Why Isn't My Home Selling?
Data provided by Trendgraphix, Mid-Florida MLS.
A lot has changed since the real estate market began its slow climb back from the recession. The lowest lows of the recession created a fantastic buyer’s market — homes sold for rock-bottom prices at about 80% of list price during the first quarter of 2008 consistently. As consumer confidence and the economy began to grow, homes began to sell more quickly and in a shorter period of time eventually becoming a seller’s market due to the lack of inventory and halt of new construction during the unstable economy. As our market continued to recover, most specifically over the last 24 months, we now see homes selling for about 92% of list price. Eight to nine years into the recovery, new construction has taken hold, creating and expanding communities that are now competitors for resale properties. The addition of new construction has eased the shortage of properties and led us to a more balanced market for sellers and buyers.
The impact of the expanding new homes and communities has had an impact on the areas resale market.
Cut-Ins on the Resale Market & the Impact of New Construction
Ten years ago during the depths of the recession, Sarasotans didn’t hear the beeping of tractors backing up, cranes didn’t interrupt the downtown skyline, and cow pastures sat undisturbed in many parts of town. Over the course of the past decade, we all have watched as construction slowly & quietly started up again. The downtown skyline now includes Echelon, Jewel, Golden Point luxury condos, and Vue, all altering our perception of Sarasota as a “town.” With the Ritz expansion set to commence over the next couple years and the sales for waterfront Epoch starting this month, it doesn’t appear to be slowing down anytime soon. We are now a small “city.”
Away from downtown, Palmer Ranch has simply exploded, the previously quiet area by the south bridge to Siesta has boomed thanks to Esplanade Siesta Key, Lakewood Ranch has increased in size and filled in most of their remaining lots, east of 75 neighborhoods have been lassoed in by widening and paving access roads–thus increasing their popularity and construction in that direction too! In short, there doesn’t seem to be an end to the growth of Sarasota. What does this mean for those of us who are trying to sell pre-constructed, lived-in and loved homes
Well, let’s let the data do the talking.
- New construction sales have increased over 500% since 2010, which it began its slow resurrection post-recession.
- Resales have increased about 25% over the same period of time.
- In Sarasota County 2018, new construction makes up about 10% of the total sales market in units sold. 5 years ago in 2013, new construction made up only 4.6% of the same market. 5 years before that, in 2008, it made up relatively nothing, as construction was essentially halted during the recession.
- In Manatee County 2018, new construction makes up about 11% of the total sales market in units old. 5 years ago in 2013, it was only 9% of the market, and 5 years before that, again, nothing.
- For 2018 so far, new construction is garnering, on average, 100% of the list price in Sarasota and 97% in Manatee, far and away above the 92% and 93% respectively in the resale market.
- Average sale price is higher in new construction. For Sarasota County, the average new construction sale price is about $250,000 more than the resale price, 40%higher! For Manatee County, new construction is averaging about $130,000 highersales price, 27% higher than resales.
So that’s the data. What does this mean for you?
There are many variables that affect the overall real estate market, not just the presence or increased presence of new construction. Our market is still healthy; resale homes are still selling in great numbers. The major takeaway here is that increased new construction is indeed cutting into the resale home market. People who can afford it, when given the choice between buying what they perceive to be an older home with older-home problems or buying a brand-new home, are increasingly making the choice to go with newer homes.
If you are currently listing your home, you need to recognize your competition may not be the house down the street that is similar to yours in size and age. It’s the emerging neighborhood down the road or even across town. Aside from investors, people are less and less likely to purchase a home that needs major updating, given that there are so many options available of new homes available in all price points. If you have the budget for it, upgrade your home prior to listing to get the max value. If you don’t, prepare to be patient and prepare to negotiate with prospective buyers who need a reason to buy your home instead of a new one.