Real Estate. Is it time to buy or is there still more dust to settle?
As 2010 comes to a close, Gail and I rushing around to Christmas parties, generally overeating, but also seeing folks that we have been out of touch with for a year. Invariably I am asked for my opinion on the status of the real estate market. Never being one that is bashful about my opinions, I am always eager to comply. There are many perspectives on the market and different ways that the real estate bust effected people. Today I would like to share with you some of my thoughts as we try to answer this question.
Let me begin by telling you that my perspective certainly is changing. Market America Realty and Investments had grown a great deal this past year and exploded in the last three months. This summer we added offices and agents in Fort Myers, Jacksonville, Clermont, and Orlando. These offices were in direct response to the need we have for agents to handle our bank REO properties (foreclosed home sales). Bert Parsley and his team joined us and added many more bank representations and a large Florida wide inventory. We expanded in downtown Fort Myers to added another 1500 square feet across the court yard to our new retail office (also opened this year, and across from our corporate offices in The Dean Building). In Fort Myers we now have thirty plus agents working out of a small “campus”, if you will, on both sides of Dean. Jerry Miller from the Miller Group just brought all his properties over this month as well. Growth in Fort Myers has to do with not just the REO business, but retail and commercial sales as well.
In December I added Joshua Unger and his team in Sarasota. We have one office on Tamiami Trail across from Saks Fifth Avenue in Sarasota and we will be adding another office on Siesta Key by the end of January. Josh has a large retail portfolio and an important REO position with banks. I expect to have 7 agents working out of Sarasota by the end of January. One office is a sales center for a fantastic condo project we are taking over very close to the beach.
This past week Nathan Baschieri, formally a top producer at Remax moved his team over and will move into new offices we have opened on Lee Boulevard in Lehigh Acres. This office will start out with six agents right out of the barrel. You may recall we first opened a satellite office two months ago in Lehigh Acres – we outgrew that small office by the end of the first month. There are at least two more teams moving over in January in Lehigh – I expect Lehigh to be one of our flagship offices.
Why the growth in so many offices and agents? Customers and agents alike are joining forces with Market America Realty because we are getting deals done.
Every company has a personality. I am not talking about a mission statement or a goal, but a real true “have it now” personality. Our personality in that we are deal makers. Positive, energetic, fast paced deal makers. We sell homes and commercial real estate, and we make it happen. It’s exciting to be working with our team. There is an energy that is evident throughout the company. I love it!
In the local market there are over 13,400 active properties. Sixty two percent of those properties are normal retail offerings, 8 percent are REO’s and 30 percent are short sales. The REO properties sell every thirty days or so and the short sales may be on the listing service for six months or more. A great deal of our growth can be directly attributed to the REO and Short Sales business and what I will call stressed asset sales – offerings for condos at finally dropped process, for example like Parkside of Cape Coral or Oasis, commercial opportunities like The McCrory Building, River Walk Apartments or failed developable land deals.
Are we at the bottom pricewise? This is probably the number one question I get. My short answer is: Mostly. But I don’t think this matters as much as price being in balance with demand? If it is, it sells, if it isn’t: it does not sell. In general if you are paying below replacement costs and are going to buy to hold and rent or live in – you should be looking long term – not “can I sell in three months at a profit”. This is the time to buy below replacement costs – way below.
I see an increase in per square foot prices in Cape Coral and Lehigh on REO sales. Sarasota is on the increase as well. Orlando has seen a more recent rise. Commercial prices are down and will see continued drop – not in sale list prices, but at the prices sellers and banks are going to get. We had over 6 offers in ONE WEEK on our listing for River Walk Apartments – all from cash buyers. Meanwhile I know of other commercial properties that are languishing on the market while the sellers come to grips with the loss they must endure if they sell at market prices and banks are not “marking to market”.
If you have the patience, making an offer on a short sale property makes a great deal of sense. First of all there is a large inventory. Second of all, you can make your offer regardless of the ask price and make it based a thorough evaluation of the surrounding prices. At Market America Realty and investments we have refined our short sale listing and selling procedures to make it as painless as possible and our success rate is 100% . That is to say we sell all our short sale listings. And the large majority of these listings are sold in house (no other agent). One of the reasons for this is that we price the short sales right and we have a large inventory of buyers looking for opportunities in house.
What will we see for 2011? I asked Gail for a crystal ball for Christmas – but I didn’t get it yet – but let me put myself on the line and make some predictions:
1. We will see the first part of the year with more foreclosures that the last six months of 2010. This because the foreclosure moratorium will end. I don’t expect a flood in the beginning, but my business plan accounts for a steady volume of foreclosures.
2. An increase in retirement home buying. After all this is our driving force here in Florida. We forgot this somewhat in the heady investments days.
3. Sale prices on the high end will continue to drop while the low end will come up.
4. An increase in commercial sales. Empty strip malls will be purchased and filled at rents that can be tolerated because of the lower cost basis. Land will be picked up by the funds and land banked (held for the future)
5. Home building will pick up (It can’t get any slower now can it).
6. Beach property is going to increase in price. We already see this in Sarasota. By the way – if you are looking for a condo under $300,000 that will have beach sand on the welcome mat – get in touch with Josh in Sarasota – we will start a whisper campaign on three projects – already built – right on Siesta Key.
7. Mortgage money will continue to be cheap but hard to get.
8. The condo market will continue to flourish as prices have come into parity with demand.
9. I expect our Short Sale business to continue its rapid growth and sellers that have held off come to grips with the imbalance of their property values and market pricing and banks get better at accepting lower prices.
Has the dust settled? No, of course not, but there is enough clarity in the market to make decisions now. I am, as always, optimistic about the Florida market. I love this industry and the excitement. We have momentum now, and it’s going in the right direction.
Buy land – they just are not making any more of it!
Best to you and your family from Gail and I,