increase from June. Available luxury properties are also 47 percent below peak property boom levels in 2005, according to the report.

As the summer construction season continues, Heatherman believes that local builders will have new homes ready for the peak real estate season during the winter, in time for the snowbirds.

"I think by the time peak season comes around, we will have new home availabilities," Heatherman said. "They're out buying properties as fast as they can and getting infrastructure in as fast they can."

Charles Schelle, business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.

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