Redfin hypes Sarasota-Bradenton real estate as overvalued, but local agents don't see that
Derek Gilliam, Sarasota Herald-Tribune
7 min read
Homes on Tidal Pointe Way in the Lakehouse Cove at Waterside development in Lakewood Ranch.
A recent report from national real estate website Redfin spotlighted Sarasota for its surging number of homes for sale at the same time as sellers slash prices faster than anywhere else in the country.
"Sarasota, in particular, has been overvalued for decades, and the chickens have finally come to roost," Redfin sales manager Eric Auciello said in the Redfin report.
But at least this means prices have to come down, right?
Not so fast, local real estate professionals told the Herald-Tribune. They don't see any chickens roosting yet and found the report lacking important context.
For example, while Redfin reported 48% of Sarasota metro homes for sale experienced price cuts by the end of March, the median property in the metro area still sold for 95% of list price.
The region's real estate market has clearly cooled from back-to-back years of double-digit price appreciation — an off-the-charts 36.3% in 2021, a still historically very high 19.6% in 2022. Interest rate hikes put the brakes on runaway home prices in 2023, when prices were mostly flat.
Still, prices remain generally buoyant: in March the median sales price was $515,000, with a median time to contract of 40 days. In comparison, the median sales price at the end of 2019 in Sarasota County came in at $290,000, with a median time to contract of 50 days.
"When I read that (Redfin) report, I couldn't help but laugh," said Laura Cole, the vice president of sales at Lakewood Ranch. "It's just so starkly different from what we are seeing on the ground."
Cole said the first quarter of 2024 was Lakewood Ranch's second-best sales year in the 30 years since development began on the 33,000-acre property that straddles Manatee and Sarasota counties.
Lakewood Ranch has been one of the fastest selling master-planned communities in the United States for several years in row, selling and building thousands of homes every year. The community now has about 24,000 homes constructed at about 60% buildout for a community that started in 1994, Cole said.
In the first four months of 2024, Lakewood Ranch reported 838 home sales, a 16% increase compared to the same time period last year. Prices, according to Cole, were also up 10%, with the average sales price for a Lakewood Ranch home coming in at about $820,000.
That doesn't mean the real estate market faces no challenges. Headwinds include escalating insurance costs and persistently high interest rates. Affordability concerns remain an issue, especially for workforce housing.
Homes on Sternway Road in the Lakehouse Cove at Waterside development in Lakewood Ranch.
Low post-pandemic inventory amplifies growth in listings
Cole and other real estate professionals interviewed by the Herald-Tribune point to record low numbers coming out of the pandemic for the Sarasota area's showing on the Redfin list that gained national attention. At that time, fewer than 1,000 single-family homes were for sale in an area that stretches from North Port to Bradenton.
Local experts said that, given the post pandemic buying frenzy, it's not surprising that inventory is up about 60% compared to a year ago, the figures that put Sarasota's statistics among the largest percentage increases in the country.
Cole cites Lakewood Ranch's lowest inventory figure in March 2021, when just 41 homes were for sale in the entire development.
In April, about 490 properties were for sale in Lakewood Ranch, a 1,095% increase in inventory compared to spring of 2021.
Cole sees the spike as a return to a healthy market.
"It bodes well for the health of the entire real estate market," she said. The resale market "was completely frozen during the pandemic."
The number of properties for sale in the two-county area recently surpassed levels set before the pandemic, the Herald-Tribune reported in March.
While there has been a spike in inventory of 64.6% over the past year, according to statistics maintained by the Realtors Association of Sarasota and Manatee, the median price for March for the two-county area came in at $500,000, a decline of 1.9% compared to March 2023. April's statistics for Sarasota-Manatee will be released in the middle of May.
The average sales price of $725,555 was up 6% compared to a year ago, according to RASM data.
Sarasota-Bradenton prices have remained resilient
Another highlight of the Redfin report was that the Sarasota metro led the country in the percentage of properties that saw a price cut, with 48% of sellers reducing their prices.
New homes being build along Lorraine Rd. in Lakewood Ranch.
"I don't doubt that statistic," Cole said. "But you don't know if it was a $1 price cut or a $50,000 price cut."
Rob Goldman, a Realtor with Michael Saunders & Co. who focuses on the Venice area, said price cuts have become increasingly common in the Sarasota real estate market.
He attributes the increase to Realtors not being clear to their clients about shifting market conditions and appropriately pricing the property.
"Some sellers still think it's way up," he said. "But it's actually 5% to 10% lower (than peak price)."
Goldman said while there has been a slight downward pressure on price, he said given the current economic uncertainty with where interest rates will go, he thinks a slight decrease in price actually shows the resilience of region's real estate market.
Goldman began anticipating increases in interest rates that would cool Sarasota's red-hot market in late 2021, after prices had shot up more than 30% in just 12 months.
While interest rates have remained high longer than he expected, home price growth had gotten out of control in 2021 and 2022, leading to affordability problems across the region.
"What we are in is a normal, healthy market now," he said. "This is exactly what we needed."
Some headwinds for real estate market
Ryan Adamson, a Realtor with the Re/Max Alliance group, said looking at national statistics and comparing markets doesn't really tell a full story.
"It's almost useless to look at from a high level," he said. "Real estate is really local."
He said what people should be looking at when they try to determine a valuation on their property is comparable sales from along the same street for single-family homes and in the same building for condo properties.
"I would be really wary of Redfin or Zillow's pricing models," he said. "They're all over the place right now."
Local professionals mentioned insurance costs and the impact rising premiums have had in Southwest Florida, particularly on the area's condo market, as continuing challenges. The national economy has continued to experience a strong jobs market and higher average inflation, which has kept mortgage rates high for longer than some experts anticipated.
Still, the area remains attractive given plentiful sunshine and ready access to coastal activities.
National home builder M/I Homes recently acquired four communities south of Venice and also bought into Wellen Park.
"We needed to be in Southwest Florida," Danielle Calamela, a vice president of sales and marketing for M/I Homes Southwest Florida, said.
The home builder has 17 divisions with Calamela's division focusing on the area from Venice to Naples.
She said, like Lakewood Ranch's sales in the first quarter, her teams sold more than they expected. She points to the Venice development Cassada Lakes, where M/I Homes is developing 75-foot lots with buyers "not batting an eye" at the price points.
Redfin noted that while affordability has pushed some potential buyers to the Tennessee and North Carolina markets, Calamela doesn't see that as a real problem.
"At the end of the day, people want to move to Southwest Florida. They want to move to paradise," she said. "There are still so many people not willing to compromise."
