KNOCK – KNOCK –You Need to See the Signs
Having a background in the investment banking business has given me some insight into viewing some similarities to the current real estate market. I can remember during the “Jimmy Carter Era” when I was selling municipal-bonds and the interest rate was at record rates, some as high as 12 - 16% tax free. I remember people saying, “I don’t think we are at the top yet!” I would always ask do you not feel that a 12-16% return tax free is a good rate. So the truth of the story is that some people missed an opportunity to own good bonds that produced a great tax free return because they thought the rate would rise and thought they could pick the perfect time to buy tax free bonds. Let me ask you what I used to ask them, how much more do you have to see before you think that this might be the right time to be looking at making your move?
FACTS:
Let’s review a few facts.
1. Interest rates are low.
2. The economy is on a steady pace.
3. Gas prices have stabilized and the warm winter in the North has actually put a downward pressure on energy prices.
4. Inventory of homes in SW Florida has shown the first decease in the last 30 days.
5. Developers have reduced their inventory and have slowed down on new home development.
The next thing to review is what may have been the turning factor in this market a year or so ago and see if those condition are still present. One of the main things was a deepening concern for energy prices, the war in Iraq and an upcoming election. With $3 dollar plus gasoline people were concerned about the future. It had nothing to do with real estate or the general economy, but it was a general feeling of helplessness. Most of the real estate news reported was always bad news, with terms about bursting bubbles and other sensational headlines. Caught in the spiral, the average person just backed away from any new investment and put plans on hold. That was combined with the previous investment madness by flippers that drove a good market into a feeding frenzy. So the hot market overnight turned to a cold market. This left the glut of flippers that had properties they purchased in a hot market with inventory that went cold. The result was a selling frenzy similar to the buying frenzy. The market had turned cold, not because there wasn’t a need but because there wasn’t a great enough demand to support the inventory put back into the market place. This provided a buyer’s market for the last year or so. History teaches us that it repeats itself and we have to be wise enough to recognize the signs. Short of a neon sign everything I see tells me that if you want a place in SW Florida, make your move in the near future or you may miss an excellent opportunity. Prices are pretty close to there low, interest rates are good and you will loose your negotiating strength as inventory is reduced. I can’t say we are at the bottom but if we are not we aren’t far from it! SW Florida is still very much in demand and with a reduction in inventory and a slowing in new construction the perfect time is at hand. If you plan to hold your property for three or more years the opportunity for a bargain is now. The market is returning to normal conditions and normal means steady appreciation based on past history.
Call a Realtor today and make the move!