Planet Earth – a good investment
In 1957, real estate investor Louis Glickman made this statement which appeared in the New York Post, "The best investment on Earth is Earth," and regardless of what has been going on during the past year, it still is.
Early in May, Lawrence Yun, chief economist for the National Association of Realtors, spoke at the Manatee Association of Realtors’ new Lakewood Ranch headquarters. What he had to say is music to the ears of all real estate professionals and property owners. Mr. Yun has climbed out on one of the longest real estate limbs in recent history by essentially stating that the real estate market should return to normal by 2009 and stay that way. He further predicts that the second half of this year will be strong and by 2013, five years from now, home prices will be 20 to 30 percent higher than they currently are.
Based on first quarter real estate statistics, what Mr. Yun is saying is not that much of a stretch. Numbers of sales and prices are still down, but the gap is slowly closing. Sarasota/Bradenton is down 9 percent in sales compared to the first quarter last year, quite a bit less than the 25 percent decrease in the Tampa/St. Petersburg/Clearwater area and 50 percent in Miami. Fort Myers/Cape Coral fared somewhat better at 18 percent down and Punta Gorda was actually slightly up in sales at 6 percent. Statewide sales were down an average of 26 percent for the first quarter, which makes our area’s sales numbers looking better.
Anna Maria Island, which always steps to a different drummer, is experiencing statistics in the positive range. One of the Island real estate agents reports more closings during the month of April than during the entire first quarter of the year, with the average sales price also up. The only caveat among all of this encouraging news is that April is traditionally a month that books a lot of closings, never-the-less, the overall picture shows movement in the right direction.
Even the new home market, which has been especially hard hit, is showing signs of a speedy recovery. Nationwide and locally, sales are up for new homes as builders and developers are creatively marketing their properties with added incentives and aggressive pricing.
The Manatee County Property Appraiser’s office is finally catching up with the decrease in property values. It has have reported an 8 percent decrease in property values from 2006 to 2007 for Bradenton, a 12 percent drop in Holmes Beach and Anna Maria and 15 percent in Bradenton Beach. This has not happened in Manatee County since the depression, and when the property appraiser looks at 2007 to 2008, I can’t imagine that year’s values looking real good. This, of course, is a classic good news bad news event. The average homeowner’s tax bills will go down about 6 percent, but government revenue is also going down, making county and city governments faced with some tough choices.
What’s developing is a perfect storm of buyer activity. Low interest rates, oversupply of inventory, sellers who are finally getting realistic and now even lower property taxes. In addition, there is a build up of potential buyers out there looking at the menu but not ordering anything, pretty soon they’re going to get real hungry.
So go forward and invest in your earth, Yun sure thinks it’s the right thing to do. "There are many reasons for people to get into the housing market today and very few reasons not to," he said.
Let’s all hope that Yun is the best darn economist this earth has ever seen.