Loveandkeywe…, Home Buyer in Siesta Key, FL

why are the prices droping?

Asked by Loveandkeywest, Siesta Key, FL Mon Jun 25, 2012

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There is a misconception that prices are continuing to fall. If you watch national news stories, that is some of what you see. However, those reports fail to take into consideration the most important rule in Real Estate ‘Location, Location, Location’, and that all real estate markets are LOCAL: The situation in Chicago is not relevant to Boise or to Dallas etc. Also, certain segments of the market within a local area can experience vastly different trends: i.e. condos vs. single family homes, or price points: under $200,000 vs. multi-million $ properties.

More specifically, for the purposes of this question I will focus my response to market conditions on Siesta key.

As a Realtor that specializes on Siesta key, I have been told ‘I’m waiting for the bottom of the market before I consider buying’ many times. As a former licensed property appraiser, I decided to compile hard data on the local market to determine when that was / or will be (see the link below for the results)

On Siesta Key, a 12 month trailing average of sales prices through March 2012 indicate the market has been improving dramatically for single-family homes since the slow-down. According to the average sales price data (compiled from the Sarasota MLS): It appears the bottom of the market for Siesta Key single family homes was approximately two years ago. Although I have not updated this data lately, more recent reports indicate that sales have continued to strengthen throughout June

Condo prices remain flat, but this is consistent with the observation that even within a specific market area – different segments (i.e. condos vs. single family homes) can experience different conditions concurrently. However, it should be noted that unit sales of condos are up significantly.

Regarding the instability of Europe and the world markets, even in these uncertain times that we live in, the US is still the most attractive country for investment (the proverbial ‘dog with the least amount of fleas’). This is supported by the fact that US Treasury bills are still being snapped up in spite of historically low interest rates. However, international investors are not satisfied with safety alone – they want return on investment, which T-bills do not provide. This would explain the recent data that over 30% of all real estate transactions in Florida involved foreign buyers, and that number is expected to grow.

Fears of inflation are also fueling the rise in prices. Like gold, oil, and commodities, real estate is a finite (limited supply) ‘hard’ asset. During periods of inflation, the value of hard assets (including real estate), tend to go up as inflation rises. There is a counter to this discussion that as inflation rises – so do mortgage interest rates – and that exerts downward pressure on home prices. However, on Siesta key (remember this is a discussion about local markets), most recent transactions are cash in spite of historically LOW interest rates. In addition, inventory levels on Siesta key (and greater Sarasota) are within the range of what is considered to be a ‘sellers market’ (i.e. at current sales volume it would take less than 6 months to sell every home). This is an indicator that future prices are expected to rise.

If you are seriously considering buying in Sarasota or on Siesta Key, now would be the time to begin looking in earnest, as all indicators point to prices continuing their upward trend in our local market.

If you have any questions, or would like a customized search for all properties specific to your criteria – call or email me for more information.


George Miller
Coldwell Banker Residential Real Estate
5145 Ocean Blvd
Siesta Key, FL 34242
941-374-1000 Cell
941-349-4411 Office
For the latest Market News and info go to my website:
http://www.SiestaHomeValues.com
Referrals are always appreciated! If you have friends, neighbors, co-workers or family members thinking about buying or selling a home, please reply to this e-mail and tell me about them.
0 votes Thank Flag Link Mon Jul 23, 2012
I wouldn't believe anything a realtor says to you. I had a realtor trying to sell me on property in 07 and she was trying to sell me on that real estate is still going up when in reality it was going down. When I called her on her comment (she was the president of the local real estate community) and I made comments that she knew, I knew what was going on and was still to come (the collapse) she admitted that things were bad and getting worse. She was just doing her job she said by misleading me. Well, get ready because the other shoe is about to drop. Housing prices will dip up to 30% more over the next 2 years. The reasons are multiple. Europe goes and we go with them, higher unemployment and inflation are on the way. Asia is contracting and it too may be the straw that starts another collapse. All the money being printed is going to bite us in the a--. Our people, middle class is on the brink and one more hit and they are going to be lower class. If you can't buy at least 25% lower than appraisal, I wouldn't purchase as you will be upside down in a very short time. Prices are dropping because real estate is still overpriced.
0 votes Thank Flag Link Fri Jul 6, 2012
2013-How do you see prices in your local market now? What area do you like best for Gulf front property? Any advise is appreciated!
Flag Sun Mar 24, 2013
The prices that you are seeing dropping must have been overpriced to begin with, on Siesta Key the inventory is down and you cannot get the same deals you could a couple years ago, we are actually reselling properties for profit that sold a few years ago when it was more of a risk whether we had reached the bottom of the market or not, this is a good article regarding the current market conditions.

WASHINGTON – April 23, 2012 – When the number of home sellers grossly outpaces the number of buyers, no offer can be ignored, even if it’s 25 percent or more off the asking price. But in today’s rebounding market, those low-ball offers don’t often work. Many times, the potential buyer finds that they don’t get a counter-offer. And, in many cases, another more realistic buyer gets the home.

A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.

When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.

Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.

Florida Realtor in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.

Some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.

In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.

Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”

Source: Ken Harney. Distributed by Washington Post Writers Group.

Portions taken from © 2012 Florida Realtors® website

There still are great deals to be had, but there are techniques that some agents use to ensure that your offer will be the one selected in multiple offer situation. Choose your representation wisely.


Brooke O'Malley PA GRI
CLUB REALTY
Real Estate Broker
Cell 941-726-2677
Office 941-366-8390
Fax 1-(888) 578-0534
Visit http://www.MyClubRealty.com to Search Foreclosures
0 votes Thank Flag Link Mon Jun 25, 2012
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