The National Association of Realtors reported that sales of previously owned homes rose 20.7% in June over May. This is the biggest increase on record going back to 1968. The surge in existing-home sales follows other recent bullish indicators such as rising new-home sales, robust homebuilder activity and a flood of mortgage applications.
Premier Sotheby’s International Realty reported that pending sales of single-family homes rocketed up 41% in June 2020 over June 2019. Sotheby sales associate Jo Rutstein said, “Unlike the 2008 recession where prices imploded, “this is a virus recession, not a housing recession.”
Drayton Saunders, president of Michael Saunders, confirmed that the demand for housing in Sarasota remained robust. He said, “The only major limiting factor in securing homes for potential buyers is a lack of inventory. Buyers appreciate Sarasota’s lifestyle.”
Wagner Real Estate Agent Tim Mitten summarized Sarasota’s real estate metrics from June 2019-June 2020:
• Prices are up 8%.
• Sales are up 29%.
• Active listings down 29%.
The supply of existing homes in June fell to just 1.57 million homes. Lawrence Yun, chief economist for Realtors, said, “The inventory levels are shrinking and shrinking, which could create a bottleneck for further home sales later.”
These factors contributed to robust sales: 1. The decline of 30-year mortgage rates to below 3% for the first time ever; 2. Young families are seeking more space in the suburbs; 3. The prospect of higher taxes has encouraged migration to low income tax communities.
Sales of U.S. housing stock were particularly strong last month in the West and South. These favorable results reflect a long-standing trend of Americans seeking to relocate to the Sun Belt. Some of the hottest markets have been Phoenix, Arizona; Nashville, Tennessee; Jacksonville, Florida; and Austin, Texas.
Yun said, “The housing market is hot, red hot,” and added, “The urban area is less hot. We are clearly seeing trends for smaller towns or suburbs.”
The increase in home sales should help our economy. The National Association of Home Builders estimate that more than 3.8 million people work in residential construction. New homeowners will spend money on furniture and renovations.
A rebound in jobs is required to sustain the outsized demand for homes. Our unemployment rate is currently 11.1%. This contrasts starkly with our 3.5% unemployment rate in February 2020 — a 50-year low.
The housing market is a bright spot in an otherwise downbeat economy. Gross domestic product is expected to drop at a 37% annual rate in the second quarter, according to IHS Markit, a global-based information provider. They cited “social distancing” mandates, supply chain disruptions and sharp declines in the energy sector as major contributors.”
Forbes Magazine in an article “Cities Will See Citizens Flee, Fearing Continued Riots and the Reemergence of COVID-19” highlighted urban problems. In the past, residents of big cities enjoyed the prospect of an abundance of employment opportunities, vibrant nightlife, great restaurants, state-of-the- art gyms, fabulous hair salons, etc.
The attractiveness of cities has dissipated. City dwellers have wearied of paying a large percentage of their salaries in housing costs and taxes.
In 1896 at the Democratic Convention, William Jennings Bryan made his famous Cross of Gold Speech. “Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.” Bryan’s dire words appear prophetic. Peaceful protests against the killing of George Floyd have morphed into nationwide demonstrations involving rioting, looting and arson in many cities.
In April 2019, U.S. News ranked Sarasota as the best city in Florida and the 18th best place in the United States. While we appreciate our wonderful lifestyle, we also want our urban communities to remain wholesome vibrant residences.
