Seasonality is back!
After several years of real estate activity both here on Anna Maria Island and nationally that defied expected norms, the big question remains, how will the real estate market perform in 2024?
With consumer confidence more positive than predicted, an increase in new housing starts predicted and an expected decline in mortgage rates, experts are cautiously optimistic. We are beginning this year with fewer gloom and doom headlines about real estate.
One aspect that hasn’t been covered in headlines enough is the return to seasonality. According to Case-Schiller, 2023 price appreciation followed seasonal norms and the month over month price appreciation was in line with average appreciation rates going back 49 years.
Price appreciation for the year remained higher than the experts had predicted at the beginning of 2023 as buyer emotion and pent up demand continued to turn into closed real estate transactions. At the beginning of the year, fear about mortgage rates slowing down the real estate transactions resulted in a forecast of price depreciation for 2023 according to Home Price Expectation Survey. While there were fewer units sold last year, the average price rose in accordance with the normal rules of supply and demand.
How did we do on Anna Maria Island?
The chart above shows the number of units for sale, sold, pending and any new listings. This is a five year look at all single-family home sales on AMI. Compared to 5 years ago we are now back to a more typical level of inventory on the island and that demand has returned to pre-2020 levels. While the number of home sales slowed down, prices remained stable, recording a 4% drop in the average home sales price in 2023 versus 2022. Over the past five years, the average home sales price on AMI has increased from $1.087 million to $2.425 million, a 123% improvement in the average home sales price.
As in any real estate market, we saw increased demand in particular price points. Not all types of homes sold quickly. A second home buyer was often more deliberate in their choice and stayed closer to their budget. We saw a slowdown in investor activity and while there is still strong demand in that market, it is taking a little longer for homes to sell versus the time period from 2020 to 2022.
Owing to positive signs in the market and the expectation that more buyers will be able to purchase this year as mortgage rates loosen up the available inventory on the market, sellers believe that more buyers will be looking at their homes and that the pace of sales should normalize.
This could be a delayed market because many buyers who are financing will wait for the rates to drop. Sellers who now have a financed home with a lower rate may also wait to put their home on the market until they see rates more favorable to their overall goals. On Anna Maria Island, we began to see an increase in the number of homes sold with financing last year, so this could affect some of the home sales on the island.
Buyer interest remains strong, but buyers remain focused on the numbers. Another piece of positive information that has not received enough national attention is the Home Price Expectation Survey, a survey of 100 analysts nationwide. The survey results shown below portray appreciation nationally over a five-year period; 2024 appreciation is expected to be 2.3%. The expectation again is that home price appreciation will follow the expected home price appreciation trends and will continue to appreciate at a more reasonable and historic pace.
As we head into 2024, pricing will remain important and the focus for buyers and sellers alike should be on their long-term goals. We are back to a market where the decision will need to be made around goals on price or goals on timing. As always, the most important step you can take as a buyer or seller in the market is to work with a local professional so that you can take a close look at the market trends for the type of property you own or would like to own.
For a complete look at the market, please contact Hannah Hillyard to receive your custom view of the Anna Maria Island, Bradenton or Sarasota real estate market.
An Anna Maria Island resident since 2001, Hannah is known as an extraordinary force in luxury real estate, with a remarkable record of selling world-class properties.
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