Sarasota Investment Property

According to the statistics just released by the Sarasota Association of Realtors, home sales were up in December, with prices holding steady. Sales are up over last month and over December of last year, which is promising since many believed the tax credit was keeping Sarasota home sales artificially inflated last year. Inventory is down to just over 7 months, with 6 months considered to be a healthy market, or a market in equilibrium. For at least two years, the experts in several national and international publications have pointed to this market as being one of the best and smartest buys around, and it appears that many are now heeding that advice!

In Sarasota, short sales and foreclosures continue to keep home values low, but a recent report from the Sarasota Association of Realtors seems to suggest that the “sale rack” could be thinning out faster than many have expected. September, traditionally a slow month, saw sales jump 35% over September of ’08. Inventory levels are moving towards levels we haven’t seen since ’05, and the “months of inventory” is at 9.8 months for single family homes. Traditionally, a market in equilibrium, or one that is balanced between buyers and sellers, will typically be evidenced by a figure of 6 months.

Sarasota was recently profiled by real estate guru Barbara Corcoran on the Today Show as the #1 place to buy in the US. SAR’s September statistics provide ample evidence to back up Barbara’s views on the market here in Sarasota. Short Sales and bank owned properties, as they leave the market, will begin to bring the median prices up, and we will start to see multiple offers again. I’m hearing from lenders that we have a long way to go before these properties are off the market, in which case theoretically prices could remain low for quite some time. I don’t, however, see prices going much lower. In the last week, I and my mother both purchased homes in Sarasota, so it should be apparent that I believe that now’s the time to buy. If you’re looking for something to gut and rehab, there is plenty of inventory available right now. If you’re looking for an updated home at a good price, I’d suggest moving quickly once you find “the one.” I can assure you from my personal experience: they do not last for long. In the last few years, investors and flippers bought up all the dated homes with hopes of fixing them up and cashing in, and in most cases they’re back on the market in the same or worse condition than they were purchased several years ago.

In a segment that aired on the Today Show (click here to watch video) this week, Real Estate guru Barbara Corcoran described Sarasota as the best real estate deal in the country and flat out said that now is the time to buy. Property values being down by 1/3, combined with an uptick in recent sales makes this the time to buy a home in Sarasota. Barbara suggested that prices were about to shoot up, but I disagree. People are jumping in from off the sidelines and investors are starting to get back in the game, which are both good signs of a market in recovery, but I tend to take a more conservative view. I think we will see a much more gradual increase in values because many banks are still holding on to foreclosed properties that have yet to hit the market. All in all, however, it is a fantastic time to buy in Sarasota.

7 Questions every homeowner should ask:

1. How will a short sale affect my credit?

A short sale doesn’t directly impact a person’s credit rating because it they aren’t reported. Missing mortgage payments will lower a person’s credit rating temporarily, but this will typically lower the score as little as 50 points and might last 12-18 months. When the short sale is approved, it’s typically reported “paid in full” on a person’s credit report.

2. How will a foreclosure affect my credit?

A foreclosure can lower a homeowner’s credit rating by 250-300+ points, and it will remain on that person’s credit for 10 or more years.

3. Will foreclosure increase my cost of living?

The poor credit rating that results from a foreclosure will cause a cascade of unplanned secondary consequences. Security deposits for services, utilities, and automobile insurance can skyrocket. Short sales, at this point in time, aren’t reported to the credit bureaus.

4. Where will I live if I’m foreclosed on?

After a foreclosure, it may be very difficult for the homeowner to find an apartment or a landlord willing to rent to a person with poor credit. At this time, short sales aren’t reported to the credit bureaus.

5. Where will I work if I’m foreclosed on?

More and more businesses today run credit checks on their current and future employees, so a foreclosure could limit a homeowners career options for years to come. Professionals with security clearances (i.e. military, police, government positions) will usually lose their security clearances over a foreclosure.

6. Will I be able to buy a home in the future?

In the case of a short sale, the homeowner could be eligible for a Fanny Mae backed loan in 2 years vs. 5 years in a foreclosure.

7. Why would a bank voluntarily lose money in a short sale when they could just take my home instead?

In years past, it was rare for a bank to approve a short sale. At that time, however, banks weren’t sitting on hundreds and sometimes thousands of these “toxic assets.” Banks aren’t in the business of selling or managing property, so they don’t have the infrastructure to hold these assets. In most cases, it costs banks substantially more to foreclose on a property. If it takes the bank 6 months to sell the property, that house will sit vacant, collecting dust, growing weeds, and deteriorating. Even if you assume that the property could eventually sell for full market value (fat chance!), the cost incurred to the bank will, in most cases, substantially exceed what the cost would have been for the bank to have approved the short sale.

At the end of the year last year, things did not look good for some 130 Sarasota Teachers.  As you may know, last year was the first year in close to a half century when the population of Florida declined.  According to a recent article in the Herald Tribune, the student enrollment in Sarasota was up to 41,500, which is the highest it’s been in a year and about 200 students over what administrators had estimated. When considering these statistics, it’s necessary to consider the fact that many parents can no longer afford private school and have placed their children back in public schools. However, principals are citing the obvious, that many parents are moving to the area because of the affordable home prices.