Still Searching for the Bottom

In the last post, I was thinking that we might see a bottom in the market in 2008. Well, 2008 is almost over and I am not sure if we are there yet. Prices have surely come down alot... and overall sales in SW Florida in October had their first positive 12 month comparison. In fact, unit home sales in October 2008 in Cape Coral/Ft Myers were up over 70% over October of last year. That is a step in the right direction and should lend a stabilizing force to the market. Basically, we have finally found a price where buyers show up but there is still a lot of inventory to chew through. If this pace continues, inventory will start heading in a positive direction this winter season What is interesting is that it appears that the weakest markets are now becoming the strongest and the strongest are finally caving in. The once unbreakable Manhattan is on its way down - and we down here in Florida, who have been in a depression for real estate for several years - are seeing some early signs of life. Indeed, it looks like the first in will be the first out of this global quagmire. From my perch, I see just as many baby boomers looking to buy here on North Captiva Island as in years past. It seems they are just waiting, though, for the right time to pounce. And for now, they have time on their side. At some point, their own ages will come into play. Do you want to wait until you are so old you cannot enjoy the beach house you always dreamed about retiring in? Thus, think the demographics in the future are stronger here by the beach than areas of the country that rely on employment to drive sales. I would not want to own property in car producing areas or areas ( like New York) that rely too heavily on high paying jobs in the financial industry.

Summer Island Update

The summer selling season on the island is nearing its end. In five weeks, North Captiva will enter hibernation mode. It is actually one of the nicest times to be here. On some days, you can walk all four miles of beach and not cross paths with another person. The only things you must share the beach with are the sand pipers, pelicans, dolphins, ospreys, and bald eagles. Unfortunately, none of them will be purchasing any homes!

Here are my thoughts about the current North Captiva Island market right now:

1) Supply is still too high. Prices are still trending downward.
2) There is still a subset of sellers that needs to get out. They are competing with one another to the detriment of prices.
3) I have seen some bank appraisals are coming in below the actual comps, making it tougher to close on bank financed properties.
4) My backlog of interested buyers is building. They are waiting for signs of a market bottom before taking action.
5) There are some signs of raw demand forming for low end lots with final sales prices in the $150k-$170k range. Several of these have gone under contract in the last month or so. Above that range, there have been two sales this year in the $300-$400k range for view lots on the state preserve ( which have incredible wide water views of the gulf of Mexico ). Note that I have another preserve lot listed at $365k which is also an attractive long term purchase.

Here are my predictions:

1) Despite all the fear and negativity, I think the island market is not that far away from a price bottom. My guess is for sometime in 2008.
2) Europeans will become large purchasers of property in Florida. The pound is hitting 26 year highs versus the dollar. The euro has rallied from .82 on the dollar to $1.37. The currency appreciation there + the property depreciation here = a huge discount. Once the dollar shows signs of bottoming, look out. There is a lot of British, German, and French money out there that can soak up the best priced supply. The central Florida market, particularly Celebration FL, may benefit from the strong pound.
3) The baby boomer generation starts to get serious about their beach properties in 2009. That is the year that the first wave baby boomers hits age 63.
4) The next Florida property bull market will start in 2010 and carry to 2015. The demographics are powerful. The annual number of people turning 65 in those years will be 3-4 times today's numbers. Buyers from overseas and new wealth created from the stock market rally will likely be the spark that gets things moving again.

When I was an investment advisor, I used always tell my clients to get to the party early and then leave early. That's good advice in today's island real estate market. Just keep an eye on interest rates.

The State of Island Real Estate

When I look back over my previous posts, it looks like I have made some good calls. The mainland Florida real estate markets have taken a beating ( I see 20% price drops for some price segments for homes in Cape Coral, 30% drops for some canal lots in Cape Coral, and as much as 50% drops for lots in Lehigh Acres). So far, the barrier islands like North Captiva have weathered the storm much better. The lesson here is all about supply and demand. Islands, by nature, have a limited supply of land. While resale inventory on North Captiva has risen 50% over the last year or two, the mainland resale inventory has risen about 200% and is still growing even today. Markets like Ft Myers/Cape Coral will take quite a while to digest such an increase. Back to supply and demand. The absolute best market I see here is on Useppa Island - a very manicured and well cared for private island with lots of history. In 2006, about 15 properties sold there. Currently, there are only 12 Useppa properties on the market. If the 2006 pace continues there, all current inventory could theoretically sell in 2007. Now there is one Florida market I would love to be in when real estate starts to move again! When will the market move again? I'll save that for the next article.

Island Real Estate Market Update

I have discussed in past articles about where the island real estate market was heading. As I see it now, a dearth of supply on the market will bring prices down in the mainland markets such as Fort Myers and Cape Coral - particularly as all the adjustable rate mortgages held by investors finally start to lose their rate locks. Out here on the island, selling prices won't likely drop by much - but many asking prices will. This is a buyers market.... and some of the sellers are finally starting to realize that. Now is the time where you can go pick out the house or lot you like ( not paying much attention to asking price ), and simply make an offer. No matter how richly valued the asking price, the seller might take your offer. From what I am seeing on the front lines, there are buyers for beach property on beautiful North Captiva Island - but they will not pay a penny more than last year's comps.

North Captiva Vacations

North Captiva is a great place to vacation during all seasons. There is a great variety of island homes for rent and at various price ranges. The busiest season is between Valentines Day and Easter, and the second busiest time is in the summer months. If you'd like to have the entire beach to yourself, come in the Autumn months when the island is almost deserted. To see some of the vacation homes for rent on the island, visit or website at www.northcaptiva.net .

Captiva Island Real Estate

Here I am again to comment on the real estate market on North Captiva Island Florida. Currently, inventory has grown to about 100 listings on the island. Over recent years I have seen the inventory fluctuate between 65-110 listings. We are in a buyers market at the moment. I still believe, though, that North Captiva is undervalued relative to other places in Florida and that the longer term fundamentals are bright. Since this island real estate market saw less speculation than other FL areas over the last 24 months, it will also take less time to digest. The neat thing about this market, is that one big buyer can change everything very quickly. Visit my North Captiva Real Estate website for more island info.

Captiva Island Shelling

North Captiva Island, also called Upper Captiva Island, has some of the best shelling in SW Florida. Though Sanibel always seems to be in the shelling limelight thanks to many dollars spent every year on advertising, some of the other barrier islands have equal or better shelling opportunities - and with less people around to compete for the best shells. My favorite spot is on the state preserve land on North Captiva. On this magical stretch of beach, you can walk for almost two miles without seeing a house. There is a little pass down toward the south end that was created from Hurricane Charlie in Aug 2004 ( visit this site for pictures http://coastal.er.usgs.gov/hurricanes/charley/ ). At low tide, you can find hundreds of sand dollars, various conch shells, olives, etc. The only place that rivals this area on North Captiva, is the mostly state owned island of Cayo Costa - which is located one island north of North Captiva. There is great shelling there, too. Perhaps I will touch on Cayo Costa on a future post.