Despite 12 roller-coaster months that Dale Sorensen Sr. called “puzzling and challenging,” his real estate company had another stellar year in 2022, closing approximately $1.42 billion in sales out of its eight offices in Indian River, Brevard and St. Lucie counties.
That number included nearly $400 million in 32963, where the family run business led the pack with a 26-percent market share, and well over a billion in Indian River County.
The year was puzzling in part because it started in the midst of a still-accelerating hyper-boom, with home prices on a steep upward trajectory and sales through the roof, and then slowed dramatically, dropping from 90 miles an hour to about 30 almost overnight.
With little warning, the pandemic tidal wave that flooded the island market with eager buyers for 20 months or so, starting in the fall of 2020, flattened out on the beach in May and June, its power finally and somewhat mysteriously spent.
Sorensen, who has been in real estate and development for more than 50 years, said he has never seen the real estate market shift as abruptly as it did in the summer of 2022.
That shift came in somewhat symbiotic response to economic challenges that included domestic and international unrest, especially the savage war in Ukraine that hurt oil and food supplies and raised fears of a larger war, an unstable stock market, high inflation, predictions of recession, severe lack of inventory, and mortgage interest rates that doubled between January and November, from 3.5 to 7 percent, before dropping back to 6.3 percent at the end of the year.
Higher interest rates were the biggest baffle breaking the force of the pandemic surge.
They made housing more expensive and froze recent buyers in place, contributing to the shortage of homes for sale. People who bought in recent years, especially during the boom, had mortgage rates as low 2.6 percent. Many of those buyers who might have moved again in 2022, did not want – or could not afford – to give up that sweet deal for a mortgage at 6 or 7 percent that would add hundreds or thousands of dollars to their monthly housing costs.
“People say interest rates don’t impact high-end cash buyers, but that isn’t true,” said Dale Sorensen Jr., managing partner of his family’s company. “Many cash buyers borrowed against their portfolios to purchase a house when rates were so cheap, so higher rates have an impact on their thinking.
“So do all the headlines about war and predictions of recession. That kind of news impacts consumer confidence and weighs on the real estate market,” making both average and wealthy buyers more hesitant.
“The buyer urgency is gone,” said Dale Sorensen Sr.
Even with all those headwinds, Sorensen, the largest real estate company headquartered in Indian River County, did more business than in any other year in its 45-year history except for 2021.
Dale Sorensen Sr. told Veronews.com that despite its challenges, 2022 ultimately was “very satisfying.
“How can you not be happy with the level of production we achieved in such a difficult year?” he said. “We saw strong growth over our 2020 numbers. If you forget about 2021, 2022 would have been a new record for the company, an amazing record. We had 20 of the top 100 agents in the county, six of the top 20 and three of the top five.”
“We are very grateful to our clients for choosing us,” added company co-owner and top-selling agent Matilde Sorensen.
Dale Sorensen Sr. said company dollar volume was down “about 10 to 12 percent in 2022 compared to 2021,” which was an Annus Mirabilis for the real estate industry with once-in-a-lifetime sales and price appreciation.
“Last year was a total anomaly,” said Dale Sorensen Jr. “We have seen price appreciation of 200 percent in many cases and it is unrealistic to expect much more appreciation on top of that in the short term.”
“The market needed to cool off,” said Sorensen Sr. “My only question now is, has it cooled? Is it still cooling? How much will it cool!”
As season gets under way, the Sorensens see a number of positive indicators.
After a quiet December, Matilde Sorensen said her high-end business selling homes mostly between $1.5 million and $5 million has been busy, with as many as eight showings a day and three offers on one property last week.
“Prices are staying pretty stable,” she said.
House and condo inventory is rising, loosening up the market a little bit, with the number of houses for sale in 32963 up from fewer than 50 at the end of April to about 120 today, and the number of condos for sale up from 30 to approximately 100.
Those numbers are still only about 50 percent of typical pre-pandemic numbers, which tends to support prices.
“Demand has decreased, but it is still substantial,” said Dale Sorensen Jr. “I think the expectation is very positive. What I mean by that is the town is very, very much on the map. It is not the quiet “Zero Beach” people used to refer to – though it never was that, really. Vero is all over the national news. There is south going north, [people from Miami, Lauderdale and Palm Beach moving here], and strong demand from buyers in other parts of the country. All these things that are positive.”
Florida remains the top destination for families relocating within the U.S. by a large margin, as “people continue to move to Florida in record numbers,” according to a December article in Globest.com
And Vero isn’t just an average patch of the Sunshine State. With its scenic beauty and high-quality housing stock, beautiful country clubs and uncrowded beaches, cultural opportunities and low-key lifestyle, it has an appeal that is rare.
On top of that, Vero is still a tremendous bargain, objectively speaking, compared to other highly desirable Florida destinations.
Dale Sorensen Jr. said the average price of a home sold on the island by his family’s company in 2022 was $1.69 million, up astronomically from before the boom but still only about 10 percent of the average price on Palm Beach Island, which recently hit $16 million – for the same ocean, sand and palm trees as in Vero.
Dale Sorensen Sr. said he expects a stable market for the first half of 2022 but would not make a prediction beyond that due to uncertainties in the economy.
“Price stability in 2023 would be a win for us,” said Dale Sorensen Jr. “Even a decline in prices for six or seven percent would not be bad. Real estate has typically appreciated 10 percent a year and it will take a while to catch up to the appreciation we saw in the past couple of years.
“It may be five or six years before we hit the numbers again that we hit is 2021, but that is okay . . . I see the market normalizing after the pandemic boom and I think the future is very, very bright. But we have to be realistic – we aren’t going to see the kind of appreciation we saw in 2020 and 2021 again for a long time.”
Sorensen Jr. added that any pull-back in prices would not necessarily be across the board. Instead, individual properties that sold way over ask and true value with escalation clauses during the mania are likely to come down to earth to some degree, nudging market-wide averages slightly lower.
The Sorensen’s attribute their strong sales in 2022 and their confidence going forward to quality of their agents and their hyper-local focus. The company was founded in a small office on Beachland in the late 1970s and, even with expansion into Brevard and St. Lucie counties, the great bulk of their business is in and around Vero Beach.
“Our differentiator is how focused we are on the local market and community,” said Sorensen Jr.
“We are all about Vero Beach,” added Matilde Sorensen.