Broken record analysis

Castles in the Sand

It seems like every other week or so I’m writing about the influx of new residents to Florida from high tax areas of the country. Forgive me if I sound like a broken record, but I’m not the only one reporting on this phenomenon; it’s all over the news, so here we go again.

Let’s start with a book I recently read a comprehensive review of; it’s called “Bubble in The Sun” by Christopher Knowlton and the name alone should run shivers down your spine since anything related to real estate should not have the word “bubble” in it ever again. Nevertheless, the 1920s Florida land boom created a bubble that the author maintains led to the 1929 crash of the stock market. The market crash also led to the end of the development frenzy in Florida and millions of jobs.

He states that in 1925 alone, an estimated 2.5 million people arrived in Florida looking for jobs in the building trades. In addition, just regular working-class people – as many as 18 million – risked their money by investing in Florida real estate, being promised a piece of land and a way of life.

What strikes me about this book is that at this point in time, Florida is experiencing a real estate boom again and a substantial influx of new residents, only this time it’s for a different reason. According to the U.S. Census Bureau, in 2018 approximately 587,300 Florida residents were residents of another state 12 months earlier. Texas was right behind Florida at approximately 564,000 residents. And remember, this does not include homeowners who may have purchased a second home in Florida but have not become Florida residents – yet.

Without overstating the obvious, the reason for this migration is taxes, taxes, taxes. As we all know, Florida has no income tax or estate tax and lower property taxes than most of the high tax Northeastern states.

Anyone moving to Florida from New York, New Jersey or Connecticut, to name a few, will benefit from a more advantageous tax situation, but high-income individuals will naturally profit the most from changing their residence to Florida. In addition, high-end real estate in Florida is benefiting big time from this influx of the wealthy. According to Realtor.com, in November 2019, the average price of a luxury listing in Florida was $1,649,380. This is up 8.6% from the same time in 2018.

Now it’s time to see what’s happening in Manatee County real estate based on the December statistics from the Realtor Association of Sarasota and Manatee.

December is a funny month for real estate in Florida. Closings reflect purchases in October and November before season. The approaching holidays can slow things down or people may want to close before the end of the year for tax purposes. Whatever the mixed bag of December is, this December was pretty much a blowout.

Single-family homes closed 24.9% more than last December; the median sale price was $325,000, 5.2% higher than last year, and the average sale price was $420,878, 10.7% higher than last year.

Condos closed 4.9% more properties; median sale price was $195,500, 2.9% higher than last year and the average sale price was $241,196, up 1.9%.

Single-family homes are selling within 90 days, about the same as last year, but condos are selling in 88 days this year, down 8.3%. Month’s supply of properties keeps dropping for both single family and condos; 3.5 months for single family, down 14.6%, and 3.6 months for condos, down 10%.

It looks like the broken record continues in Manatee County with homes appreciating and inventory low. Based on December, I predict the new resident broken record is going to continue for a long time to come – here’s hoping.