One thing about being in Real Estate, there is no shortage of information. We are constantly barraged with information on properties, mortgages, trends, and much more. On occasion, we run across information that requires second take and then a thorough analysis. It’s one of those days.
We are constantly in the MLS searching for properties that will meet the criteria of our clients. We represent buyers from all walks so we are quite familiar with everything from investment condos to large estate homes. Having said this, the article to which I am referring was done by Realtor Magazine Daily News and referred to average list prices. They were comparing the average list prices in 146 markets with a database of 2.2 million properties. You have to admit, that is a substantial survey. The purpose of the survey was to determine where average list prices had increased by the largest percentage in the country.
The reason I did a second take was that average list price is not a stat that I am accustomed to studying. This created a need to analyze the term average list price. My first reaction to seeing an average list price for Fort Myers – Cape Coral was that the figure was much higher than I would have expected at $405,809; however, after careful consideration, I came to realize that large estate homes skew this number a great deal. One $8,000,000.00 property on the market offsets a whole lot of $150,000.00 properties.
So why is this significant? Of the Top 10 cities in the country with the largest increases in listing price from August 2010 to August 2010, Florida cities accounted for 9 of the top 10. Fort Myers – Cape Coral ranked #2 with a 26.27% increase in 1 year, second only to Miami. There can be forces at work here besides increasing prices. Owners of larger homes may have been waiting out the uncertainty and have finally decided it is time to list. Large homes statistically take longer to sell, thus inventory of these larger homes is swelling while the less expensive homes are selling quickly, etc.
What it positively means is that the market is heating up. The average list price is up 26.27%. That is remarkable. Does this mean that all prices have increased by that amount? Absolutely not but I can assure you that some have and I see that trend continuing. Many communities that were devastated with distressed properties have worked through their problem inventory and are now strong again. Once these properties are dealt with these unrealistic comps go away and the unrealistic deals cease to exist.
While there is much speculation that the “Shadow Inventory” of foreclosures looms in the wings and that we are going to see another big surge of this activity, I have my doubts. The banks have stabilized themselves (most are announcing huge profits now) and have made room on their balance sheets to carry this inventory. They also seem to be catching on that they need to protect the values of surrounding homes which happen to belong to other clients. It is a lesson that was learned the hard way, but I believe that it has been learned and that the release of this inventory will take place in a more measured manner.
The moral of the story; we are past the bottom and a degree of realism is beginning to return to the Florida market. The deals are still amazing but no longer ridiculous. There are still great deals so take action. We all have our “I remember when I could have … “ story. I believe you still have the opportunity to say, “I took advantage of the once in a lifetime real estate opportunity in Florida, and I’m glad I did.”