By Ken Gandy
A day doesn’t pass that I’m not asked… “How is the real estate market on Marco Island, have prices stabilized, and when will our values start going up again?” The answers I give my friends and clients on Marco are based upon a daily study of statistics, trends, and the overall confidence levels observed from the dozens of buyers and sellers I speak with each week, both locally and nationally. Often, they are quite surprised to hear that properties are moving and there is a constant flow of sales. Yes, foreclosures and short sales have been commonplace words in my profession lately. But, remember, they represent only about 25% of the real estate activity on Marco Island, whereas that number easily approaches 75% on the east coast of Florida. You might be surprised to know that 84 properties have sold and closed, just on Marco Island alone, in the past sixty days; historically one of the slowest times of the year in our “tropical paradise.”
During my thirty-seven-year career as a Realtor, I have seen many up and down cycles. Every time we have been faced with a “Shifted Market”, I have to remind myself that real estate is a commodity, and that prices sometimes go down with commodities. This is the first time in my career that we have been challenged with global financial issues and, certainly, the fear created by the oil spill crisis slowed our market considerably starting in May, after an active and positive winter sales season in real estate.
Yes, prices of Marco Island real estate have adjusted down as much as 40-50% since the “boom days” of six years ago. But that one factor does not reflect the entire market and is not the only factor to dwell on or to consider. I truly believe that Southwest Florida, and specifically Marco Island, will rebound first. We are starting to see indications of that POSITIVE SHIFT during the past twelve months. I have observed these cycles continuously repeating themselves over the years, when often the first to fall is the first to return, especially in areas that focus on higher end resort properties.
Do you realize that we have some of the top Realtors in the country practicing on Marco Island? These top-caliber individuals and teams are some of the brightest minds in the real estate industry. They are the professional experts you should be listening to before making financial decisions with your real estate. So…I asked six top Realtor teams on Marco Island to share some of their opinions with you, so you may “Hear from the Experts”. They were all asked the same real estate questions. I believe, over this edition and the next edition of Coastal Breeze News, you will find their advice and opinions to be accurate, informative and often quite surprising!
JIM AND NIKKI PRANGE, Premier Properties
“You can see that since 2007, Marco Island sales have been on the rise. The first four months of 2010, we had incredibly increased activity in comparison to 2009. In April 2010, we had 109 closings on Marco Island, compared to a total of 57 in April 2009. Then came April 20–the oil spill. From that point on, it was like having a Category 5 hurricane just offshore. Many assumed that the entire Gulf Coast was inundated with oil. Things came to a standstill. In the month of July, there were only 39 closings on the whole Island, and 37 in the month of August. Just since the capping of the oil well, we have seen renewed interest and a flurry of activity. Sales for September actually exceeded 2009 sales for the first time since the oil spill.
Have prices stabilized? About the time that we feel that prices have stabilized, it seems that there is some new natural or unnatural disaster that we are faced with. And we have had times where, if there are no buyers…there are no buyers. And if you have to sell at that moment, you’re subject to the only buyers out there, who can be extremely shrewd and unemotional. I truly feel that we are in one of the safest areas of the United States for appreciation. Forbes Magazine has just recently recognized the Naples/Marco Island area as a place where the wealthy are moving to. When you consider that there are not really any new developmental opportunities here on the Island, the old law of supply and demand is definitely going to come into play.
How soon will it be before we see any increase in property values? The answer is: when people start feeling safe again. Some people are already in that zone; others are waiting for the election and other factors before they feel comfortable. For the last year, the banks have been trying to figure out how to handle the short sale/foreclosure market that they have been hit with. I think they are finally starting to figure it out and we have seen much improvement recently. We are told that the banks have money; the rates are the best that they have ever been; but the problem is: the people that really need the help still aren’t qualifying. The approval qualifications have become so strict. Hopefully as they liquidate the distressed properties, they will be able to address the people that are still trying to survive–those that need some immediate relief, and those that want to just stay living in their homes. We are extremely excited about the future of Marco Island and we really feel that we are in a very special place.”
SCOTT NEEDLES AND STACY WITTHOFF, ERA Flagship Realtors
“With all the negativity in today’s environment, let’s take a look at a few positive aspects of today’s market. Many sellers are saying that only short sales and foreclosure are selling. Marco Island has approximately 30 active foreclosures for sale, out of nearly 1,500 properties (condos, lots, and homes) for sale. Many buyers that come into the market to get a “good deal” on a foreclosure quickly realize that the “deal” may cost them a lot more in the end. Therefore, these buyers end up purchasing with an equity seller. As a matter of fact, 75% of our business for 2010 has been regular equity sales.
Single family homes are beginning to sell at a faster pace. As of September 30, 2010, the market has a 14-month supply of homes for sale. This is down considerably from the last few years. A normal market is defined as having a 12-month supply of homes for sale. Although, we are still in a buyers’ market, the well-priced homes are selling.
As for the big question, has it hit bottom? Of course, no one has a crystal ball to determine this. However, we believe that if the market has not hit bottom at this time, it is close. Even if the market does drop a little more, but the interest rates go up, now is the better time to buy. With the interest rate at all time lows, it is an unbelievable time to purchase in the Marco Island area. For example, a $500,000 home today will cost you less on a monthly basis to own than a $470,000 home when interest rates go up to even a moderate level of 5%.
We don’t think anyone can confidently answer the question of when real estate prices will go up, as there are so many other factors in our current economy that make that difficult to determine. I do know that with the wide variety of properties available, great values and, once again, all-time low interest rates, now is a better time than ever to buy. As we all know, when the values start going up, the inventory will go down, and if you are a buyer you may not be able to find the right property to meet your needs.”
ALAN AND LINDA SANDLIN, RE/Max Results Realty
“First of all, as we all know, for ten years our country experienced unprecedented growth in the real estate market and the general economy. As a matter of fact, Marco Island in 2004 had the second highest appreciation rate in the country, second only to Las Vegas, with nearly 50% appreciation in a one-year period. Two things happened during that time: First, everyone wanted a piece of the pie. Even “moms and pops” became real estate investors attempting to flip real estate for a quick profit. Second, banks were loaning money to anyone who could fog a mirror. Needless to say, you can’t continue those kinds of numbers, and we all know the end of the story–a huge collapse of the real estate market which brought down our entire economy. The problem with the good market was again twofold: First, many purchased at the top of the market and second, it is hard to get a grip on the fact that prices are where they are and may not be back to 2004 prices for several years to come. Everyone, of course, wants the most they can get for their properties and often ignore or hope their Realtors are wrong. Many sellers have priced just above the declining market in the last few years only to find themselves “chasing” the market down. They have refused offers, only to find themselves a year or more later, accepting much less than the original offering.
In today’s market, when speaking with owners interested in selling their properties, we advise them that they have to “win the price war and the beauty contest”. One of the hardest things for a seller to accept in a buyers’ market is the fact that their home is only worth what a buyer is willing to pay. Chasing the market does not work.
As for our current prices and how stable are they? The good news is Marco Island led most of the country in the last appreciating market. Our prices on the Island peaked very early in 2005 while even Naples was several months behind us. On the other side of that coin, prices for us started coming down sooner than most and we are poised to begin growth again before our neighbors. In September, which is traditionally our slowest sales month, the entire Marco Island MLS had 52 sales. This is very good, especially considering there were 36 MLS sales in August. No one has a crystal ball. However, if the trend continues, we are headed for a good season of sales activities. We were inundated all summer with media coverage over the Gulf oil spill which unfortunately was a killer for, not only real estate, but the entire coastal economy of Florida. Earlier this summer, the NOAA reports indicated that there is less than a 1% chance of oil ever hitting our shores. Yet…56% of all Americans still think Florida beaches are covered in oil…54% of all Americans think that Florida seafood is not edible. Most have read about the grass roots efforts of our Marco Chamber of Commerce to get out the word that our beaches are great through their “See you in the Sand” campaign.
When will we see prices go up again? John Tucillo, a top US. Economist says, “When inventories are low enough that buyers fear losing the property of their dreams, prices will rise.” In other words, when supply is low, demand goes up. How are we now? Homes have been the strongest sector of our market in the last year. In September 2009, there were 481 homes listed for sale on Marco Island. In September 2010, there were 430–that is over a 10% decrease in inventory and a positive market indicator. Also, there were 27 closed home sales on Marco in September (a 42% increase over September 2009.) We have approximately 15 months to absorb the current inventory. We use this absorption rate analysis all the time in looking at trends and time lines. One thing is certain, real estate choices are the best they have been in years and interest rates are at record lows. There will never be another Marco Island or Naples and astute buyers are coming back to our market slowly but surely.”
In closing, as we approach our coming “season”, we are still experiencing a buyers’ market, but let’s look on the positive side. The oil spill is over; interest rates are very low; sales volume is increasing; inventory is down; and thousands of visitors will be coming to enjoy our “Island Paradise” soon. Many of them now have an extraordinary opportunity to own a small part of this spectacular paradise we love and cherish. One thing for sure, my glass is half full. Let’s hope yours is too!
Ken Gandy is the Broker of Keller Williams Realty Marco Island. He and his wife, Lisa, have lived on Marco Island for over 6 years. He has practiced real estate for 37 years.