Florida Real Estate Outlook

Florida's Real Estate Outlook

6/20/08 by Jules Roman

We are at the Bottom!

This summer is the last chance to buy SW Florida at a big discount.

By Jules Roman

The market is like a two year old child; when it is good, it is GREAT, and when it is bad, it is HORRIBLE. It can bounce from extreme to extreme and there never seems to be a happy medium. Markets are driven by sentiment and sentiment is driven by the average attitudes of people. Our attitudes are somewhat driven by the press, and of course the media only reports on exciting news. All markets overreact. A shrewd investor will avoid the hype and buy when the market is depressed and sell when it is exuberant. The real estate market is no exception. The exuberance creates more buyers resulting in over inflated bubbles.

The NASDAQ average in 2000 and value of Sarasota homes in 2005 were both bubbles. After the bubble popped, could they fall to Zero? No, there is a price at which people will begin buying again. For the NASDAQ in 2002 it was 1100 and for homes in Sarasota it is 80% of the cost of a new home to be built. Affordability is what popped the bubble in real estate. When the average homeowner could not afford the average home, something had to give. But it is also affordability that will stop the price decline. The value of homes can only stay below cost until they are all gone. At that point, builders will start building again.

In Florida, we still have a fair amount of inventory on the market, and there are still great deals. Even with the summertime seasonal downturn, we have seen an up tick in market activity. However, the big change appears to be coming near the end of the year. Lack of interest from buyers equals fewer bids. Right now, our offer at 65 cents on the dollar may be the only offer, and that offer may be accepted. Once the sentiment turns or the buying season hits, your offer may not be the only one. I am already seeing some competition from buyers placing offers on more than one home at a time. Sellers who are able to hang on until November, will tend to become less negotiable, because season is around the corner. The charts all predict that it will be a strong season. With two years of pent up demand and any market up-tick indicating a bottom, buyers both international and domestic will drive prices up, not to 2005 levels, but back up to the cost line.

If you are one of the millions of buyers who have been sitting on the fence waiting to see what happens in the real estate market, you have less than six months to take advantage of the best buying opportunity Florida has seen for decades. Call me today to discuss how to capitalize on this downturn.

5/1/08

Across Florida, values are down to early 2004 levels, virtually wiping out the massive price appreciation that took place in 2004 and 2005. The precipitous decline that began in late 2005 has begun to slow as prices start bottoming out. Looking at the data, it is clear that we have hit or fallen below the long term trend line. All markets are bipolar and far from perfect and Florida's residential real estate market is no exception. The market's decline is strongly driven today by market sentiment, just as it was in the boom of 2005. Sentiment is about as low as it has ever been. This allows vulture investors to clean up. Their offers of 50 cents on the dollar are being accepted, simply because there are no other offers. Holders of notes that are in foreclosure are capitulating as well. They are accepting short sales at these levels.

This is a real estate investors opportunity to build an investment portfolio at discounted prices. Cash flow should be the primary driver when selecting properties. Price appreciation over the next 3-5 years should be an upside bonus. Properties today are selling at or below cost and once they are gone, the market sentiment will turn and it will almost be too late to acquire properties.


	Florida's Real Estate Outlook 6/20/08 by Jules Roman We are at the Bottom! This summer is the last chance to buy SW Florida at a big discount. By Jules Roman The market is like a two year old child; when it is good, it is GREAT, and when it is bad, it is HORRIBLE. It can bounce from extreme to extreme and there never seems to be a happy medium. Markets are driven by sentiment and sentiment is driven by the average attitudes of people. Our attitudes are somewhat driven by the press, and of course the media only reports on exciting news. All markets overreact. A shrewd investor will avoid the hype and buy when the market is depressed and sell when it is exuberant. The real estate market is no exception. The exuberance creates more buyers resulting in over inflated bubbles. The NASDAQ average in 2000 and value of Sarasota homes in 2005 were both bubbles. After the bubble popped, could they fall to Zero? No, there is a price at which people will begin buying again. For the NASDAQ in 2002 it was 1100 and for homes in Sarasota it is 80% of the cost of a new home to be built. Affordability is what popped the bubble in real estate. When the average homeowner could not afford the average home, something had to give. But it is also affordability that will stop the price decline. The value of homes can only stay below cost until they are all gone. At that point, builders will start building again. In Florida, we still have a fair amount of inventory on the market, and there are still great deals. Even with the summertime seasonal downturn, we have seen an up tick in market activity. However, the big change appears to be coming near the end of the year. Lack of interest from buyers equals fewer bids. Right now, our offer at 65 cents on the dollar may be the only offer, and that offer may be accepted. Once the sentiment turns or the buying season hits, your offer may not be the only one. I am already seeing some competition from buyers placing offers on more than one home at a time. Sellers who are able to hang on until November, will tend to become less negotiable, because season is around the corner. The charts all predict that it will be a strong season. With two years of pent up demand and any market up-tick indicating a bottom, buyers both international and domestic will drive prices up, not to 2005 levels, but back up to the cost line. If you are one of the millions of buyers who have been sitting on the fence waiting to see what happens in the real estate market, you have less than six months to take advantage of the best buying opportunity Florida has seen for decades. Call me today to discuss how to capitalize on this downturn. 5/1/08 Across Florida, values are down to early 2004 levels, virtually wiping out the massive price appreciation that took place in 2004 and 2005. The precipitous decline that began in late 2005 has begun to slow as prices start bottoming out. Looking at the data, it is clear that we have hit or fallen below the long term trend line. All markets are bipolar and far from perfect and Florida's residential real estate market is no exception. The market's decline is strongly driven today by market sentiment, just as it was in the boom of 2005. Sentiment is about as low as it has ever been. This allows vulture investors to clean up. Their offers of 50 cents on the dollar are being accepted, simply because there are no other offers. Holders of notes that are in foreclosure are capitulating as well. They are accepting short sales at these levels. This is a real estate investors opportunity to build an investment portfolio at discounted prices. Cash flow should be the primary driver when selecting properties. Price appreciation over the next 3-5 years should be an upside bonus. Properties today are selling at or below cost and once they are gone, the market sentiment will turn and it will almost be too late to acquire properties.