The Sanibel Stalemate
What’s going on with Sanibel’s real estate market? When you combine sellers who don’t need to sell with buyers who don’t need to buy, an interesting dynamic is created. Our unique market has more “wait and see” buyers then in recent past years. There are four major factors contributing to this stalemate: overall perceptions about the nationwide economy, and concerns about local property taxes, insurance rates, and a large inventory. Read on to learn why despite these factors, buyers continue to invest here on the islands.
Without question, the uncertainty of the U.S. economy is the biggest hurdle for real estate investors. Are we in a recession? What’s this about stagflation? Are interest rates coming down? Who will be the next president? What is going on with the stock market these days? Whether you are working for a living or watching the stock market, no one knows for sure what lies ahead. Consequently, many are holding off on purchasing one of their largest assets. Most Southwest Florida buyers are trying to “time” the market and buy at the bottom. Unfortunately, many buyers will wait until we have passed the bottom and miss the best deals. The smart money is moving in now with savvy investors finding great deals.
On January 29, 2008, Florida voters passed Amendment One which gives permanent residents in Florida another benefit with their property taxes. Additionally, it offers “portability” to homesteaders so that they may think about moving “up” or “down” and carry their tax savings with them. Currently this amendment as passed, offers little savings to those investors who do not qualify for homesteading. However, this is a great first step in a long process to ignite activity in the real estate market. In November voting will take place to decrease the cap in assessed value from 10% to 5% for non homesteaded property. Additionally, due to the drop in real estate values across Lee County over the last 20 months, our assessed values, and ultimately our taxes, will be coming down this year. Look for a pleasant surprise from the property appraiser office this coming November.
There is also good news regarding property insurance. Many first time buyers are concerned that either they cannot get insurance for their property or the rates will be unaffordable. Wind & Hail, Homeowners, and Flood insurance are available and affordable for all properties in Florida. Furthermore, due to the fact that we have not had a significant storm since 2005, the rates have been dropping.
Another misconception is that our inventory is way too high, and that is affecting the buyer’s perception of our market. In Lee County, due to all of the new construction over the last three years, the inventory is historically high and way out of proportion. It will take at least another year of sales to correct that. However, on Sanibel and Captiva the inventory is always high during our “season”, and this year the total number of properties on the market this season wis only about 15% higher than normal. It is also important to note that 10% of the inventory sold this March!
Our condo market has cooled simply due to “cash flow” concerns. Rental rates have not increased in proportion with property values. This has caused a lower return on investment. However, well appointed, updated rental properties combined with aggressive marketing are commanding higher rental rates. Condo prices may need to adjust until the numbers make more sense for the buyer looking for a “return on their investment”.
The island housing market has leveled off with prices holding firm yet many buyers are still trying to time this market. Property inquiries from foreign investors have increased significantly. In the next 18 months, thanks to favorable currency exchange rates, look for more buyers from Canada, England and Europe to invest in Sanibel and Captiva Island real estate. These investors will spark the summer market, and I look for a busy season in 2009. If you are trying to time the market, please don’t miss this great time to buy. The sale ends soon!
-Eric Pfeifer, Broker CRS, GRI Pfeifer Realty Group Eric has consistently been one of the Top Producers in island real estate sales over the last five years. He has represented more buyers every year than any other island agent. In addition to his real estate Broker’s license, he has a Structural Engineering license and a Building Contractor license.