real estate

The area’s inventory shortage should keep the real estate market safe in the short term.

Image: Staff

In April, the auto warranty company Olive announced that, while it would still be maintaining its office in Chicago, employees were free to work from home if they wanted to. That meant Paul Sherman, the company’s chief marketing officer, his wife, Cindy, and their four children could live anywhere.

They put their house on the market, found Kristen Srur, a realtor with Michael Saunders & Company, and flew into Sarasota on a Friday intending to sign a contract that weekend. By early August, the Shermans had purchased a four-bedroom home in Lakewood Ranch for $640,000.

Sherman says a number of factors inspired the move. “The property taxes and taxation in Illinois were continuing to increase, and the civil unrest around Illinois has just gotten scary,” he says. Add in Covid-19, and Sherman wanted out.

He is not alone. This summer and fall, a spike in interest from out-of-town buyers and near-zero interest rates have fueled a dramatic real estate turnaround for an industry that was shaken in the spring by the pandemic. People have stormed into the area from places like Chicago, New York, New Jersey and Connecticut—dense communities that were either hard hit by the pandemic or underwent strict lockdowns to fight the disease. Inventory in Sarasota is at dramatic lows and prices have spiked to their highest point in at least a decade, making for a hot seller’s market.

The boom is being caused in part by a major shift in how Americans work. As the pandemic has killed more than 242,000 Americans and sickened millions more, dozens of major corporations and many small businesses have made the decision to shutter offices and permit or even require some employees to work from home. That has allowed some workers to move to places like the Sarasota area, where, like Sherman, they can work from afar using tools like Zoom.

“What we found was that there were profound behavioral consequences to the pandemic,” says Budge Huskey, the president of Premier Sotheby’s International Realty. People who had done some preliminary poking around in the local real estate market suddenly wanted to buy a home soon as possible.

“They were forcing moves or making decisions they perhaps wouldn’t have made for some time,” Huskey says. “They were looking at the future financial instability of some states, the enormous deficits states are going to run. It’s tragic, but there are people who are moving here from select markets where they feel there is instability and unrest and they simply want out of that environment.”

The trend isn’t just for people who are working remotely. Buyers near retirement age are making faster decisions about their futures. Patrick and Annamarie Johnson of Buffalo purchased a unit in Fisherman’s Cove on Siesta Key for $580,000 in July. The two both recently retired and have vacationed in Sarasota for decades. They had considered buying before, but the pandemic sped up their planning.

“Sitting in my house in Buffalo in the summer, when I couldn’t go anywhere, I thought, ‘If I’m going to sit somewhere, I want to sit on a lanai and look out at the Gulf,’” says Patrick.

Like many recent buyers, the Johnsons never even set foot in their new home until after they purchased it. Using apps like FaceTime, realtors are now able to show properties to people without them traveling to the area.

Roger Pettingell, a Coldwell Banker realtor who specializes in luxury waterfront properties, says he used to give “zero priority” to requests for virtual showings. “Now it’s exploded,” he says. Early on in the pandemic, Pettingell’s office saw a surge in online interest in Sarasota from people who suddenly had a ton of free time to surf real estate websites.

After catastrophic declines in sales in April and May, the market began to improve in June and then soared in July and August. In August, sales of single-family homes in Sarasota County totaled $425.7 million, up more than 52 percent from a year prior. The median sale price rose to $330,000, nearly 18 percent higher than in August 2019 and the highest figure recorded since at least 2008, when the Realtor Association of Sarasota and Manatee began keeping records. Pettingell says the pandemic wasn’t what affected people’s decisions to buy. It was the stock market.

“As the stock market recovered, that’s when all the buying started,” Pettingell says. “It started at the top end of the market and went all the way down into all price levels.”

His biggest challenge today is finding enough properties to sell. “In my 34 years, I’ve never seen inventory as low as it is today,” Pettingell says. “I tell buyers, ‘Be prepared to buy.’”

In August, the supply of inventory for homes in Sarasota County stood at just 2.2 months, down from 3.5 months a year prior. Realtors say a balanced market typically hovers around a six-month supply. The risk is that prices might shoot up to unrealistic levels as people compete to buy, but Pettingell says that while homes are moving fast, intense bidding wars are not yet common. “I wouldn’t be uncomfortable at these price levels,” Pettingell says.

How long will the boom last? Realtors are uncertain whether the surge represents pent-up demand after months of inactivity caused by the pandemic or a lasting change in the market.

Craig Cerreta, the managing broker for Premier Sotheby’s International Realty, says the “rocket ship will slow down,” but he thinks demand for homes in Sarasota will continue to rise in the long term. “For the next five years, barring any international catastrophe, our demand should continue with pretty steady growth,” he says. However, he warns, another spike in cases of Covid-19 could unsettle markets.

Pettingell says the area’s inventory shortage should keep the real estate market safe in the short term. “If half the people stopped buying, we’d have enough inventory,” he says. What the flurry of activity shows, he says, is that people from all over the country want to be in Sarasota and they don’t want to wait until it’s too late. “People got the message that life can be short,” he says.

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