Now is the time that we all look back on the year that has passed and forward to the year ahead. The perspective is different for each of us but one thing is for sure, we all hope to make the upcoming year better than the last. I am always entertained and refreshed by the optimism professional sports teams have at the beginning of each season. Why is it, on the other hand, that every news source is obsessed with negativity? They tell us it is what sells and I suppose that is true. I for one, in my final newsletter of the year, intend to note the negative but dwell on the positive in looking ahead.
The past 7 or 8 years have been marked by extremism in the real estate world. First, we had the extreme optimism that homes had turned into money machines. Banks and buyers alike had the attitude that it did not matter who bought or how much they paid. Everything was predicated on the assumption that values would rise and rise at a rate that would turn even the worst deals into viable transactions.
Along came the bursting of the bubble and we entered the phase of extreme pessimism. Real estate transactions came to a screeching halt as everyone stepped back and waited for the world to come to an end. Unfortunately, it did just that for many. Prices were unrealistically depressed to a point that they were a mere 40% of replacement value and even so, nobody was buying. Ever so slowly people re-entered the market and homes began to sell, albeit at ridiculously low prices.
I am calling for 2012 to be the year of “Regained Sanity”. Of course, the news continues to tell us that there is a recovery but that it is lame at best. We are inundated with news that new housing starts are up but that they are still only a fraction of what they were in 2005. We are told that housing prices are recovering but ever so slowly. We will never see the end of negativity but if you take a closer look some of this news is actually encouraging. I, for one am happy to see a measured recovery as opposed to a dramatic uptick.
Here in Florida, I will tell you as one of the troops on the ground that sanity is returning. According to the December issue of Money Magazine, Fort Myers has seen the highest increase in home values in the country in 2011 at 5.1%. Fort Myers Florida Weekly recently published an article revealing that the median price for homes sold this year has risen a whopping 28.27%. This indicates that the bottom feeding has subsided and a normalcy has returned. The homes that were built for investors who were over extended and went into default were sucked up by new investors positioned to cash in on the opportunity. Now that this activity has subsided we see more traditional transactions taking place in the vacation and retirement home category. Finally, it is important to note the distinction from the 2 different numbers provided by Money Magazine & Fort Myers Florida Weekly. One is reporting home values & the other is reporting MEDIAN sales price.
Indeed November numbers appear to indicate that this trend will accelerate now that we are in season. All of this having been said, values are still extraordinary. This area was hit hard and fast in the beginning and struggled for a long time but it appears that the low point was about this time one year ago. I for one am happy to see slow and measured increases in values. I believe that it is a sign that people have learned a hard lesson and are now being careful in their decision making. I look forward to this election year when we as Americans have the opportunity to give direction to our country and send signals to Washington about where we want to go.
Brad and I want to take this opportunity to thank all of you who have enriched our lives. We truly value the relationships we have established in the course of our business and look forward to the New Year with eager anticipation and hope that you do as well. Above all else we hope that it brings peace, joy, and happiness to you and your family.
Happy New Year,