We’re writing this article this week two days before official numbers are released, so by the time you read this official numbers will have been released. Absent this knowledge, we expect prices in August to be higher than last year and sales to be down from last year, however sales volume may be higher than July.

SW Florida Real Estate Bargains
Year End Median Sale Prices For Single Family Homes SW Florida

We’ve included a chart of average year end sales prices which is really an average of prices for that given year, not the Dec 31 average price. As you can see, prices fell from their peak in 2005 through 2009 where they stabilized and actually rose in 2010. In 2011 we’ve seen more gains over 2010.

We started writing articles and advertising back in 2009 that Florida was on sale and buyers flocked here in droves looking for bargains from all over the world. Buyers have been competing with each other for the best bargains and in fact many of these properties have seen multiple offers. As you can see from the year end chart, prices are still very affordable and are on par with 1996-1997 prices. If you look at the attached chart you’ll notice prices in July were up 14.33% over last year and up 19.1% over 2009 prices.

Median Sale Prices Single Family Homes in SW Florida
SW Florida Real Estate Prices 2009-2011

We are fielding calls from buyers looking for foreclosures, short sales, and otherwise good bargains. They just finished reading on a website or watching an older YouTube video how another buyer bought a $20,000 condo or $30,000 house close to the beach and they want to come here and buy the same thing.

If you ask any agent in this market I’m sure they’d chuckle because they’re answering some of the very same calls. This is where the perception that Florida is on sale, which it is, collides with reality. The days of buying newer homes for $35,000 are over unless the home has serious defective drywall issues or is gutted. We still have some inexpensive condos for sale. For instance we just listed a bank foreclosure 1 bedroom, 1 bath condo in Mystic Gardens for $27,900 which is a bargain. These deals are becoming fewer and farther between.

Unfortunately buyers from all over are calling and expecting homes close to the beach or on the beach for ridiculously low prices. While it is true back in 2009 we had some seriously under-priced homes from some of the banks, prices have gone up considerably since then. We’re still well below replacement cost in most cases and we’re not headed back to 2005 prices anytime soon, however we are still a bargain.

Florida Real Estate Bargains

I guess there is a difference between a bargain and a steal. The steals are over, but there are fantastic bargains and opportunities in this market if you’re realistic. If a buyer is unrealistic, they’ll suffer the same fate as an unrealistic seller, which is no transaction. A buyer who fails to buy in this market is just as damaged as a seller who overprices and misses the top. While the bottom may be behind us, we’re still close enough to it that we can see it in our rear view mirror and prices today will look like a bargain years from now.

Remember back in time when someone you know once said “Gosh, I should have bought every piece of property I could get my hands on back when prices were lower?” Well, in the future I’m sure there will be those that say, “Gosh, I should have bought everything I could back in 2010 and 2011. Those were the days when there was little competition from new home builders, interest rates were at their lowest, prices were below replacement cost, and at those prices they actually cash flowed.”

It pays to be an educated consumer, whether you’re on the buying or selling end. Remember, money is always made on the “Buy”, not the sell. Inventory is going down. If you’re truly a buyer, learn the market and step up now. I bet you’ll be glad you did.

It’s kind of funny how humans follow the herd mentality. When everyone else is buying, people feel more comfortable buying at the top, but when things are down, people are scared of overpaying. Back in 2005 you were overpaying, but most felt good about their purchases. Look what prices have done since. The smart money is buying and holding today. Failure to land a property now is a wasted opportunity.

We recently experimented with shooting our TV show in High Def.  Previously we’ve used a mixing board much like a TV studio whereby we can mix camera shots, video graphics, etc, but it was standard definition TV.  Because we have a high definition TV we use anyway, and we shoot the show with High Def cameras, we though it would be nice to make everything more clear and understandable.

Future of Real Estate Video Show SW Florida Goes High Defintion
SW Florida Real Estate Market Update Video September 2010

Future of Real Estate Video Show SW Florida Goes High Defintion

Instead of having one track mixed in from a mixing board along with audio, we’ve gone to mixing each camera track and audio track and syncronizing them.  The reason I spell all this out is because agents all over the country have asked how we produce our show, and now that we’re making the change I thought I’d spell it out.  We then mix all the tracks together and produce one output and export.

Next week we’ll work on shooting the video so everything is in screen properly, or we’ll add another camera.  Let us know if you like the new changes.  View the latest show SW Florida Real Estate Market Update This week’s show covers pending home sales in Cape Coral Florida, Fort Myers, Bonita Springs, Estero, and Lehigh Acres.  We also cover inventory levels in Cape Coral, Fort Myers, and all of Lee County as we’ve seen varying reports of inventory levels reported lately.

It was bound to happen.  Back in 3rd Qtr of 2005 we went on TV and said this market is getting ready to hit some bumps in the road.  We looked at the data and determined the Boom was over and it was simply a matter of time before the market reacted.  In reality we started noticing signs in the 2nd Qtr of 2005, but everyone was busy rushing around trying to get their construction deals put together and finalized.  We began pulling our investors out of projects in early 2005.  We risked some commission dollars by doing so, but we just didn’t feel good about what was to come. 

We took a lot of heat back then.  We heard things like “You can’t stop this market, it’s on fire” and “It’s a runaway train” etc.  Most of us learned growing up that nothing goes up forever, but back then it was that herd mentality.  It was quite common to go to a cocktail party and hear stories of average people flipping home after home and making $100,000 per deal.  They were buying as many as they could, without a true end user in mind. 

Median Sale Prices 2009-2010 Sothwest Florida Single Family Homes
SW Florida Real Estate Prices Single Family Homes

We all know what happened to those days.  Just as nothing goes up forever, nothing goes down forever either.  If you read these articles regularly you know we’ve been predicting that about March or April of 2010 we could see prices actually rise over year ago prices and the headlines we would read would be quite different than what we’ve seen over the past 5 years. Well, Official numbers were just released this past week, and guess what?  Prices are up 9% over last year.  It’s not a miracle.  If you’re unemotional and study the numbers you could see it coming. 

We’re not rocket scientists.  Most Realtors have a good pulse on the market and can tell you what’s really going on.  And just because the headlines read one thing, there can be many submarkets reacting quite differently or bucking the trend.  You’ve heard that all real estate is local, and that’s true.  Even in the Boom market some properties didn’t fare as well as others, and in the down market, some didn’t do as poorly either.  Full time Realtors are on the front lines and see trends as they develop.  Sometimes it’s beneficial to step back and analyze the numbers, and others it’s great to be right in the race and see what’s happening in real time.  Sometimes it’s great to do both. 

Where will the market go from here?  That’s a good question.  Some speculate that the Home Buyer Tax Credit Expiration April 30 will have a negative impact, but we’re not so sure in SW Florida.  Many of our buyers are scooping up bargains and don’t qualify for the credit anyway.  We think home sales should continue their torrid pace as long as we have bargain inventory.  2009 set an all-time record and 2010 sales have surpassed 2009 sales.  Our prices are artificially low, in many cases half or reproduction costs.  This is why you see so few building permits being pulled. 

Because we are not seeing building activity, it is limiting employment in our area, which was so heavily dependent on the building and real estate industries along with related services.  We don’t believe prices will shoot back up wildly until we create more jobs, and we may not create more building jobs until prices shoot back up.  So it’s the old chicken and the egg theory.  We think we’re going to have to find other employment opportunities to help lift our entire economy back up so we’re not so reliant on the building industry.  Once we do that, the building industry will take care of itself.  We would caution governments not to add impact fees and other costs that price jobs out of the market.  We need to be more competitive, not anti-competitive. 

And finally, resist the urge to follow the herd.  The herd is usually on right for a brief period of time, and usually at the tail end of the curve.  Our market is Hot, and prices rose last month.  We point out that even though the herd considers 2005 the Boom, there is more opportunity in the air now than there was in 2005.  Misery was in the air, just few people realized it back then, and today opportunity is in the air, and the herd will realize it only after prices rise substantially in a few years.