What Will It Take To Recapture That Buyer Sense Of Urgency?

It has truly been an eye-opener to observe the difference in Buyer behavior over the last 7 years. One of our gulf front listings back in 2003 was listed at $995,000 and we were very aware of that $1 million threshold that had not been broken. It sold to the the condo owner next door for $950,000. Since this upscale complex offered two condos per floor, the new owner was able to merge the two into one dramatic penthouse residence.

Once the $1 million threshold was broken, things really began to heat up. Buyers were able to get financing on a "drive by" appraisal, or with "stated income", or the ever so attractive "interest only". Interest only was a seemingly great choice because appreciation was occurring at an unprecedented 19-21%/year! "Flipping" a unit (or reselling it for a higher price due to an original low entry price combined with appreciation) became an obsession to many ready to earn a quick profit. There was a point in 2006 where you could not get a property on water here in Tampa Bay for under $700,000! And buyers were flocking in, competing offers for prime properties, and bidding wars. Over 1000 people were moving to Florida a day!

Then a series of things happened... the hurricanes of 2004 wreaked havoc in Florida as 5 named storms made landfall, 3 of which with sustained winds of 115mph. Charley, Jeanne, Frances and Ivan became names not to be forgotten. When Katrina hit New Orleans in 2005, bringing national concern and attention to the issue, Florida found insurance premiums drastically increasing and some insurance companies pulling out altogether.

Simultaneous to this boost in insurance, the tax man was also on the way. Home values soared and along with it property taxes. So owners got a double dose of increased carrying costs which made owning these properties MUCH less affordable. If that wasn't enough, interest rates began to rise. This was the point when things began to go downhill. Buying a $700,000 condo carried with it a much higher cost and had lost its star appeal.

As property values plummeted, the Buyers had become cautious. No one knew where the "bottom" was and the concern was buying too high. We saw potential buyers begin to rent the properties that they might normally have purchased... as the rent was less that what it would cost to own. Sellers now found themselves competing for the few Buyers ready to take advantage of this time. And the Buyer's market brought out the merciless tactics of driving hard bargains and leaving Sellers unable to even cover their mortgages. Thus, short sales, foreclosures or in many cases the Seller bringing the shortfall $$ to the table.
But things are beginning to shift again. Insurance premiums have come back down, property taxes have lowered with the decrease in property value, and interest rates are at significantly lower numbers. What sparks that sense of urgency? The picture left is a project called Signature Place in downtown St Petersburg that took a beating in value as it was completed in 2008. An auction took place March 7th with 41 units being offerred at a fraction of their original prices. Attendance was great! Every unit sold above the minimum bid price, ranging from $174,000 for an 859 sq ft unit to $742,000 for a 2,319 sq ft unit. At least 10 additional units were sold and there are plans to bring more units onto the market shortly.

An announcement came out late Monday about a Builder Closeout for 20 waterfront units in Treasure Island ranging from $129,900 to $239,900. They will begin taking contracts on these units this Saturday at 9am. Speaking with the agent, they already have commitments from 40 Buyers interested in making an offer and 60 others planning to attend Saturday to take a look! To take advantage of this kind of opportunity, Buyers will be forced to make a decision and "pull the trigger" quickly. These are the kind of deals that spurred Buyers on in 2004 and 2005. It should be interesting to see how this unfolds.

Anyone interested in participating in this Treasure Island opportunity should contact us as soon as possible at 727-480-8219.