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June 28th, 2007
If you are like many wondering just what is selling, the following is a breakdown of homes sales, year to date, by price category. This is for the period from January 1st through May 31, 2007, and represents residential sales for the entire county.
Homes priced from:
$300,000 and under 1200 sold 80% of total
$301-500,000 206 14%
$501-700,000 62 4%
$701-900,000 10 1%
$901,000 and above 14 1%
A total of 1,492 homes were sold in the entire county in the past 5 months. The median price (the number most quoted in statistics) was $195,000. The average price of a home was $232,000. For many, these two figures are confusing so simply stated, the difference between the median and the average price is, the median price is the point where half the sales are below, and half the sales are above that price. The average price of course is derived by dividing the total number of sales into the total sales dollars.
Susan Herrera of CNN, recently interviewed Dr. Edward Learner of UCLA’s School of Management, where he commented on the current state of the real estate market and how he feels the return to “normalcy” is going to take a couple of years. He further stated, “Sellers need to clear inventory and cut price.” Perhaps the weight of his words for aggressive pricing was more succinctly put when we went on to say, “Buyers should view a house like a bus; if you miss one, a better one will come along in an hour or two.”
Susan Wachter, Professor of Real Estate and Finance at the University of Pennsylvania’s Wharton School of Business was also interviewed and commented that the real estate market was still in decline. She feels the market will bottom closer to the end of the year however, she did stress that prices need to continue to go down as they are still too high.
Other analysts have drawn the correlation, “as interest rates go higher, historically home prices are lowered.”
As a seller, this information should confirm what we keep saying, by aggressively pricing your house now you may save yourself thousands in the long run, as you won’t be chasing a “declining” market. We have seen that today’s buyer is no longer responding to “fair market prices” or “competitive market prices,” they want a deal. They feel the market is still adjusting and the only way they are getting off the fence is if they feel by negotiating well enough today, they would still be in good shape tomorrow if the market continues to decline as expected.
You have to ask yourself, “Am I competitively priced or am I the DEAL?” The result of your property selling may be more in line with how you answered the question!
Few can contest that our area is everything Money Magazine and Forbes suggested in voting us as “One of the top places to live in the country.” The adjustment in real estate prices was expected, and needed, to return ourselves to a healthy balance. The faster we achieve this balance, the quicker we are going to realize the potential the media and developers alike have predicted for our area for years to come.
June 18th, 2007
If someone came up to you and said, “I just purchased a house for $200,000 below what it was originally listed for,” your most likely response would be, “What a steal, someone must have been in big trouble to sell at that price.” My question to you is, “Did that home sell conventionally, or did it sell at an auction?”
The problem most people have with an auction is the perceived stigma they feel is attached to it. For many, the word auction conjures up a distressed sale by someone who is in serious financial trouble. Visions of strangers coming through your home like vultures circling over their prey, is more than most people can bear.
In the past couple of years we have experienced a roller coaster ride in the real estate market that most people have never seen before, and may never see again. Shortly after Hurricane Charley, many of those who purchased homes prior to 2004 saw the value of their properties soar. Returns of 200% or greater were not out of the ordinary however, now that the market is going through its anticipated adjustment period, those profit margins are returning to more realistic numbers. Investors who were giddy with the increases in the stock market in the late 1990’s through early 2000’s were joined by those real estate “investors” who enjoyed the meteoric rises prior to 2005; and how quickly we all went from being surprised by the “return on investment” to expecting that kind of return on investment; and for many it was the unwillingness to concede a significant part of those returns that kept home prices high that resulted in sluggish sales. Recently, Michael Saunders, founder of the Michael Saunders Real Estate Firm, was quoted regarding Sarasota and Bradenton’s 14% increase in home sales stating, “Early on, the Realtors in our area made a collective effort to get prices in line (realistic) that has attributed to our area’s growth.” Although I believe, demographics played a larger role in their areas recent resurgence; it is the reference to the reduction of prices that is credited with their turnaround. So what does this have to do with auctions?
With over 6300 homes on the market at the present time, there is more competition than ever for developers, investors and individual homeowners alike, to make the price of their homes as attractive as possible. Incentives from developers in the form of cash discounts and credits towards upgrades are being offered to the buyer. Higher commission rates, Hawaiian vacations and even Rolex watches are being offered to Realtors for bringing customers to them as they desperately seek to reduce their over inventoried positions. Even some homeowners are offering higher commissions to the selling agent just to feel they are getting their homes shown more often however, with all of this being said, the bottom line is price.
Today’s buyer still feels the market is adjusting, and with all the negatives in the press that continue to erode away at the their confidence level in the market, those willing to jump in are taking their time in making a decision and only doing so at a great price. The only way to get today’s buyer off the fence and quickly, is by making the price too good to pass up. Does that mean a “fire sale,” absolutely not! But today’s buyer is looking for the assurance that even if the market does continue to adjust downward a bit more, they still negotiated a good enough deal now, where waiting an extra few months would not have put them in a position of getting a better deal then. That brings us to “Auctions.”
An auction is nothing more than another tool that can be used to sell your home…..quickly. There are many types of auctions from the Dutch Auction, that is similar to a conventional way of selling a home where the price starts high and works its way down, to the auction most people are familiar with where the auctioneer is trying to get the potential buyers to bid higher. Recent statistics show that auctions will account for 30% of all real estate sales in the next few years and are currently the fastest growing segment in the real estate industry. “Absolute” auctions are those where any offer is accepted regardless of price, whereas those with a “Reserve” are characterized by an established minimal bid or price that must be offered, or the property does not sell. For those not willing to trust human nature to bid the price up, an auction with a reserve may be best for them. But keep in mind, no one wants to see the other guy get the deal, and thus the price gets bid higher. Statistics have shown that auctions also get a price very close to fair market value which is defined as,” The price at which a ready, willing and informed seller would sell his property and a ready, willing, and informed buyer would buy, neither party being under any pressure to act.”
Instead of looking at an auction from the stereotypical point of view as a “distressed sale,” try looking at it as a guaranteed sale, in a guaranteed time frame. Unless you purchased a home in the last year or two, auctions may be a very viable avenue for you to pursue if you are looking to sell your home quickly. Banks are starting to look at auctions more favorably as well as “Short Sales,” as it helps them avoid the costly legal fees of foreclosures for those that are facing severe financial difficulties. The benefit for you as a seller is the commissions are paid out of a “Buyer’s Premium” or participation fee. That fee which can run from 10-15% of the purchase price, pays for any commissions due from the sale. As a seller, you will have a set marketing fee usually for the month that can range from $2,500-$10,000, depending on the company. While this may sound high at first, the marketing associated with the auction is very extensive that often- times includes national data bases.
Auctions are just one of the tools some of us use to sell homes for our clients; it by no means is being used to replace the existing way we sell homes today. Depending on when you purchased your home and the price you paid in comparison to what the market will bear, will determine whether or not an auction is right for you.
As for the home I mentioned in the beginning of this article that sold for $200,000 below its original list price, if you thought it sold through an auction, you were wrong; but I bet most of you thought this was a desperate seller who had to give his house away through an auction. In reality, this seller would not price his house aggressively enough, and as a result took over 200 days to sell his home for $200,000 less than his original asking price. Had he considered an auction, he would have sold it in a fraction of the time and probably for a much better price, with a lot less frustration; and don’t forget about those monthly carrying costs!
You don’t have to be a desperate seller, just a highly motivated one, to realize the potential benefits of turning your money more quickly through an auction. For more information on Auctions and other real estate questions, please feel free to contact us at 888-818-4945.
June 13th, 2007
As a former psychology major, I have always been intrigued by the emotional diversity of the human mind. At times it seems to have a spirit or will, that serves as a great source of strength in helping us overcome adversity and fear. Other times it can appear weak and fragile leaving us confused and doubting our abilities to face life’s challenges.
Having transitioned from one career into another, I have had an opportunity to work with people who have overcome great odds to reach the pinnacle of success however, I have also witnessed some of these very talented people second guess their abilities when their respective market changed, even when the change was expected.
The same has happened with our market as many homeowners, investors and realtors alike find themselves questioning the degree and length of time this market will continue to adjust. Once confident, many of these “investors” who were either “banking” on the equity in their homes, or who overleveraged themselves with investment properties, not expecting the market to change so rapidly, are now growing more concerned about the prospects of recovery in this market. For many, their confidence may be shaken, but for those who take more of an analytical approach instead of one based on emotion, the market is actually performing as expected.
As one of ten writers of this column I am often asked to comment about various real estate related news articles and opinions that come across our TV screens or other forms of media and surprisingly, many of those asking the questions are the same ones who were very bullish in this market. Even more interestingly is how their behavior pattern is very similar to the “day traders” of the late 90’s and early 2000’s when making money in the stock market seemed as easy as “shooting fish in a barrel.” When their market turned, many of these investors who thought they cracked the code to riches, found themselves looking for answers to the sudden change in their market; sound familiar? To help you through this time, let me share with you some of the questions I have been receiving and my personal responses, but first let me explain to you the four cycles of the real estate market that I feel were clearly outlined by Maryann Mize of Charlotte State Bank in some of her presentations.
If you started in the quadrant of “Under Supply” you are essentially starting with the cycle that is ripe for growth and is poised for the beginning stages of development. Just as it says, there is an under supply of inventory in a variety of sectors of the real estate market. Following the quadrant of Under Supply is that of “Expansion” that is characterized by declining vacancy rates and new construction and growth. These two quadrants represent “Increasing Demand.” The third sector or quadrant is that of “Over Supply,” with increasing vacancy rates and inventory levels and the fourth is what is considered “Recession” that is characterized by further increasing vacancies and more completions in new construction. These last two quadrants are those of “decreasing demand” and it is between these last two quadrants that we find ourselves today.
The questions I receive most have to do with the type of buyers in the market. Some have heard the Europeans are coming here, while others claim they hear the investors are back in the market. Traditionally, the Central and South Americans have favored Miami for its Latin influence and nightlife, while the Irish and Brits prefer to invest in the Orlando area for the theme parks and the potential for year round rentals. What we are seeing primarily in our market is a diversity of “End Users” who are looking to purchase a home for personal use. Where we could pick up additional opportunities from the international market are from some European countries as well as Venezuela that are starting to see the signs of Socialism and are considering Florida as a safe haven for their real estate holdings. As for the investors, I beg to differ from the opinions of some, as I believe most are on the sidelines waiting for the opportunities on the horizon where there is a growing consensus that the fallout from the “sub prime” market is going to be felt, causing higher delinquency rates and foreclosures. Many feel this time will come in late summer and I am hearing that even the Wall Street investors who are looking at real estate are positioning themselves to take advantage of the great opportunities that will be at hand; and that brings us to the “mindset” of today’s investor.
Today’s investor is thinking very differently than those that were in the market two years ago. Much like the behavior of the “Day Trader,” those claiming to be “Real Estate Investors” a couple of years ago, where jumping in with high hopes the market would continue its meteoric rise due to low interest rates, affordability and the influx of baby boomers projected for years to come. The investor of today is banking on the vulnerability of market and is looking at opportunities “for a steal.” As a seller, this investor is not who you should be looking for; it is the “end user” who is more reasonable in their pursuit of a good deal.
Another question I am asked relates to the increasing inventory levels and the lack of sales in the market. For the eight years I have lived in Florida, January 10-15, regardless of the industry, has always been the beginning of our busiest season. With people looking for any glimmer of hope, we started to see signs of life with an “Up Tick” in sales at the end of the fourth quarter of 2006 and the beginning of 2007. Now the market seems to have hit a little bit of a trough again as the economic news has been volatile. Personally, I feel the increase in inventory levels is due to the optimism and anticipation of a busy season, and with the general public very uneasy about the economy and the inconsistencies over the past few weeks in the stock market, many people are putting their properties on the market hoping to capture any momentum there is. As a result, instead of inventory levels going down, they have increased and home prices are continuing to adjust.
Recently I was watching T. Harv Eker who wrote the best seller, “Secrets of the Millionaire Mind,” in which he said, “It is how you train your mind to think that will insure your success.” Are you of the mindset to protect what you have or is it to “Win” by taking chances and creating opportunities for success? Previously, I referenced Robert Kiyosaki, author of “Rich Dad, Poor Dad,” who said years ago, “When everyone starts to get into the market, that is the time to get out, and when everyone is trying to get out of the market, that is the time to get in.” It is a contrary way of thinking, but now that you understand our market, you can either choose to let the market dictate circumstances for you or you can look at all the opportunities within the market and program your mind to take advantage of those that will benefit you the most, regardless of whether you are a buyer (end user), seller or investor. What’s the secret? Think more analytically and less emotionally and then consider if this is a market in despair or one full of opportunity?
The rich make money in good times, but they make even more money in the challenging times, according to Kiyosaki. The question you need to ask yourself is how you are going to train your mind to take full advantage of the opportunities this market will bring.
January 26th, 2007
A January 26, 2007 article in the Herald-Tribune may be an indicator of good things to come with regard to the real estate market, particularly in our area. With homes sales still sluggish for most of the nation including the metro areas in Florida, this news shines a very favorable light on our area as “Sales in Charlotte County-North Port handily beat December 2005, rising 19 percent.”
In what traditionally is a slow time of the year for home sales due to the holidays, this news is of particular interest considering the drop of 17 percent for the national market. Personally, I have found January 10-15th as the beginning of the new season here in Florida, regardless of the industry. With home sales picking up earlier than anticipated and a headline on MSNBC stating, “Is the housing market bottoming out,” we may be starting to see a beginning of the long awaited stabilization in our real estate market.
In an interview on MSNBC today (January 26, 2007) David Lereah, NAR’s (National Association of Realtors) chief economist stated that we have seen the worst drop since 1989 however, three quarters of the country is starting to show signs of expansion. He did echo caution for the large metropolitan (metro) areas in California, Florida, Las Vegas, Pheonix and Washington D.C., but continued to say, “With fingers and toes crossed, it appears that we have hit bottom.”
The major reason for the up tick in home sales are huge incentives and lower prices that have been offered by builders and home sellers alike. This certainly follows the advice we have been giving for a long time. Buyers are primarily responding to “attractively” priced homes before they submit a bid, and not making offers on homes they feel are still not competitive in pricing.
Sue Louis, a regional senior vice president for Coldwell Banker Residential Real Estate Inc., agreed with David Lereah’s outlook of the market and added (for buyers), “Be prepared to pay a price that may not be as low as you’d hoped, but that just might be your last opportunity because we are beginning to see multiple offers on appropriately priced homes.”
Although we may not be seeing this scenario in our area just yet, my suggestion would be as a seller, to take full advantage of the busiest season of the year and make the price of your home as attractive as possible. While the indicators showed an upswing in sales, it should be noted that home prices were down 3 percent. We still have very high inventory levels of homes, condos and vacant land that will keep prices down, but reducing your price will enable you to move your property faster during this competitive market. Once these levels are lowered we will start to recover from this adjustment period at a faster pace than many other areas, and the result will be higher property prices and more stable growth.
August 31st, 2006
Recently a friend came up to me and said, “If I read one more article on how to sell your home, I’m going to scream.” Before I could stop myself I replied, “Yeah, me too.” Then I realized during this market many of us who are writing columns such as this typically gravitate towards the position of the seller…interesting.
I started to think, “Isn’t it funny how certain business’ and individuals thrive regardless of the economy or situation they are in and when asked, “How do you do it?” they reply, “If you’re good, they will find you.” I thought, “Why should we as a community be so quick to accept ourselves as a depressed market. Did we have our fifteen minutes of fame and now everyone’s leaving for the next great opportunity?”
Recently, my wife and I attended a national real estate conference in New York City (by the way did you hear the Yankees are getting a new stadium???). Realtors from around the country, regardless of their office affiliation, met in one of the most open and genuine formats I have ever attended, and exchanged ideas and marketing strategies pertinent to today’s changing market. It was great experience for us until we met some Realtors from the Carolina’s and parts of Georgia, Alabama and Tennessee who were just too anxious to hand us their cards while saying, “We hear things aren’t going so well in Florida, everybody’s heading up our way. If you know anyone who’s looking for a great place to live, give me a call.” Maybe it’s the New York side of me but as I looked at the smile on their faces I thought, “What do you think you’re doing, throwing me a life line? I don’t think so.”
I was still undecided as to what pearls of wisdom I could impart to you until I read a recent article by Brian Gleason entitled, “Being here is the best sign of progress.” Then I came across another by Gordon Bower, “Here’s some good news about the city’s future development.” I thought, “That’s it! We were just being discovered before Hurricane Charley and although we suffered from its devastating affects, we essentially became a blank canvas that had unlimited potential. Well guess what? That potential has not gone away and despite the national real estate slow down, the Middle East conflict and all the negative press about insurance rates and taxes (I’ll get to that later), we have so much more to offer than any area you can possibly imagine.
To understand what is happening in this market you have to understand the real estate cycle. We have had an unprecedented residential growth these past few years. In its simplest form, the residential side is catching its breath or as some would say, “adjusting.” But, you can’t have all this growth with no business’ or cultural interests to service it. We are now in that time where you are seeing the commercial projects starting to come up out of the ground that have been in the works for a long period of time. You don’t have to look much further than the old Home Depot location to see what the face of our community is going to look like and Panera Bread (that should be good for a croissant) is just the beginning of the new retailers and restaurants that are seizing the many opportunities here in our area. However, we can’t assume that restaurants and retail stores are the last piece of the puzzle. Why should we be banking on the baby boomers to be our financial salvation? Why not try to attract companies to at least set up satellite offices here much the same way that FGCU is looking to do with their campuses? We can’t keep expecting to increase the taxes on those who are “still here.” We need to diversify ourselves and start attracting a young talent pool to our area. Just look at the high tech communities outside Atlanta; they are young, thriving and exciting to watch.
I don’t know about you, but I know what it is like to take a subway to work every day and on a more sobering note, the entire time we were at our New York conference, the city was on “red alert” (the highest state of alert for terrorism). Everyone I know would gladly give up their monthly train ticket to commute to their job as we do, experience the weather that we have, and to be part of a growing community that is just starting to realize its potential as we are.
Our potential is great nevertheless, as Realtors we hear what the public is thinking and it isn’t the interest rates or the threat of hurricanes that are foremost on people’s minds, it is the affordable housing, property insurance and taxes. We need to get them in check if we are going to have any chance to reach our potential as a thriving place to live, work and play for all ages, and not just those looking to retire. Now is not the time to sit back and wait for things to change, it is time for us to do the things that other counties are unwilling to do and to support those who are thinking outside the box for our long term well being. If We Are Good, They Will Come, and as long as we embrace this, our community will continue to thrive while others decline.
July 24th, 2006
I want to first apologize that I have not updated you sooner however, we have been attending a week long real estate conference in New York City. Despite the great information and networking opportunities we were challenged with difficult sell phone and internet reception.
It is always great to step back and look at your area from different perspectives and getting outside our area has proven invaluable as we have had the opportunity to network and study with realtors from all over the United States. We have specifically explored everything from emerging markets to direct mail campaigns. The networks we have developed have proven invaluable as our goal was not only to look for new approaches in addressing our changing market but to develop relationships with realtors in areas where people are moving from their areas to ours.
With regard to the changes in the market, the slow down is not limited to our area. From New York to Miami to Kansas City and beyond, this is a national epidemic however; there are opportunities that do exist. For those of you looking to invest, there are opportunities that abound locally, nationally and internationally.
However, the surprise, which was really not a surprise, was the continued emphasis on “Being aggressive in your pricing,” which was the theme that resonated throughout the duration of the conference. What we thought we were experiencing on a local basis turned out to be the challenge that most of us faced on a national basis due to the rapid rise in property prices.
There was a realtor who posed a question to one of the seminar speakers who said, “There are no buyers in the market.” The speaker, who was a realtor from Ft. Myers, Florida said, “You are buying into that media position, of course there are.” The other agent responded with, “The reason buyers are not in the market is due to high insurance and tax rates as well as increasing interest rates, I have a house priced at $400,000 and it has not even had one showing.” The speaker said, “If you priced the house at $250,000 do you think it would sell?” The other agent responded, “It would sell in a minute.” He said, “I thought you said there were no buyers in the market!” This is the same position we have been taking with our customers all along - price your house aggressively. What I think has come as a surprise to all of us, is the buyer’s posture or patience in waiting for prices to significantly drop and it is our personal opinion that prices will continue to adjust to those of a year and a half to two years ago. For many sellers a home holds a great deal of meaning and memories. However, a buyer looks at it completely differently. A home is like a stock, it has no value until someone is willing to buy it. As we have stated in the past, fair market value is not what a home is appraised for, fair market value is what someone is willing to pay.
Although giving the house away is not what any one of us is suggesting that you do, it is now very apparent that with the inventory that is on the market and all of the choices that the buyer now has, if you are not getting calls on your property, the price needs to come down even further. Another key point that was addressed (and one that we have been discussing with many of you) is not to “chase the market down.”
By chasing the market down, you ultimately will sell your home or property for less. By aggressively positioning yourself below the market, you create separation and your property stands out. We have all enjoyed the high returns of the market the past few years however, now we all need to be objective and look at it from more of our buyer’s point of view when we establish a sale price. The potential buyer is going to pay much more for the house than you did as well as face increased property taxes, insurance and interest rates (if they are financing). Do the math, and if the potential numbers you come up with make you gasp, it will be hard for an intelligent buyer to make a purchase that you would feel uneasy about making yourself.
International contacts, websites, blogging, pod casting, consistent print and creative media advertising were all discussed as the future platforms for marketing. This was particularly gratifying for us as for the exception of pod casting (which is still in its very early stages) we have already been incorporating all of these formats in our marketing strategies to get your property the greatest possible exposure.
During this seminar we have added to our list of relationships with realtors who have investor groups, specifically looking to invest in Florida on a long term basis as well as other realtors, primarily from the north and northeast whom are seeing their customers move to Florida.
We have been very blessed with a diverse client base and for each of you whether you are a buyer, seller or investor although we will continue to stay at the forefront of industry trends in presenting you with solutions to your needs. By expanding our networking base we have greatly enhanced our efforts to present you with the opportunities you are looking for.
If there is one final piece of information I could give you from this seminar that was echoed from California to Florida it would be, “With the changing market, comes great opportunity. As an investor there are niche markets that have not reached their potential while there are others that present opportunities as investors maybe over-leveraged. You know as a buyer you are in a great position and as a seller, now is the time to price your property aggressively; sell it and free yourself up to pursue your next real estate opportunity.”
July 7th, 2006
As we try to keep everyone up to date on the latest developments in this ever changing real estate market, we realize that while many are adapting, others have been left wondering, “What are we doing wrong, no one is even looking at my house?”
Although on paper having a home competitively priced seems to be a sure-fire guarantee for getting buyers in the door, today’s buyer is very different from the “investor” who has monopolized the market over the past few years. Investors looked at anything that made financial sense. They study the market and know just how much they need to put into a property to gain the greatest return on their investment dollar. For the most part, they travel from “hot” market to “hot market” and have a host of contractors who follow them around knowing exactly what they have to do to turn a property quickly. Because of their experience, more often than not, these investors can make changes to a property for less money and in a fraction of the time it would take the homeowner to accomplish the same thing.
Today’s buyer is very different, as are most “end users.” They are much more deliberate in their selection process since they are not concerned as much with return on investment dollar as they are satisfying a lifestyle need. What this means to you as a seller is you can have your home competitively priced but if it doesn’t fit their criteria, your home is not going to be viewed. So what can you do to give yourself the best chance in this market?
The first thing you need to do is to lose your fear of selling your home too low. With market prices trending down, if you lower the price of your home incrementally, you will stay in “the pack” and will not differentiate yourself from the other homes on the market. By pricing your home aggressively, thus creating a distance in pricing between yourself and other homes comparable to yours, your home will be recognized first and shown more often. By taking an aggressive stand earlier, you may wind up selling your home faster and for more money than had you continued to hold on to your home and followed the market down.
Keep in mind, as I have written in earlier “blogs,” a well priced home is only half the battle. Today’s buyer is most likely an end user who may not have the vision of an investor. You need to make sure your home is in as close to pristine showing condition as possible. An impeccably maintained home gives any potential buyer the peace of mind knowing that the home has been well cared for, reducing the possibility of significant unexpected costs down the road. A buyer may first be attracted by to the price you have your home listed at but, if you want to seal the deal, the condition of your home should be better than the buyer could have imagined.
June 13th, 2006
“You Gotta Believe”
For us New Yorkers, this was the battle cry made famous by New York Met pitcher Tug McGraw (also the father of country singer Tim McGraw) during the “Amazing Mets” 1973 pennant drive. The Mets who, despite their 1969 World Series victory, were perennial “cellar dwellers” year after year and were finally putting together another winning season. “You Gotta Believe” became the chant of many New Yorkers (even a few of us Yankee fans) who had a hard time believing they could do anything more than live in the shadows of their cross town rivals. So, what does this have to do with our area you may ask?
If you were to poll anyone outside our county to name the cities on Florida’s west coast, Punta Gorda and Port Charlotte would have rarely been on anyone’s list; at least until Hurricane Charley put us in the national spotlight. Depending on their source of information, we are either viewed as the “best kept secret ready to be discovered,” or “still in a state of disrepair”, as depicted recently on one of the national evening news programs that found a building needing to be torn down and used it as their backdrop.
With all the negative press about another “active hurricane season”, increasing interest and insurance rates, the slow down in the real estate market and the issuance of building permits, it’s a wonder that anyone would want to live here. What most people don’t consider is that many of the “concerns” making front page news, particularly the real estate slow down, are not exclusive to our area; they are occurring on a national level.
In a newspaper article I recently read, Charlotte County is being referred to by some developers as the “hole in the doughnut, surrounded by well-developed communities and remaining a fairly blank-and affordable-canvas waiting to be painted.” What most of us don’t consider are the millions of dollars that have been spent on demographic studies by national major “box stores” and developers/builders such as WCI, Stock, Kitson, Pulte, D.R. Horton, Lennar/US Homes, Centex, KB Homes, Wal-Mart, Home Depot, Loews and many others, long before they decided to make their presence here.
Much needed medical offices and warehouse space are being developed and one quick drive to our airport is sure to surprise you when you see the massive undertaking of very forward thinking commercial space already underway. With future planned developments up and down Burnt Store Road and the recent news regarding “The Loop,” which is a collection of specialty store outlets and anchor stores such as Best Buy, aimed at creating a unique shopping and meeting experience, the face of our community is going to change dramatically.
Just imagine what the new waterfront area in Punta Gorda is going to look like with the possibility of quaint shops and small restaurants in a marina setting; and let’s not forget what interest the new Events Center is going to bring back to our area. These are just some of the many diversified projects planned for our community.
With each building that has been removed, new ones are being designed with great attention to architectural detail; this is the new face of our community however, to be viewed as more than just a retirement or vacation destination, we need to attract the corporate business and develop cultural interests as well if we are going to be perceived as having value when compared to our neighbors to the north and south of us.
Recently, Friedman Billings Ramsey & Co’s veteran analyst Michael Youngblood, in a Business Week article, not only dispelled rumors of a “housing bubble” but went on to specifically predict Punta Gorda as the market that will have the fourth highest price gains (35%) in the nation. Although, he may be going out on a limb in my estimation, what I found interesting is that he bases his positive outlook for us on “job growth and growth in personal income.”
If all these people are seeing the potential of what we can become, I guess Tug said it best, “You Gotta Believe!”
May 24th, 2006
I don’t know about you but, if I see one more article that focuses on rising interest rates, increases in taxes and insurance rates while counting down the days to another hurricane season, I may consider cancelling my newspaper subscription. Oh it gets better, my next door neighbor just returned from a trip to Arkansas and on page one of a small town newspaper was a story about how Boca Grande is being over run by Iguanas. What they didn’t mention was the 50 mph winds and mothball sized hail that tore through their area.
I find it amazing that in the past year alone, there have been devastating storms throughout the world and yet the media doesn’t seem to sensationalize them like they do the “potential” storms that may hit Florida. There have been blizzards accompanied by 80+ mph winds in the upper Midwest, hurricane force storms in Australia, tornadoes from Texas to Tennessee and most recently floods in New England, yet the stigma of these storms has not been long lasting.
The other night I saw an infomercial on television touting the Carolinas as a more affordable and safer place to live in, as if they have been recently discovered. My immediate thought was, “Do you remember Hurricane Hugo?” Perhaps I’m being a bit sensitive but the reason most people I know moved to Florida was for the tropical environment and of course the water and the beaches.
Although life in the Carolinas, Tennessee and a few other southern states may have a lower cost of living, I question if they have the year round weather and diversity of cultural interest in the close proximity that we enjoy. Just an hour and a half to our north we have three major professional sports franchises, not to mention many entertainment venues hosting world class artists. If you enjoy the arts, Sarasota has the Van Wezel and Asolo, and for something closer to home there is the Barbara B. Mann that hosts many top line performers and Broadway shows; and let us not forget about Disney and Universal Theme parks just a little over 2 ½ hours away. Of course there is plenty more to see on the east coast and for the truly adventurous, a quick three hour flight can put you right in the heart of New York’s Theater district on Broadway. How many states offer this diversity of interests?
A few short years ago, Money Magazine and Forbes selected us as one of the best places to live in the United States. Unfortunately, Hurricane Charley and a brush with Wilma seemed to over shadow the positive national exposure we were enjoying. Now with the real estate slump we are currently experiencing, many are now questioning, “What is wrong with our area?” Until you realize this is a national issue and not a regional one, you are going to wonder if our fifteen minutes of fame has passed us by.
Now for the good news! Did you know that recently INC. magazine selected us as one of the top 17 small cities in America to live in? Are you aware that Friedman Billings Ramsey & Company’s veteran analyst Michael Youngblood not only dispelled rumors of a housing bubble in our area in the May 15th issue of Business Week, but he specifically chose Punta Gorda as the number four market for the greatest price gains at 35%! Only Bakersfield, CA (43%), Fort Myers, FL (42%), and Stockton, CA (39%) had higher projected price increases.
What I found particularly interesting is that Youngblood does not use the traditional methods to measure a market’s strength such as inventory-to-sales ratios and the number of months a house is on the market. The indicators he uses are employment and personal income growth which means that from an economic perspective our area is on a healthy track.
If you look at the number of major projects that are planned for our area as well as the increasing presence of national chain stores that are calling Charlotte County home, it should become more obvious that we are only in the beginning stages of our explosive growth. With investors now out of the market, we are seeing a more balanced growth in all sectors of our area, and that to me is exciting.
We live in a great country that offers enough diverse climates and geographical features to please most anyone. For me, living in a place that most people consider a vacation destination makes me feel very fortunate and with the exciting new developments and master plans for our area makes me realize that I am not alone in realizing the best is yet to come.
May 15th, 2006
Over the past few months we have been updating you on the changes that our market has been undergoing; and there have been many. We went from a red hot market where sellers enjoyed unprecedented profits as they watched the value of their homes go up almost on a daily basis. Then as if almost overnight, we saw a dramatic change that have left sellers and now buyers scratching their heads wondering, “Where do we go from here?”
During most of 2005 rumblings of an “over heated market, bubbles bursting and expected tax and insurance increases as well as rising interest rates,” started to dampen the feeling that the real estate roller coaster was going to continue upward for years to come with the arrival of the “baby boomers.” We first saw the change from a psychological perspective with the buyers who started to question the long term stability of the market.
Last July the market literally came to a stand still as buyers, one year removed from Hurricane Charley, decided to take more of a wait-and-see approach. No longer were we immune to the slow down that was occurring around the country, and no longer was Florida a place where you could purchase a home for half the price of the home you sold up north, living off the balance you put into your “nest egg.”
With inventory levels increasing, we started to realize the impact of the investors, as the number of homes on the market and the prices they were listed at, were at an all time high. As quickly as they came, they left, and our market has been trying to adjust since that time. However, it is the psyche of both the buyer and seller that need to adjust even more than the inventory levels.
Recently I wrote an article aimed more at the seller, challenging them to take a hard look at the listing price of their home. It is no secret that sellers have been spoiled over the past few years with enormous returns on their real estate investments. The reality, I wrote, is more of a realistic expectation of return on the original purchase price of their home. To expect a 200% or greater profit that some experienced these past few years may not be realistic in today’s market, especially after owning the property for just a short period of time. But then again, some of the offers we are seeing put on the table are equally unrealistic.
Just in the last week alone, we had offers on two brand new homes that bordered on “Grand Theft.” Not looking to be an accomplice to such a transaction, we respectfully declined. In one case, the home which was built in 2006 and had over 2000 sq ft of living space had been lowered over $30,000 making it the least expensive home on the market in it’s category by far. An out of area agent called with an offer almost $30,000 below the new list price with no money down, 100% financing contingency, a significant portion of the buyer’s closing cost to be paid by the seller, a home warrantee and an additional $1,000 from the seller to pay for a new water filtration system. My answer to the buyer’s agent was, “Why stop there?”
The other home was a brand new custom home overlooking the golf course in prestigious Burnt Store Isles. Priced already over $100,000 lower than what you could possibly build a home like this for today, (and with less upgrades); I received an offer over $150,000 below the list price. To compound matters, the agent said he had a piece of vacant waterfront property on the same street he would be willing to trade on an even exchange for the house. My reply to him was, “Perhaps if you want to add the parcel of land to your offer, we might have a deal.”
It is no secret that this market is sending mixed signals. Has it bottomed out? How much more does it have to go? These are the questions we are fielding everyday that are keeping the buyers on the sidelines. For those who are willing to get into the “game,” many of the offers are reflective of what I described above. My suggestion, if you are selling your home, price it at a fair market value and if you are buying a home, don’t be insulting. Look at what it costs to build a home and what you would expect as a reasonable offer if it was your home.
As I have written before, sellers like to use active comps when listing their homes and buyers go by sold comps when looking to purchase a home, and the two may not see eye to eye. In this market, I suggest we look at things a little more from each others perspective if we are going to see our market return to a healthy balance.
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