Bright spot in a bleak condo market

SARASOTA - The Sarasota condominium market, like practically every other condo market in the state, looks pretty bleak right now.

Sales fell 30 percent to 1,510 during the nine months ended Sept. 24, from 2,160 during the same period a year ago, according to deeds recorded at the Sarasota County Circuit Court.

The drop at the high-end marked was even more pronounced. Only 89 condos sold for more than $1 million during the first nine months of the year, representing a 43 percent decline from 157 in the first nine months of 2007.

With the crisis in the financial markets, real estate agents do not expect the situation to improve any time soon.

"I see a further drop in sales and prices in the year ahead," said Steve DuToit, who heads up Team DuToit for Keller Williams Realty in Sarasota. "How can that not happen? When people have uncertainty, whether it's because of the economy or an upcoming election, they are less likely to spend."

DuToit added that the drop in sales would impact the upper end of the market most.

"Look at the stock market," DuToit said. "That's a major factor. People who own stock are not feeling as rich right now. If declines on the stock market continue, it will mean further declines in buying high-end homes."

The bright side

Still, there are more optimistic ways of looking at the condo market.

Inventories of unsold properties in Sarasota are down 22 percent to 3,718 units from 4,756 a year ago. Though part of the drop is because of the new MLS system that eliminated duplicate listings, and part is because of people pulling their properties off the market after not getting the price they wanted, the descending number still has a positive psychological effect.

At the beginning of September, Sarasota had a 106-week supply of unsold condos, compared with a 134-week supply at the same time a year earlier, statistics provided by Team DuToit show.

In turn, the 30 percent decline in sales does not look so bad when one considers that no new condos came on the market in 2008.

"There were all kinds of complexes that were being completed last year, and those sales were being recorded," said Cheryl Loeffler, an agent with Sky Sotheby's International Realty in Sarasota. "This year, we haven't had any condos come on line."

Loeffler said that many of the 157 sales that occurred during the first nine months of 2007 were actually people who made their buying decisions two years earlier when the market was crazy.

As to the median price, it fell 6 percent to $220,000 in August from $235,000 during the same month a year earlier, statistics from the Florida Association of Realtors show. But Realtors say that the price drop is not a bad thing. It simply indicates that there are many more bargains to be had, and court records show that investors are out hunting.

Jonathan McCague, for example, bought three units -- one at Central Park and two on Golden Gate Point -- for a total of $480,000 in 2008, or about half what they were worth two years ago.

Similarly, Charles Vollmer bought units at Admiral's Walk and Villa Rosa in Sarasota for $412,000, a savings of $140,000 from what previous owners paid.

There is no question investors like them will continue to see bargains in the year ahead, agents say, and they are most likely to find those bargains by following properties that have fallen into foreclosure.

Court records show that 438 condo owners defaulted on loans during the first nine months of 2008, which was more than double the 182 defaults that occurred during the same period a year earlier.

"All these foreclosures are why prices are so low," DuToit said. "They are also what has created buying interest. If Dillard's has a 50 percent off sale, you're going to have a few people lined up at the door."

Price is king these days.

"Only 17 percent of properties listed on the MLS are selling right now compared to over 80 percent in a normal market," DuToit said. "Unless you're willing to price at a level that stands out from the market, you're property is going to sit there for a while."

Foreign influences

Real estate agents have long been saying that Canadians and Europeans, with their stronger currencies, have been descending on Southwest Florida in greater numbers to scoop up the bargains. But that does not seem to be borne out by the numbers.

Canadians and Europeans bought 156 properties during first nine months of the year, which represents roughly 10 percent of total condo sales in Sarasota County.

Loeffler said Canadians and Europeans usually account for 10 percent of sales, and she has seen only a marginal increase from previous years.

Court records show that Canadians and Europeans accounted for 14 sales of more than $1 million in the first nine months of the year compared with 12 during the same period a year earlier.

That may change in the year ahead, though, says Barbara Ackerman, a high-end buyer with Coldwell Banker Previews on Longboat Key.

"The Canadian dollar has dropped in value compared with the U.S. dollar," Ackerman said. "A condo that would have cost them $625,000 last year costs them $675,000 now."

Compared with U.S. buyers, however, Canadians and Europeans have been the only stable force in the market.

Floridian high-end buyers, for example, bought 54 percent fewer condos during the first nine months of the year compared with a year earlier. Midwesterners bought 56 percent fewer condos, while Northeasterners bought 24 percent fewer.

Agents say it is hard to stay positive about the year ahead given the turmoil in the nation's financial markets. But they are trying.

"By nature, I'm an optimist," Loeffler said. "I can't believe it will stay dormant like this. I know people are out there value hunting."