As the state of Florida experiences a surge in buying activity, accompanied by a decrease in inventory levels, some question the reasons for the transition in the market. Where does surge in buying stem from?
According to Property Wire, “Excess inventory devastated Florida’s real estate market in 2009, bringing housing construction nearly to a halt and creating a buyer’s market of premium properties selling for as little as 50 percent of 2005 prices. Foreign investors and cash buyers capitalizing on the dollar’s decline will find Florida properties a particularly promising investment in 2010, with the added perk of bountiful sunshine, recreation and entertainment.”
A Wall Street Journal article observes, “The housing market isn’t as bad as the numbers indicate,” with the conclusion that the national housing market is poised for an upward trend. How do they come up with this conclusion? Consider the following factors: new homes are at their lowest level in 40 years, (“Home price declines have slowed”) and building permits have risen for two straight months. “We think recovery is underway, but there will be bumps in the road,” said Barclays Capital economist Michelle Meyer.
According to Florida Realtors and the University of Florida Bergstrom Center for Real Estate Studies, “Qualified buyers who have signed a contract to buy a primary residence by April 30, 2010, have until June 30, 2010, to close the transaction to be eligible for the federal tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.”
One strong consideration for near-term retirees, especially those from heavily taxed states, is the refuge from state income taxes found by setting up residency in Florida.
As we look at the recent reports in real estate, we see a dramatic change from not only the previous year, but most importantly, from the past five years. The benefit of stronger real estate means a decline in inventory and, in some niche markets, price appreciation.
Figure 1 shows the surge in closed sales for Naples in the fourth quarter of 2009. This trend continued in Jan. 2010. Preliminary figures for January shows an increased sales trend with 502 closed sales, compared to only 353 closed sales in Jan. 2009.
While 83 percent of the sales (Oct. 1, 2009-Jan. 31, 2010) are for property sales under $500,000, a recent Naples Board of Realtors Jan. 2010 press release stated, “We are seeing sales steadily move to higher priced range.” (Quote by Jo Carter, president of Jo Carter & Associates.) Both single-family pending and closed sales increased in all price ranges below two million.
The fourth quarter of 2009 boasts the strongest fourth quarter sales for the past five years. For Jan. 2010, sales continued to show five-year record levels for the respective month. In a year-over-year comparison, closed sales increased by 100 percent, with 48 sales in Jan. 2010; whereas, Jan. 2009 only saw 24 closed sales. Overall, inventory decreased by 14 percent on Marco Island from the previous year.
For closed sales (Oct. 1, 2009-Jan. 31, 2010), the sales were spread across a broader base of price ranges, with 57 percent of the closed sales under $500,000.
In both Naples and Marco Island, niche markets are experiencing very little inventory and in some areas, price appreciation. As inventory continues to decline and buyers continue to re-enter the market, some may find their selection limited, and in some cases, depleted inventory at certain price points and locations.
If you are looking for an online guide to set up domicile in Florida to save on your state income taxes, contact Natalie at NatalieK@PremierMail.net or call (239) 784-0491.
Natalie Kirstein is employed with Premier Properties of Southwest Florida Realtors, Inc., She uses her 13 years experience in real estate appraisal and sales to generate informative and timely market reports for the Marco Eagle and her customer base. Reach her at 784-0491 or e-mail NatalieK@PremierMail.net.