Florida window closing
If you’ve been debating whether to buy a Sunbelt vacation home at a bargain price, it’s time to stop dithering and do something about it. The window appears to be closing.
After sitting on the market for a year and a half and attracting only stink-bid offers from people hoping we were desperate, our beautiful home in Fort Myers Beach, Florida sold last week at a respectable price. In fact, we received two good bids within the space of a few days. The market is starting to heat up.
The reality is that most of the bargain-basement deals are gone. Foreclosures and short sales no longer dominate the Florida real estate market, although there are a few still to be found. And there is still the occasional story of a place being virtually given away. Recently, a financially-strapped seller put up a one-bedroom condo on an Internet auction site with a minimum bid of $1 (that’s right, one buck). As you might imagine, the action was hot and heavy. A total of 51 offers were submitted; the winner got the place for $16,501 (all figures in U.S. dollars). So the bargains haven’t dried up entirely. But they’re becoming much harder to find and they are usually in less desirable areas.
Real estate agents in south-west Florida (Naples/Fort Myers), the area I am most familiar with, report that buyer interest in has been running at levels they haven’t seen since before the 2008-09 crash. “It’s calmed down a little in the past few days,” one said, “but it seems it’s because we’re in the usual quiet period that precedes a Presidential election. I have no doubt it will pick up again after that.”
Our own experience was indicative of the type of buyers who are out there. One bid came from a real estate professional who planned to spend more than $250,000 renovating the property (which has a magnificent waterfront view), turn it into a showpiece, and put it back on the market. The other came from a couple in Germany who were willing to buy it sight unseen at the full asking price on the advice of their agent. That’s a huge change from a year ago when everyone was looking for give-away prices.
The anecdotal evidence in south-west Florida is confirmed by national trends in the U.S. Barron’s reported last week that housing starts in September reached their highest level in four years. Confidence among home builders is at a level not seen in six years. The National Association of Home Builders reports that the number of prospective home buyers is at its highest point since April 2006.
In short, the American housing market is now in full recovery mode. With more buyers out there and interest rates still at near-record lows, demand is going to push prices up and sellers are going to be increasingly reluctant to look at low-ball offers.
September data published by Realtor.com shows that the median listing price for a U.S. home is $191,500, up a modest 0.78 per cent from a year ago. However, the total number of listings is down 17.77 per cent, which means the available supply is dropping quickly.
Areas such as Fort Myers/Cape Coral, Florida, which was hit especially hard by the housing bust, are staging an impressive comeback. The average home price has jumped 11.58 per cent in the past year, to $239,900, while listings are down by 18.35 per cent.
Out west, prices in Phoenix/Mesa, Arizona are up by 26.66 per cent to $190,000 while listings are down by almost 25 per cent.
You’ll find similar patterns in Tampa/St. Petersburg, Orlando, West Palm Beach, Boca Raton and several other popular Florida destinations.
So as I said at the outset, time is running out. If a Sunbelt home is one of your dreams, act now or regret later.
This article originally appeared in the Internet Wealth Builder, a weekly e-mail newsletter that provides timely financial advice from some of Canada’s top money experts. For more information about a one-month trial subscription (four issues) go here.