LEADING QUESTION

Is there too much room at the top? Now that everyone's talking about a cooling of the national and local real estate market, should we be worried, especially at the upper end? Not yet, say local developers and realtors, and perhaps not for quite a while to come, providing that properties are priced sensibly.

"I cannot build lots fast enough," says Pat Neal, president of Neal Communities, who defines "high end" as $800,000-plus. "There's enormous demand for something in that range."

Michael Saunders, who defines high end as $3 million-plus, says there is some leveling due to unprecedented amounts of new product in that price range, both in single-family and condominiums, and also because the real estate boom has encouraged a large number of resales. Saunders, president of Michael Saunders & Company, estimates that about a three- to five-year supply of $3 million-plus product is in the market, but adds that a well-priced property in a good location could still be snapped up in a day.

Michael Saunders & Company realtor Evella Feldhacker estimates that at the $2 million-plus level, there is about 10 months' supply on the market. So far, mortgage rates remain low, and wealth is compounded in the hands of wealthy boomers and immigrants, many of whom still consider this area a good deal for a second or third home compared to other parts of the state and country. In Sarasota County, for example, 173 $1 million-plus houses were sold in the first six months of 2005, compared to 141 in the last six months of 2004. In Lakewood Ranch alone, Feldhacker reports five $2 million-plus resales between January and June 2005, up from two resales in that price range over the previous six months.

However, inventory has also increased; in June 2004, only four houses in that price range were on the market, while in June 2005 there were nine. But Feldhacker says the supply is in response to high demand, and that Lakewood Ranch will defy the economic forecast of "bust or slowdown."

"Is it softening or it is sustainable? That's my question," says Feldhacker. "We could sustain if we get a correction here or there. A correction will be healthy in order for us to sustain growth, because it will allow other players to come in and buy vacation homes without saying to them, 'You're too late for the party.' If you own real estate in Sarasota County or Lakewood Ranch during the past two years, and you can think about the worst case scenario and it is acceptable, then we are in a great market. For example: If your home has increased in value 45 percent for the last two years, for a total of 90 percent, and it declines by 20 percent the third year, are you going to complain if it allows for the continuity of the upward trend?"

While single-family sales seem to hold strong, there are some doubts as to whether all condominium sales will hold. Neal says condo sales in downtown Sarasota are overheated. Saunders says single-family sales are definitely stronger, but that has traditionally been the case, and that many retiring baby boomers, who like condos, may change that trend. Those boomers are, in fact, the main reason many realtors and developers aren't too worried. Neal says that with 4 million boomers retiring each year, enough demand will be created to balance the supply. "We're going to have a huge demographic-driven market," says Neal.

"The boomers have distorted all the markets, and I think their sheer numbers are going to assure us of a continued demand," says Saunders. "Florida will be undersupplied to meet that need at all price ranges."-Anu Varma

MY FIRST JOB

Field Study
The Wine Warehouse's Thomas Morgan got his start as a struggling farmer.

Thomas Morgan, 31, has managed Sarasota's Wine Warehouse since 2001 and is a partner in the company, which has 19 stores across Florida.

"In September 1999 I was leasing a 100-acre certified organic blueberry farm outside of Gainesville. I had studied horticulture at the University of Florida and then went to Evergreen State College in Washington state in 1998 to continue my education in sustainable farming. Just before that first year was up, a friend called and said, 'I know this guy who's got a certified organic blueberry farm in Florida.' The guy was Wine Warehouse co-founder Tom Dorn, who'd had all these wine stores for 18 years. He'd bought the farm to increase the number of certified organic acres in the state as a favor to a friend who started the Florida Organic Growers Association.