People always ask each year what Season will bring in terms of home buying activity in SW Florida. The past few years Season has been slow compared to historical standards, with good reason. The past few years buyers have been fearful prices could slip lower, and the economy seemed to be showing signs of slowing down and consumer confidence was eroding. Some have even argued we’ve been in recession or at least heading toward recession.
So why would 2009 Season be any different, as the economy doesn’t look any better than it has the past several years? There are many reasons this year could be different.
1. Prices are down. Not just a little down, but way down. They’re down so far that builders wouldn’t dare build right now because sales prices are much lower than replacement cost. This phenomenon can only last so long, and once inventory levels start coming down, prices will go back up. We’ve witnessed a large number of foreclosures work their way through the system and come to the market. As soon as they hit the market, they’re sold because they’re affordable. Affordability is back in this market, and that is new.
2. Retirees aren’t getting younger. A Retiree has been able to sit on the sidelines and wait for prices to come down, and they have come down significantly. The demographics for Florida are still fantastic as Baby Boomers haven’t even peaked yet. Retirees have wisely waited, but they can’t wait forever. A retiree only has so many good years and opportunities left, and if they wait too long they’ll miss out on living their dream in Sunny SW Florida forever, not because the market won’t be good, but because they only have so many good years left. Retirees are so much healthier when they move to the sunshine because their outlook improves, and they can be physically active 365 days per year due to the weather. They also enjoy conversations with other people in the neighborhood close to their same age and with similar interests. This isn’t always the case in rural areas up North with bad weather.
3. It’s always wise to Buy when everyone else is selling and Sell when everyone else is buying. Look back to 2005 and you’ll recognize many were buying. Those that sold did very well. Now that prices are abnormally low and below replacement costs, those that buy now when banks and sellers are selling at bargain prices will fare much better than those that purchased only 3 short years ago.
4. Interest Rates have remained low. Because of the global crisis, the World Bank has coordinated interest rates cuts among many nations, so the US was free to cut again without fear of the dollar being de-valued if we were the only one’s cutting rates.
5. Inflation may come back long term. If so, buying assets today at low prices and financing them with low rates allows people to pay back a rapidly appreciating asset due to inflation at today’s low prices and with cheap money. It’s the same reason people have bought gold, only a house is something you can live in, Vs. gold or a stock.
6. When real estate was down, people flocked to stocks. People are running from stocks right now, and because prices are so low in real estate, you could see a charge back into real estate in the next year or so.
The bottom line is nobody knows for sure the future. All we do know is that our streets are getting busier with our friends from the North visiting, and people are watching to see if this is the year many of these snowbirds start opening up their wallets now that Florida is on sale. Everyone loves a good sale, and we’re having a blowout sale as we speak. The next few months could get interesting.
Click here to Search the entire MLS for your bargain property today. Cape Coral and Lehigh Acres has had a number of bank foreclosures. Fort Myers has had a few, but not near as many, but there are bargains galore. Sales in Lee County Flroida have been up tremendously versus other areas of the state because our prices in SW Florida real estate have come down much faster than other areas. The areas throughout the country seeing the greatest sales gains are those where the sellers have reacted first and brought value back into the market. While it’s been painful, SW Florida home sellers have reacted.