Bradenton-Sarasota Housing Market Set to Fall

The Southwest Florida cities of Bradenton and Sarasota snagged headlines in June 2005 as the area set a national benchmark for soaring home costs, but just a year and a half later, the tide has turned.

Fortune Magazine has named Bradenton-Sarasota in its list of top 10 housing markets ready for a fall. Combining the two cities and ranking the area number seven, the magazine projects local home prices will tumble 4.8 percent in 2007 and an additional 0.8 percent in 2008.

Local real estate professionals aren’t shocked.

“I think that’s a reasonable expectation,” said Rod Rawlings, vice president of corporate development for Re/Max Gulfstream.

Homes in two other Florida communities, Miami and Fort Lauderdale, joined Bradenton and Sarasota real estate on the list, ranking sixth and 10th, respectively.

The area poised for the biggest tumble, according to Fortune, is Stockton, Calif., where prices are expected to drop more than 7 percent in 2007 and an additional 5.3 percent in 2008. Las Vegas also is supposedly headed for a price plunge but will see the worst of it in 2008.

Local Realtors are looking at the forthcoming changes in the turbulent Southwest Florida housing market more like an adjustment than a burst.

“That’s what markets do; they breathe in and out,” Rawlings said.

Home prices started to correct as early as the last quarter of 2005 and sellers are being more realistic when pricing their properties, said Milt Flinn, broker of Lakewood Ranch Realty.

“More people are looking now and actually buying,” Flinn said.

With Florida mortgage costs still remarkably low, and hovering around 6 percent, Lakewood Ranch Realty has seen the number of closings rise during the last three months and said that Fortune’s prediction is akin to “looking out the rear window.”

The latest numbers released by the Florida Association of Realtors found the median home price for October at $277,900, down 18 percent from the $340,700 median in 2005. Realtors say they still believe that Bradenton-Sarasota will fare better than predicted and remain cautiously optimistic even if it doesn’t.

“Even a 5 percent reduction in the market would be a pretty soft landing considering the appreciation we saw last year,” Flinn added.

Falling prices can also be attributed to the influx of inventory.

If a seller had a property in a sought-after community and nothing else was for sale, the price may have been the limit in 2005, but now, even though Florida mortgage loan rates remain low, the prices have gotten so high in many areas that buyers must take a more realistic approach.

“I think we all need to take a look at our individual greed temperature. Sellers now who realize there is no way they can lose money on the sale are more likely to alter their approach and price according to what the market allows,” Rawlings said.

The best bet for selling in a buyer’s market - especially in an area that has a lot of inventory - is to price a home in the bottom of that area’s price range.

“It takes two to make a transaction and the buyers have been sitting back waiting for the market bottom and I think they’re coming back now,” Rawlings said.