Major Change in the Market

After I go over the statistics for last month I’m going to cover an important topic for anyone looking at buying a home, condo or townhouse in the area in the coming months.

I’ve learned some important things in the last few months about how our local market is behaving that can definitely affect how any purchases you attempt to make here will go.  I want everything to go smoothly for you and so you don’t have to experience some of the things my other clients have gone through.

One other bit of news – our MLS is changing this week and you may notice some slight differences.  If you have saved properties you are interested in you should note down the addresses or MLS #s since, unfortunately, those saved listings will get wiped out when the transition is fully done.  But the good news is that the MLS will now include listings for nearly all of central Florida including Orlando, Ft. Myers, Sarasota, etc.

But before I get into that, let’s see how April turned out.

In last month’s newsletter I wrote about how surprised I was to see that the local real estate sales here in March were the highest since back to before January 2007 and that I didn’t know whether the sales would be able to maintain that higher range.

The final sales numbers for April show that there were just slightly less sales in April than in March but more than during April of last year.  So other than March of this year, April sales were higher than all other months back through and including January 2007.

Here’s the graph so you can see for yourself (2011 is in orange and if you click on the chart it will open full-sized in a new window):

I don’t know what May will bring I feel pretty confident that the overall positive trend will continue.

I’ll get into describing the market change in a moment but I did want to let you know that I came across two interesting articles this month and will have links to them at the end of the newsletter.  One is a list of the ‘Top 6 cities where buying beats renting’ and the other answers the question ‘How can you beat a cash bidder?’ so make sure to check those out after reading the rest of the newsletter.

So what’s the major change in the market?

Last month I wrote about some of the experiences of my clients since the beginning of the year.  The attempts by one client to buy a high-end condo on Clearwater Beach facing the Gulf and being beat out twice and missing out on 3 other possibilities all in a 2 week period; other clients seeing houses and condos they were interested in going under contract before they could act; an investor who bought 4 condos in December and has been beat out on 6 since the beginning of the year.  This was getting to be so consistent that I had to look into this further to determine what was really going on and my investor client came to the same conclusion about a day before me.

Last year the market was doing well, especially due to the tax credit and then slowed down for 3-4 months after the tax credit ended and, in part, due to the problems that came up foreclosure paperwork.  December showed a big increase and sales have been strong since.  What appears to have been going on last year was that sales were strong due to the tax credit but there was still overall concern about the economy and real estate that caused many buyers and investors to hesitate on buying.  Experienced investors and buyers, however, viewed this as an opportune time to buy and likely a bottoming of the market.

But after getting past the uncertainty of the elections and what was going to happen with taxes it seems that there were more buyers feeling more confident about getting into the market, especially investors and cash buyers.  So, as my investor described it, the end of last year was like “a party” for those who were buying and now the party is over (or at least it’s more crowded and the good appetizers are getting snatched up before you can get to them).

This doesn’t mean that there aren’t still good deals available but it does mean that a buyer’s approach to the market has to be different if they want to be successful in securing good deals.

Each of my clients that lost out on these good deals since January was approaching the market as if it were the same market as it was last year and that was the error that both they and I were making.  Knowing this makes it possible to approach these types of deals differently and in a way that can be more effective.

The key points will be 2 that I have brought up in other newsletters but can see are even more important now.

The first is being prepared.  If you have not worked out how you’re going to pay for the purchase or finance it and have to take time to get that done you can lose out.  This happened to one client that could have bought a condo for about 60% what the market value is for condos in that complex, but due to a delay in getting the documentation needed he lost out to another buyer who saw what a good deal this was and was able to act quickly.

That leads into the second key point – acting quickly once you find a good deal that you are interested in buying.  This is especially true with foreclosures because there can often be a delay of a few days before getting a response from the bank to your offer and if other offers come in the bank will then tell everyone to submit their “highest and best” offer and you will now have to hope you aren’t beat out by someone willing to pay more than you wanted to get it for.

That pretty well sums up how you need to adjust your approach to making a purchase in this current market.  Included in the first point, in addition to be prepared in the financial aspect, is getting any information you need to know before making any decisions.  Questions you have about taxes, association fees, how the buying process works in Florida or anything else you would need to know to be able to make a decision should be addressed right away – these are things that you can get sorted out easily and can cause unnecessary delays at a crucial time.

You should always make sure to make a decision based on what is right for you and with all the information you need but to be successful in this current market you should be well prepared so that you can act quickly when needed.

I hope this helps you to better understand our current market condition and look forward to seeing you in the near future.  Don’t forget about the links below to the articles I mentioned.

Sincerely,

Ron

Top 6 cities where buying beats renting

How can you beat a cash bidder?