Over the competitive edge
Within my family, my columns are a pretty big target to challenge. It's not unusual for me to get phone calls or e-mails questioning something I wrote from some member of the clan. The most recent of these disputes questioned my "rosy" outlook for the future of Anna Maria real estate, from, of course, someone who lives 1,300 miles away.
Just to be clear, no way are we out of the real estate woods and probably won't be for a long, long time. On a national level, the two driving forces keeping the real estate market down are high unemployment rates and foreclosures. As stated last week, nationally 22.7 percent of all homes with mortgages had negative equity as of the end of the first quarter of the year, and even though that number is starting to drop, it is still historically high.
What is happening in certain pockets around the country and on Anna Maria Island is a slow and steady movement of residential sales. July, August and September have always been slow months for sales, but I'm hearing from local brokers that they are busy with buyers and inventory is starting to dwindle. Also, it appears that this activity is starting to overflow from the Island onto the waterfront communities on the mainland.
In addition, it was recently reported by the Bradenton Herald that a deep pocket investor bought up a large number of condo units in a new building that was in bankruptcy in downtown Bradenton and was planning on selling them for less than half of the original asking price. This is similar to what has been happening in Rivera Dunes in Palmetto. The most recent investor said he felt that the Florida market has reached its bottom.
As previously stated, most of these sales are cash and many are from foreign buyers. Cash is important in the current market since mortgage financing is tight. Banks are holding on to their capital and only making loans for A plus buyers with large down payments.
For high end real estate buyers who are looking for financing, it could get even more difficult since on Oct. 1, the federal government is reducing the loan limits for government backed loans on jumbo mortgages. These limits will vary based on state and even county, but there is no doubt that buyers of high end properties will have to come up with more cash down, higher interest rates and be satisfied with smaller mortgages. What if any affect this will have on upper end Anna Maria properties we'll just have to wait and see.
Personally, I think Florida is coming back before other sun-belt states like Arizona, Nevada and even California because of a combination of things. Florida has for decades been the retirement state of choice for both Midwestern and Northeastern retirees because of the natural beauty, long coastline and attractive tax environment. With baby boomers on the horizon, that's probably not going to change, and adding low real estate values to that mix is putting us over the competitive edge.
The days of flipping real estate and using your personal residence as a piggy bank may be over, but most Americans still want to own their own homes. The new reality may actually be the old reality of living in your home and burning the mortgage.
I don't really mind being in my family's cross hairs as long as the message that I target stays on target, and my target is on Anna Maria Island real estate.