People selling second homes in sunny locations couldn’t have asked for a better marketing pitch than the winter of 2011. With snow turning Northern roads into ice rinks and closing airports and schools, the Sunbelt would seem to be more desirable than ever. The only glitch is the real estate hangover from the Great Recession.
But new data from Florida suggest that this may be the year when buyers and sellers come together. “We’ve outperformed January 2010 by 85%,” says Judy Green, chief executive officer of Premier Sotheby’s International Realty in Naples. “It’s almost as if someone just turned on a faucet and the people are out there. They’re making deals.”
Before leaping in, though, you need to ask yourself two questions: Why is this happening now? And how can I take advantage of it?
The “why” is a function of both the market and of sentiment about Florida. Interest rates remain historically low — the average 30-year fixed-rate mortgage in Florida was recently 4.9%, according to Bankrate.com — and banks are lending again, if cautiously. Now that rental prices in the coastal areas are rising, people who have dreamed about owning a second home in (or relocating to) the state see this as their moment to act — while sale prices remain off their highs.
Indeed, the uptick in sales hasn’t yet translated directly into pricing power for sellers. According to Florida Realtors, sales were up statewide in 2010 by 29% for condominiums and by 5% for homes, but prices were down 15% and 4%, respectively. (This is better than last year, when prices were down 24% for homes and 34% for condos.) A January report from Moody’s Analytics said home prices in Naples will not return to their pre-recession peak until 2038.
Those numbers mean that there are plenty of bargains to be found, and even an occasional steal. Allison Turk, an associate at EWM Realtors, just sold a house on the exclusive North Bay Road in Miami Beach for the second time in five years. In 2005 the home fetched $1.3 million; this time it went for $690,000.
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