Vol 7 No. 13 - December 20, 2006

Tracking down the birds of real estate
By Louise Bolger
sun staff writer

The white pelicans are back. The beautiful snowy white larger version of our native brown pelicans have made their winter migration to the shores of Anna Maria and Sarasota Bay. The white pelicans are also accompanied by exotic birds with license plates from Michigan, Ohio, Illinois and Quebec, who can also be spotted driving up and down Anna Maria Island and over the bridges. But what about those other exotic birds, the ones who come to permanently roost in our condos and our waterfront homes, the ones who have driven up the value of our properties during the past five years, the ones we have come to depend upon - the buyer birds - has anybody seen them yet?

The National Association of Realtors reported that total existing home sales, including single family and condo, were down 12.7 percent from the third quarter of 2005 compared to the third quarter of 2006. Further, they report this is the first time since 1993 that quarterly home prices took a downturn. Not surprising to anyone on Anna Maria with a property for sale, the declines were the largest in the once-booming areas of the country, including Florida, which fell 34.2 percent. Nevada, Arizona and California were all approximately in the same rate of decline as Florida.

David Lereah, the National Association of Realtor's chief economist, has put somewhat of a positive spin on otherwise depressing numbers by predicting that the downtrend will continue in the months ahead, but predicts modest appreciation in 2007.

I sure hope you're right, David, but more likely 2007 will be loaded with uncertainty and probably won't be a standout year in the housing market.

Some of the experts in the field, including the Urban Land Institute's study of emerging 2007 real estate trends, are hopeful that the economy has built up enough momentum to pull the housing market along until the next upturn. The change in the market will be a sideways or slowly slipping downward trend instead of an abrupt drop. Hardest hit will be recent buyers who need to sell without waiting out the downturn and speculators who got in the game too late.

Existing homeowners who have years of equity gains will fare well even in a declining market as long as they haven't borrowed too much of their paper equity for other big ticket items, or engaged in creative financing. Also in for a rude awakening are new or potential retirees who were depending on their home's value to fund their retirement. They may have to recalculate their net worth in view of softening home prices.

Unfortunately for us, the second home market has inevitably slowed to a crawl. There are a lot of likely vacation property and second home buyers sitting on the fence waiting for what they perceive as the absolute bottom of the market where they can negotiate from a position of power.

With the market in full transition, if you were planning on spotting the buyer birds, this may not be the year you're successful. They may be a rare breed now, but they can't stay away forever; eventually they'll want to fly south for the winter and we still have what they're looking for.

Wishing everyone a happy and peaceful holiday season.

AMISUN ~ The Island's Award-Winning Newspaper