Vol 6 No. 52 - September 20, 2006

Transitioning to a buyer’s market
By Louise Bolger

I recently came back from a long car trip through the northeast and north into Quebec. Typically when I travel, local real estate books and real estate sections of newspapers become part of my daily reading, and this year was no different. Only this year it seemed that the listing prices on the properties were going down in direct proportion to the mileage on my car going up.

The state of Connecticut seemed like a bargain compared to southwest Florida, and even waterfront outside of Boston was substantially less than the last time I was there. Resort areas like Block Island, R.I., were still pricey, but somehow not as steep as I would have expected. The best buy, however, was Vermont, where property size is defined in terms of acreage, and if you don’t mind the snow, moose and bears you can buy a lot of woods for less than a one bedroom condo would cost on Anna Maria.

What does this all mean? It apparently means that in spite of everyone saying prices wouldn’t go down, including me, they have. Is it time to panic? No, not unless you bought in February and want to sell in September. Do we need to wait until our buying season starts? Absolutely. We don’t really know what the market will be like until the serious buyers start arriving near the end of the year.

Right now, buyers and sellers appear to be in a stalemate. Property owners are reluctant to cut prices and buyers are watching from the sidelines hoping for a fire sale. The market is definitely transitioning from a seller’s to a buyer’s market, and the psychology of the new environment hasn’t caught up with everyone yet.

There are, however, signs out there that we may need to lower our expectations and that the incredible run we’ve had during the past five years may be over. The St. Joe Company, which is currently marketing and plans to build Seven Shores on Perico Island, recently announced it will be leaving the Florida homebuilding market.

Makes you wonder what their marketing and demographics researchers know that we don’t. In addition, the national economy is starting to feel the affects of a slow down in the real estate market. Remember, the perception of wealth keeps people buying those big-ticket items, and if you perceive that your home is worth less now than it was six months ago, there’s a good chance your buying habits will be impacted.

Also, brokers and sellers are starting to attach incentives to their marketing plans. Everything from free trips to new cars and boats are starting to show up in advertising.

Builders have been doing this for a while offering upgrades, closing costs and condo fees, as well as cash incentives. Don’t be surprised to see more of this as sellers and builders continue to feel the pinch.

Hopefully when the cool weather starts to blow in off the Gulf, so will the buyers and their checkbooks. In the meantime, perhaps a cartoon I recently saw will put everything in perspective. It goes something like this: Dad says, "You sold your tree house for $299,000." His son replies, "C’mon dad Don’t make me feel bad. I had to cut the price 50 grand."

Let’s all hope 50 grand is the most we have to reduce our tree houses.

AMISUN ~ The Island's Award-Winning Newspaper