Discussing the 2023 Market & a Peek at 2024

Welcome to our Broker Corner, where we interview RASM broker members, asking pertinent industry-related questions to share their valued expertise, advice, and industry knowledge with our RASM members. This month, we’ve reached out to Barry Grooms, Realtor® and Co-Owner, along with his wife, Sherry Grooms, of Florida SunCoast Real Estate, Inc., and Robert Milligan, Broker/President of Preferred SHORE Real Estate Inc., to ask them about the state of the real estate market today and their professional predictions for 2024.

How would you describe the overall real estate market in the region in 2023?

• Barry: I will answer this question with one word, which is “predictable.” The rationale behind the word “predictable” is that we were not sustainable with the way the market was in ‘22 leading into ‘23, and with the economy growing as it had been, a slowdown was very predictable. In some cases, we needed to stabilize our market overall. The overall market in Manatee County is what I would describe as “normal” based on the last 40 years of sales. I know it seems like a shock to a lot of people who just got into the business, but when you look at it from 10,000 feet, it’s normal.
• Robert: I would describe our market in Sarasota as “robust” so far in 2023, meaning that there are plenty of opportunities for both buyers and sellers to accomplish what they are trying to achieve with their move. There have also been plenty of opportunities for Realtors® to build their business and progress.

Can you highlight any notable trends or changes that you observed in the local real estate market during the past year?

• Barry: The only trend was that rates kept going higher, and inventory remained low, so basic supply and demand - if you want to call that a trend.
• Robert: The most relevant trend has been the continuity of migration to South West Florida, as well as a move toward balance where inventory levels improve and buyers adjust to higher interest rates.

What were some of the key factors that influenced real estate sales and prices in 2023?

• Barry: In Manatee County, the key factors were interest rates and lack of inventory.
• Robert: Pricing always primarily comes down to supply and demand. The continuity in demand, coupled with a constricted supply, has kept prices very stable in choice areas. There has been moderate price softening in areas that are less sought after, where the property is not as desirable, and homes that are cosmetically dated. We have still been seeing price appreciation in choice communities and in luxury housing, which is especially desirable.

Were there any specific neighborhoods or areas in Manatee/Sarasota County that experienced significant growth or decline in real estate activity in 2023?

• Barry: Of course, the barrier islands are always a popular area and anything that has water behind it. Also, any large tracks of land that developers gobbled up are now seeing growth.
• Robert: If I were to name one stand-out segment of the market, it would be new homes in newly developed communities. Aside from the desirability of having a new home and the amenities that these communities typically offer, builders were often able to strategically mitigate rising interest rates with buyer/borrower incentives to keep their product moving swiftly.

How did interest rates affect the local housing market during the past year, and what are your expectations for interest rates in 2024?

• Barry: Of course, rates are going to drive the market in ‘24. I think we will stabilize after the beginning of the year, possibly settling around 6 to 7% by springtime, and then, hopefully, by election time, we will see a decline toward the end of the year.
• Robert: Any adverse effects of rising interest rates were as much a matter of perception as reality. Buyers who are more sensitive to monthly payments paused during the first part of the year, which made it more challenging to list and successfully sell resale homes $750k and under. Even though rates are higher, they are still within historical norms, and buyers are acclimating. Fortunately, our office often caters to the luxury segment of the market, let’s say $1M - $2.5M, and those properties have still been moving at a very brisk pace, often as cash transactions.

What were the challenges or obstacles that real estate professionals faced in 2023?

• Barry: One of the biggest challenges that newer agents will face is that if they “hopped” into the market during 2020 or just before, they may have never been given the tools or resources necessary to thrive in a different market. One of the obstacles is going to be identifying the right brokerage and training system that fits their specific needs as a person and their personality. Many people jumped into the business because it was one of the few that remained essential under the governor’s order, but now that the market has opened up, they’re facing challenges never seen before. They will require the necessary skills, tools, and mentorship from the right brokerage. Now is the time to sharpen your skills and not panic because the market will certainly change again, and the difference in being successful will be determined by how you handle customer service, and how you treat your clients for future referrals.
• Robert: In Sarasota, the challenges were low inventory and buyer lack of urgency. For the first part of the year, many buyers were in a “wait and see” holding pattern, and the adverse effect of their complacency was compounded by the lack of exciting choices to buy from. We’re coming out of that pattern now with buyer timelines improving and increasing inventory.

Can you provide insights into the types of properties that were in high demand in 2023, such as single-family homes, condos, or commercial properties?

• Barry: Specifically in Manatee County, the high-demand properties were single-family homes priced between $250,000 and $450,000.
• Robert: Prime properties on barrier islands with great boating water accessibility are in high demand. Luxury high rise condos and new homes have all been in high demand. While the days of every listing selling immediately are gone, it is still common to see these types of properties go under contract on the first day on the market when priced appropriately.

What impact did remote work and changing lifestyles have on the housing preferences of buyers during the past year?

• Barry: I don’t know if the “stay at home order” and “work from home” individuals had any changes in their lifestyles other than increasing the demand on housing, especially homes with extra workspaces, such as a fourth bedroom or a flex space.
• Robert: This social trend of working from home bolstered the migratory effect of people choosing to reposition themselves, be it for a better quality of life, weather, financial reasons such as lower taxes or lower cost of living in general. Naturally, the inhouse office or den has been more of a priority, and people are looking for an attractive, quiet space to be utilized as a “Zoom room.”

Were there any notable shifts in the demographics of buyers and sellers in 2023?

• Barry: The biggest influx that we saw were working professionals that wanted to use their 401(k)s or investments to buy in the state of Florida, then rent the property until they’re able to retire here. This created a high influx of Airbnb and rental properties, but not ones that people can afford.
• Robert: We’ve seen more transplants and fewer lateral moves. We used to have more local customers move from the water, out east, then back to the water. That hasn’t been the case so much as it was prior to the pandemic.

What are your predictions and expectations for the local real estate market in 2024, and what advice do you have for buyers and sellers in the coming year?

• Barry: Predictions are always difficult. One thing people have to remember is that regardless of how high the rates are, how low our inventory is, or whatever else influences our market, life must go on. People are still going to need to buy homes, and people are going to want to move. So, the sooner people move on with their lives and stop worrying about rates and inventory, the quicker life will return to normal.
• Robert: I subscribe to the old adage, “Don’t wait to buy real estate, buy real estate and wait.” That said, as long as anyone reading this maintains good principles of personal finance and doesn’t extend themselves beyond what is prudent, you can confidently buy real estate. I’m cautiously optimistic that the worst of the housing recession is already behind us, with South West Florida coming through this cycle better than a lot of other areas in the United States. At this point, the best words I could use to summarize my expectations about SWFL real estate in 2024 would be “stability and balance.”