RSSSouthwest Florida Real Estate Tour
I just returned from a first hand look at one the country’s most depressed housing markets along the Florida Gulf coast from Ft. Myers to Bradenton. OK, I spent some time on the beach too and took a day long boat ride. What a difference two years makes. This market is still declining quickly with buyers waiting to see the bottom for home prices before they shop seriously. It will remain depressed long after the housing market begins to recover elsewhere in the country.
My wife and I stopped in at some open houses in this area two years ago and were urged to buy now before prices went up further. That was when we got the attention of the real estate agent. Usually we were ignored by agents huddled with speculative buyers.
Instead, home prices crashed over 20%. Our very friendly and very available agents gave us antidotal reports of 30, 40 and 50% price cuts. We were the only prospective buyers in each of three large real estate offices. One listing agent met us at the door of a home with an announcement of a $50,000 price reduction. Another seller offered to include the cost of a replacement roof and new flooring in several rooms.
The homes we visited were generally immaculate with sawdust and scrap piles in the driveway giving evidence that they had been spruced up for sale. Even homes built in the 1970’s and 1980’s had granite countertops and the new larger ceramic tiles on the floors. Instead of disappearing, several owners followed us through their house pointing out attractive features.
We only looked at single family homes but were told by each agent that we should look at condos where the deals were better.
We visited several foreclosed homes being sold by banks. Our agent hinted that the bank would accept 80% of the already discounted list price if it did not get a better offer soon. Hand made “foreclosure sale” signs were posted on many corners directing buyers to desperate homeowners trying to find a buyer to avoid a bank foreclosure.
Conversations with the agents and homeowners made it very clear that overbuilding and the collapse of the non-conforming mortgage market was only part of the reason for the depressed housing market. The impact of the 2005 hurricanes is uniquely very significant in this part of the country.
The consequences were higher housing costs and fewer net migrants to Florida. New homes near the water have to be elevated as much as a full story with the ground floor usable only for a garage and for storage. This makes new homes less attractive to retirees looking for one story living. Property insurance premiums have soared to rebuilt insurance reserves. Information on specific properties was hard to get but it appears that insurance premiums are about 5 to 6 times higher than for our older and larger home in suburban Boston. And that is with the state acting as reinsurer, a role the state can not afford if there is another round of serious hurricanes. So homeowners feel insurance rates could jump much higher.
