Southwest Florida Real Estate Market Slow Down
There are several reasons for Southwest Florida’s real estate market slow down this past year.
A few years ago, the media hyped up the Baby Boomer issue. Baby Boomers are a large part of the market here in the Fort Myers area. The Boomers started to think about their retirement in 10-15 years and began to look for retirement property.
Some Boomers lost money in the stock market, so real estate investments looked attractive to them.
All the major builders in the USA got on board and began to buy up all the vacant land. That pushed the price of vacant land way up.
Florida counties saw all the growth coming on the horizon . They needed money for infrastructure, so they raised impact fees on building permits.
At the same time in 2004, Florida had a few hurricanes. The storms caused a lot of damage. The needed rebuilding and repairs made material costs go up. In addition, a shortage of workers caused more inflation. As a result of the hurricanes, the building codes changed. That increased the cost even more.
The world economy was doing well, so building material costs and energy costs just kept increasing.
So, with demand high and costs going up continuously, builders started raising prices monthly. They couldn’t build homes fast enough. They limited the number of monthly sales to try to slow it down. But it created more urgency.
Everyone saw the prices going up. Investors came in from all over the world and scooped up as many homes, condos and lots that they could. Then, they started flipping properties like crazy. They were buying pre-construction with small deposits and often selling the property at the closing. They made several thousand dollars with little or no effort.
Everyone wanted to be an investor. When builders announced a new community, hundreds of buyers would line up to buy on opening day.
All of a sudden, in mid to late 2005, builders had caught up with the demand. As the builder completed a project, the investor put the new property up for sale.
The interests rates moved up a fraction. Insurance costs increased. With all these pressures on prices, the average person could no longer afford to buy. This kept many buyers out of the market.
As a result, the Fort Myers area, as well as other Florida communities, have almost a two year supply of single family homes and a three year supply of condos on the market.
We, here, in Fort Myers, are very fortunate that we live in a great area that is in such high demand. We will work through the inventory problem, but some investors will suffer financially.
One good thing about this whole issue is that interest rates remain at relatively low levels. In the 80’s and 90’s, we had interst rates over 10%. That really hurt buyers.
If you are thinking about buying a home, it is the time, right now, to jump in the market. Sellers have dropped prices to a more realistic level . . .many taking a loss to move the property and get on with their lives.
Being a home owner and investor for over 40 years, I can say that prices have always seemed too high. But, when I look back now, they really were a bargain.
To own your home gives you a sense of pride and accomplishment in life. Make it happen! You can do it! Now is the time! Don’t wait til the prices start to go up again.
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