People ask me if we have reached the bottom of the real estate market or if I think we almost there. It's like a kid asking "Are we there yet?". The uncertainty of the market drives some would-be buyers half nuts. They want to buy, but they don't want to pay too much. They want the deal of a lifetime without having to worry that someone else may get a better deal by waiting a little longer. It's like sitting in a hospital waiting room. You expect the worst and hope for the best. I guess more people prefer some finality over more uncertainty.
The chart above was borrowed from The Catherine "Cathy" Chaudemanche Team at Keller Williams Realty on this same topic. CLICK HERE to read that concise and very well written essay on real estate market cycles. The writer asked the same question as I did, but more artfully: "Which Real Estate stage are we in today?" I don't know when she wrote her piece but she gave an anecdotal account of where she perceived her local market at that time. She perceived her market was still in the Despondency and Depression stages.
I have been writing for some time now that most of the inexpensive properties have been put under contract. Those properties include numerous short sale houses, condos, and town homes in the Mid Town, New Town, and numerous Stock Island communities. Bank owned properties all over the Key West area seem to go under contract soon after they being listed if they are priced correctly and marketed properly. Bank owned properties that do not sell right away may have some underlying problem that continues to make the individual property difficult to sell. Finally, some upper-end properties are selling very quickly because of their inherent perceived value (location, design, construction, amenities, price, etc.) as compared to other similar properties.
I have noticed a resurgence of an almost buying frenzy starting to occur on some properties. Places that sold within the past few years for high prices that get listed as a short sale or bank owned property often go under contract within days if not hours of being listed. Many Realtors have clients waiting for that too-good-to-be-true buying opportunity.
Something else has just started to happen: price increases. There have not been enough increases to call it a trend, but there have been enough to note that not all properties are being marked "down".
Reuben Concepcion of Keys Financial sent out his take on the market a couple days ago. He said:
"The Federal Reserve left the key Fed Funds rate unchanged today. However, that’s not the important part of the story.
The Fed has been purchasing hundreds of billions in long term treasuries and mortgage backed securities this year as part of an effort to drive down long term interest rates – i.e. MORGAGES, and therefore help the real estate market recover.
They announced this program will come to an end by early October and will not be extended.
Rates have been artificially subsidized to the lows we’ve seen this year largely as a result of this government buying. Therefore, expect upward pressure on long term mortgage rates in the near future.
Additionally, the “positive” (not as terrible) economic news coming out (lower unemployment claims, etc) is helping the stock market rally, which also creates upward pressure on mortgage rates by moving money back into stocks and out of bonds."
I have been fortunate to have some "all cash" deals and some traditionally financed deals during the past year. I would love to see the low cost money continue, but I realize it probably will not.
If you read my blog regularly you have seen that I have mentioned many really nice properties that once sold at high prices that are now offered at significantly lower price points. I usually refer to these types of properties as buying opportunities. Sometimes I even call them bargains (as compared to previous prices or as compared to similarly priced properties that I subjectively view as inferior or too highly priced). Some readers and commentators may feel the Key West market will continue to fall. I don't know the answer. Nobody does. I monitor the County Clerks records and I know that more foreclosures are on the horizon.
What I do know is that the Island of Key West has a finite amount of permanent housing. Real buyers are now purchasing as opposed to sitting in the waiting room. If you look again at the above chart I think the Key West real estate market is somewhere between Hope and Optimism. There are enough indicators that we are no longer in the Despondency and Depression stages.
If you believe we are on the road to recovery and want to buy a place in Key West, please contact me, Gary Thomas, 305-766-2642 or e-mail me at email@example.com. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West, Florida. CLICK HERE to search the Key West Association of Realtors mls database. Get your place in Paradise.