THE MARCO ISLAND REAL ESTATE MARKET
By Ken Gandy
The 2011 “season” has come to an end as the snow birds have returned north to warmer weather. But, has the real estate buying season ended? Certainly not! The scenario of yesteryears on Marco Island where the real estate market totally slows down until next Thanksgiving or Christmas is long gone. Our real estate season has become more year round in the past years with continuous activity, even during the past five year cycle.
As I market watch daily, it is obvious that we have reached a critical turning point and have generally price stabilized in most real estate sectors. The Marco Island real estate market is a very complex world certainly influenced by national and global financial markets as well as numerous locally based factors often found only on the Island. However, the 2011 season has been much stronger than past years with sales volume up dramatically from last year showing a total of 415 properties sold and closed on Marco Island year to date. Also, our inventory of properties for sale has dropped approximately 8% and pending sales are up approximately 21%. All good solid news!
So, what does this really mean? In spite of the vast number of foreclosures and short sales we have, the Marco Island real estate market has reached a “Turning Point.” For the past four years we have had an over abundance of properties for sale and a much smaller number of available buyers. When this occurs, we experience a “buyer’s market” and prices have to adjust to that demand which they have; in some cases as much as 50%. Well, the “buyer’s market” is still with us, but I see certain price ranges and certain types of Marco Island real estate working towards more of a balance and that’s very good news. This is often the first step as a real estate market finds its new foundation for potential growth.
Cindy Carroll, SRA, a local expert real estate appraiser from Carroll and Carroll, Inc., states, “Marco Island was one of the first resort markets in southwest Florida to experience the downward market shift in late 2005 and will probably be one of the first to begin a recovery. In fact, one local appraiser who knows the complexities of the Marco Island market feels that we might see a slight price increase in certain areas. As we venture into the summer selling season it’s important to note that the increase in sales volume demonstrated in 2010 continues into 2011 at a steady pace. The supply of single family homes in all Marco Island locations is now under 2 years – a one year supply is considered equilibrium. In fact, supply and demand in the inland home market on Marco Island has returned to a balance setting the stage for value stabilization and recovery to pre-market run-up price levels. Today’s real estate market is diverse with each product type, neighborhood and price level moving at its own pace. Six months from now I believe it will be clear that many market sectors reached their bottom in the first half of 2011.”
Mortgage financing is another vital piece of the puzzle. When asked about the condition of the Marco Island real estate market and a possible turning point, Tony Iannotta from Wells Fargo Mortgage states, “Yes, I feel that the trend has turned to a more positive momentum based on several indicators. The banks are feeling better and the loan guidelines are beginning to ease. Recently at Wells Fargo we have increased the loan to value on jumbo loans from 70% to 75% due to stabilized prices. Another indicator would be the increase in the number of transactions in comparison to last year. Additionally, another important change I see in this market is that our buyers are end users compared to investors.”
Do you realize that approximately 50% of our buyers on Marco Island are cash buyers? The remainder are usually solid buyers seeking mortgages and the challenge is to provide them with programs that make sense and are not curtailed with unending government restrictions, limitations, and conditions that ultimately prevent the sale. I am pleased to report that mortgage financing is readily available for the buyer who has the normal basic qualifications such as good credit scores and income to substantiate the loan. Many of my clients believe that mortgage money for residential purchases no longer exists due to media reports. And, fortunately that is not accurate. So, again more good news.
In conclusion, we’ve waited for over four years to see substantial price and value stabilization in most sectors, fairer federal lending practices, lower inventories and balance, increased sales volume, and genuine excitement, confidence and enthusiasm on the part of buyers. They have finally started to recognize that now is a great time to buy on Marco Island. It certainly appears that the wait is now over as evidenced by the sales and related market indicators so far in 2011.
Yes, we have reached a significant “Turning Point” for the real estate market on Marco Island. The reminder of 2011 will be our next big test for the strength and continuation of this new and critical phase. It’s positively good news on the real estate front and big first step.
Have a great summer in our Island Paradise!
Ken Gandy is the Compliance Broker of Keller Williams Realty Marco Island. He and his wife, Lisa, have lived on Marco Island for over 7 years. He has practiced real estate for 38 years.