Our scorching real estate market has homeowners asking, "Should I sell?" and home shoppers asking "Should I buy? Or should I sit tight and wait it out?"
The "it," of course, is market uncertainty and swollen prices like we haven't seen before. Tony Veldkamp, senior advisor with SVN Commercial Advisory Group and the president of the Realtor Association of Sarasota and Manatee, shares his expertise on what we might expect this summer and beyond.
The Future of Real Estate Prices
Will prices calm down or continue to rise?
"We’ve been anticipating some leveling off in 2022 due to many factors. First, the level of price increases that we’ve seen over the past two years is simply not sustainable. With interest rates increasing, home prices increasing, and inflation on other consumer items creating less buying power for potential home purchasers, the amount of demand and price increases have to begin tapering off at some point.
However, if the Federal Reserve System allows interest rates to stay low due to the [market] uncertainty and concerns overseas, and buyers continue to flock to Florida to purchase new residences, that leveling off could push out to 2023."
The Impact of the Russian War in Ukraine
How is it affecting the local real estate market?
"The tragic events in Ukraine will affect our local real estate market directly and indirectly—directly because local communities within our market, such as North Port, have a high Ukrainian population. When the U.S. accepts Ukrainian refugees, they'll want to move to areas with friends and families, just like immigrants have done for hundreds of years. That will increase demand for housing in those markets even further, causing continued increases in pricing.
Indirectly, the conflict has raised gas prices and the cost of other consumer items, which will remove some buyers from the market. But again, it depends on how interest rates are affected by federal policy. That will also determine if more buyers will enter the market, or if they leave the market."
Rising Interest Rates and Inflation
Are they slowing down home buyers?
"Absolutely. At a 3.5 percent interest rate, $2,000 a month will buy you a $445,000 house. At a 4.5-percent interest rate, you can only afford a $394,000 home still having the same payment. Also, a higher cost of living reduces someone’s buying power since more income is now going to food, gas, car payments, etc."
Is it a Good Time to Buy an Investment Property?
"It’s always a good time to buy an investment property. But you have to be careful and buy it right. The common theory is that you make money in real estate when you buy it, not sell it. So as long as you can buy at a price that rents support, and build equity over time, and you don’t see any reason values would decrease, you should buy.
Florida, with its 'open for business' attitude and low taxes, is somewhat insulated from issues that impact other parts of the country. As long as people continue to want to move here and live here, we don't see anything on the immediate horizon that could cause a reduction in values. Today’s price increases are very different from the ones from 2005 and 2006 that were artificially inflated and eventually crashed."
Investors vs. Individual Homeowners
"Sometimes. Single-family residential investments continue to be popular—not only with individuals but also on a corporate investment level. But we’re seeing the development of 'build-for-rent' communities in new, single-family subdivisions where you could once purchase a home. That puts the squeeze on inventory and on home builders who traditionally developed homes for sale."
Is it a Good Time to Sell?
"Prices have never been higher; interest rates are still at historical lows. It’s a great time to sell."
Is it a Good Time to Buy?
"Yes. We don't see prices going lower anytime soon—only the rate of increase leveling off. So that home you’re looking at today for $500,000 will be $525,000 in a couple of months. The sooner you can buy and start building equity, the better off you'll be."
With expert insights like these, homeowners and home shoppers in Sarasota can navigate the real estate market with confidence. Whether you're considering selling or buying, understanding the current trends and factors impacting the market will help you make informed decisions. So seize the opportunity and make the most of Sarasota's booming real estate market this summer and beyond.
