We’ve been compiling our annual State of the Market Report which will be released soon and this year more than any other some interesting trends are developing. Full time agents tend to get caught up in the deals they’re working on and could miss some of the major trends developing in the overall market. It is always so interesting to analyze the overall Lee County real estate market, and then dissect down to the smaller sub-markets and see what story the data conveys.
This past week I asked several full time agents who work with a lot of buyers if they could tell me what they’re seeing on a day to day basis. I then compared what they said with the data we’re compiling to see what they story is.
A few themes developed from their stories. The first theme is many buyers have heard Florida is on sale, so they come down here with unrealistic expectations about what they can buy. Agents are receiving unrealistic requests for things like gulf front homes or condominiums 1 block from the beach with a garage, built in the 2000’s for $100,000 or less, or waterfront gulf access homes, 3 bedrooms, 2 baths, built in the 2000’s for $150,000 or less. The stories go on and on.
Many buyers want to look at bank foreclosures, but they don’t want to do any work if it needs repair. They expect all homes should sell at the bank foreclosure prices regardless of whether they need work or not. Many buyers feel the foreclosures set the prices in the neighborhood even though they may be missing a kitchen and needs tens of thousands in work. Buyers are quite often dissatisfied with the condition of the distressed properties, but they don’t want to look at a regular home that is all fixed up because it is not a perceived bargain.
You could take two identical homes next door to each other, one being a foreclosure and needing $15,000 in repairs and another being a normal sale and in excellent condition. The bank foreclosure might be priced $15,000 below the normal home, but when the buyer sees it they’re turned off. They’re also turned off by the price of the normal home because they feel it should be priced $15,000 lower. Many times there is a reason a foreclosure is less money. It takes money to fix them up, not to mention time and effort. Not everybody wants to do that.
Another theme is buyers have no idea homes are selling as quickly as they are. Many buyers are looking around and because there is some inventory believe they have time. Many are not motivated to pull the trigger because they believe that home, or one just like it will be on the market in 6 months or next year. Buyers do not believe these homes are receiving multiple offers and being scooped up by investors who can actually cash flow them at these low prices.
The emotional buyers are seeing fault with the homes and are afraid to buy. The studious investor is beating the regular buyers to the punch because they know these homes will be selling for more in the future, and they can actually rent them out and make more return on their money than other investment vehicles. These homes make financial sense to investors on both ends of the spectrum.
The regular buyer is operating out of fear and lack of knowledge about the local market. After they miss out on several properties to higher bidders it becomes apparent to them this market is much more active than they actually thought.
The SW Florida real estate market is on sale, but it’s the old herd mentality buyers follow. Buyers tend to be most motivated when everyone else is buying, usually at the height of the market. It’s true in the stock market, and real estate market. Back in 2004 and 2005 people couldn’t buy fast enough, sometimes buying groups of homes. Would you say buying a home back in 2005 was a better investment than buying one in 2010? And yet the motivations were higher back in 2005 because people weren’t afraid, when they should have been. 2010 is a far greater opportunity, and the people who study the market realize it.
Later this week we hope to release our State of the Market Report at www.Topagent.com so you can analyze what properties are selling the best right now, analyze where the inventory is, and what prices are doing on a monthly basis. Being informed will help you make a better buying or selling decision. It makes no sense to miss out on opportunities because of lack of local market knowledge just as it makes little sense to overpay, or list at the wrong price either. If you list too high your property won’t sell, and if you list too low you’ll be giving equity away to someone else who is more informed than you.