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More Real Estate

• Market Update: Is there a silver lining for housing?
• Real estate sales: October 1, 2008
• Real estate sales: September 23, 2008

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On this sun-kissed paradise called Marco Island, there continue to be signs of growth in the real estate market.

The market has witnessed a surge in sales during a post-Easter buying spree. In the not so distant past, “price reduced” covered the advertising pages of our local papers. Now the message is more and more frequently “pending” and “sold.”

How does a small, exclusive island paradise show such a significant change in a relatively short period of time? Buyers are scooping up property in this beautiful paradise for many reasons.

Wealthy investors have seen their portfolios reach record levels in the booming stock market and are looking to enjoy their increased wealth. While this trend is evident in places like the Hampton’s in New York, it’s also evident on the beautiful shores of Marco Island and Naples.

Foreign buyers now consider Marco Island more affordable due to the historic lows of the dollar against their currency. In April 2003, $1,255,000 U.S. would convert to $1,827,154 Canadian. In May 2007, the same $1,255,000 U.S. would convert to $1,380,851 Canadian.

A spacious 3,400 square foot home with partial bay views built in 2000 sold for $1,600,000 in May 2007. That $1,600,000 U.S. converted to $1,760,448 Canadian. The same home was sold in April 2003 for $1,255,000 U.S., which at that time converted to $1,827,154 Canadian.

The favorable conversion rates explain why we are starting to see foreign ownership increase in our area. A notable example of new foreign ownership in our area is the pending sale of a home in the Estates area of Marco Island listed at $8,500,000 to a European buyer.

“Pending” means the home is in the process of being purchased and that the sale will be finalized once all contractual details have been finalized. During the “pending” process, title searches are executed, funds or funding sources are pulled together by the buyer, home inspections are undertaken and home appraisals are completed.

Our real estate market growth also stems from an influx of Baby Boomers. The oldest of the nation’s 78 million baby boomers will turn 65 in 2011. Some of these individuals have already retired or have started purchasing second homes in winter retreats such as Naples and Marco Island.

As more baby boomers approach retirement age, the trend of purchasing second homes in anticipation of retirement will continue to grow. That trend will ultimately have a sustained positive impact on our real estate market.

The Economic Development Council of Collier County has stated that Southwest Florida is “regarded as having more millionaires per capita than any other area in the U.S.” As a luxury destination, our area provides the best in recreational activities, cuisine, shopping, and culture. Southwest Florida is home to some of the best fishing and beaches in the world and a highly desirable lifestyle. Marco Island’s close proximity to Naples with its arts, fine dining and golfing is highly attractive to the discerning buyer.

Collier County also provides a mild winter climate that attracts visitors searching for an escape from the cold and snow. The outstanding lifestyle in this area will continue to attract those who desire an affluent, fulfilling lifestyle.

Tax advantages are another reason people come to Florida. Allan R. Lipman, a legal expert with a practice in New York and Florida, advises his clients to become Florida residents for the savings on property taxes. Floridians benefit from the Save Our Homes property tax cap, which is only available here. Lipman also recommends that retirees take domicile in Florida because of the savings on state income and estates taxes.

Pending sales have increased dramatically in the Marco Island market. Reports show pending sales have increased by over 23-percent in a year over year comparison of the Marco Island real estate market.

For the first time in months, the Marco Island market experienced a drop in available inventory levels by over 2.3-percent. When you factor in the number of properties that are currently pending on the market, estimates show another inventory decrease of 4.8-percent, for a total estimated decrease of 7.1-percent inventory in the upcoming month(s).

In recent weeks, I have seen several properties of interest for my prospective buyer base go to pending, or pre-purchase process. This past week, I had to report to my “waiting” buyers that the Vera Cruz residence they wanted was no longer available since it went pending. The same thing happened four weeks ago with a Madeira listing. The buyer waited to put an offer in on a developer unit. The buyer ended up purchasing another unit in Madeira. Since Easter, Marco Island’s definitive luxury beachfront condos, Madeira and Vera Cruz, have experienced a pending sale every 4.4 days.

In another instance, I forwarded a list of select homes to another prospective buyer three weeks ago. The buyer selected properties after two weeks of reviewing the Buyers’ Tour. After they notified me of their tour selection, I had to notify them that two of the four selected properties were already pending.

What makes this scenario so unusual when many sellers report limited or no showings in this market? Buyers are looking for the best value or the best units in this market, such as the best priced, newer home on the water or the best views in Madeira. Sellers who are priced too high would be wise to take a hard look at the current market offering. If they can’t match the lower priced comparable listings on the market, they need to make a decision as to whether they want to compete with these properties or take their property off the market until price appreciation reaches their selling point.

Year over year sales comparisons indicate continued growth in the real estate market with tremendous gains in the post-Easter buying spree.

When comparing Marco Island sales from October 2006 to May 2007 to the same time period of the previous year (October 2005 to May 2006), for single family homes there was a 9.1-percent increase in homes sales and a 19.3-percent increase in pending sales. A large portion of this growth can be found in the post-Easter buying spree.

The largest area of growth in the single family market on Marco Island can be found in the water indirect home market. Water indirect homes are located on the water but have some limitation in boat height due to the bridge access out to the Gulf of Mexico. Based on a comparison of strictly closed sale transactions, this market is up over 38.6-percent from the previous reporting period.

Water indirect homes offer a large variety in pricing from the 1966 home on the water with only 1,312 square feet currently pending at $499,999 to the sale of the estate-sized, builder’s model home that sold for $2,500,000 in May 2007.

The water direct and inland homes reported negligible changes from a year over year sales comparison. Water direct homes also offer a large variety in pricing from the 1965 home with on 1300 square feet of living area that sold for $500,000 in April 2007 to the estate size home, built in 2006, with over 6,900 square feet of living area, and gorgeous views of the bay, pending at $8,500,000.

For inland homes, the lowest priced sale was a two bedroom, one bath, home built in 1966, which sold for $260,000 in March 2007. The highest priced pending sale at this time is a 3,400 square foot, custom home with three bedrooms, a den, and three bathrooms. This spacious home features an open floor plan, high ceilings, many architectural details, granite countertops, wood cabinets, crown molding, and views of the lake at Mackle Park. This home is pending at $850,000.

For inland homes in the Estates and Hideaway Beach, sales range from a low of $800,000, for a 3,500 square foot home built in 1982 on a .5 acre lot. The high-end of inland homes in this area can be found in Hideaway Beach for a 3,800 square foot, three story home, with an elevator, built in 2004, that sold for $1,325,000.

As the real estate market continues to gain momentum, don’t miss your opportunity to purchase your dream home in paradise before you find price appreciation forces you to purchase less for your dollar and your selection continues to dwindle.

Look for my next article to feature an update on the condo market June 22.

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Natalie Kirstein, MBA, Realtor, works for Premier Properties of Southwest Florida, Inc., phone (239) 784-0491, e-mail NatalieK@premiermail.net.