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January 21, 2009 - by Clinton Burton
Rebound in Real Estate....
Home sales on the rise, locally
The residential real estate market that, when it fell, dragged the American economy
into one of the worst recessions in recent history, hit Southwest Florida
particularly hard.
Homeowners lost homes that they could not afford to keep and jobs they could not
afford to lose.
However, 2009 may bring a glimmer of hope from the very economic segment that cast
a pall over 2008 - real estate.
Figures released this week by the Cape Coral Association of Realtors and by one of
Southwest Florida's biggest developers indicate that the residential housing
market, vital to the local economy, may be on the cusp of making a comeback.
Sandoval, a Bonita Bay Group community in northwest Cape Coral, reported an
increase in sales in 2008 over 2007. Debbie Holm Sheeley, general manager of
community operations, said she expects a swing toward the positive as consumers
realize that the fire sale-like deals will not last forever.
"Smart shoppers are looking for values," she said. "And they're finding them, so
properties are moving."
Although, Holm Sheeley said, the community sees fewer visitors these days, a higher
percentage are serious shoppers. Roughly one out of every 11 visitors to Sandoval
last year bought a home.
2008 marked the second year in a row of sales increases in the community in a time
when a number of its affluent-market competitors fell on much harder times.
Still, Holm Sheeley said, buyers were not exactly lining up to move into Sandoval
when the community went on the market in early 2005.
"There were a lot of people who waited. There were some buyers that came in early
but wanted to wait until the amenities were built out," she said. "Some people like
getting in on the ground floor. Others are people like me, who have hard time
buying based upon a sheet a paper."
Holm Sheeley said she is confident the uptick will continue since, in an up or down
market, Southwest Florida remains an attractive place to live.
"There are a lot of great places to live in Cape Coral, Sandoval included, and
we're very optimistic that this momentum will continue," she said.
Cape Coral Association of Realtors President Paula Hellenbrand shares her
optimism.
"I just received the new numbers today, and it's clear that the market is changing.
In the fourth quarter of 2008, home sales in Cape Coral were up 295 percent. We
currently have 3,900 homes on the market. In the first quarter of 2008 we had
4,400," she said.
Hellenbrand, the broker-owner of Encore Realty, concedes that with homes selling
for less, real estate professionals are having to sell more homes to turn the same
profits that in recent years would have taken fewer closings.
More work for Realtors, however, could eventually benefit every homeowner in the
city due to simple supply and demand. As continued sales decrease residential
inventories, they eventually lead to greater demand and subsequently higher selling
prices.
Hellenbrand said the resulting increase in property values may take several months
or even years to culminate, but in the meantime potential homebuyers can bargain
shop.
"Think of it as going to your favorite department store and seeing something you
have always wanted on the discount rack and it's 75 percent off," she said. "That's
what the market is like now, and that's why it's trending upward."
To emphasize her point, Hellenbrand cited a home that county records reportedly
show sold for just over $150,000 as recently as 2005.
"In a few hours, one of my buyers is closing on that house for $85,000," she
said.
A basic economics lesson, however, does not take into account the human factor that
will eventually revitalize the housing market and, presumably, allow the
broader-reaching economy to bootstrap itself from its current malaise.
Cape Realtor Lenora Marshall, of Century 21 Sunbelt Realty, believes that the
current wave of buyers will continue to benefit the local real estate market long
after they have closed on their homes.
"People are buying homes to live in, not just as an investment that they are hoping
to flip," she said. "When these people move in, they improve the value of the
entire neighborhood."
Instead of having an abandoned or absentee-owned home next door, the new neighbors
set about improving the property, Marshall said.
"Even if that just means cutting the grass or applying a fresh coat of pain, the
property is now someone's home and not just a house, so it's likely going to be
well taken care of," she said. "Many people also are planting trees. Cape Coral
definitely needs more trees. Buyers who are purchasing homes to live in, and not as
a business venture, end up making Cape Coral a better place to live."
Any uptick in the housing market generally bodes well for the health of the further
reaching economy.
A 2004 research project by the Center for Applied Economic Research at Montana
State University concluded that a strong real estate market can benefit many more
people then just those directly involved in the construction and marketing of
homes.
In fact, the researchers said, strong sales of new and existing homes can impact an
economy all the way up to the county level and beyond, regardless of where,
specifically, the homes are being sold.
The study emphasized the direct, indirect and induced effects of home sales.
Direct effects benefit the businesses involved in the sale of real estate such as
real estate, mortgage and title firms. Businesses that aid or facilitate property
sales, accounting and advertising firms, benefit indirectly from upward market
swings.
The final effect, what researchers call induced effect, is also the most
far-reaching. Everyone who makes money from real estate transactions also spends
money for goods and services, thus benefiting everyone from dry cleaners to fast
food restaurants.
However, it takes time to overcome any recession, according to Gary Jackson,
director of the Regional Economic Research Institute at Florida Gulf Coast
University.
"I think the economy is making a comeback, but it's going to take time. We may be
looking at 2011 before the recession ends," he said.
According to Jackson, that may be just what the economy needs to stay healthy in
the long run.
"When things are good and booming, volatility can rise faster and that's always
going to be a problem. We have to think about the impact and the long-term
effects," he said.
Jackson harkens back to 2001 when Southwest Florida last saw a noticeable
recession.
"We were able to come out of that fairly quickly, but we won't be able to do it
this time around because we just don't have the population growth that we were
having then," he said. "Most economic forecasts call for a slow return, maybe as
late as 2011. That's desirable. The growth that led to this recession wasn't
sustainable. Slower growth is what we want."
Key to recovery is consumer confidence, Jackson said.
"Consumer confidence is important and it has risen a little bit in the last few
months, but it's still very low. When consumers are concerned about losing their
jobs or their homes, they stop buying the durable goods whose production and sale
drive the economy."
Jackson said newly seated President Barack Obama may inspire confidence in some
buyers, but America should not expect a speedy recovery.
"He's got some new ideas and may be able to turn things around, but even he admits
that it's not going to happen overnight. He's been very explicit when talking about
his stimulus package, that it is going to take time. He's even said that he may not
be able to implement all of his ideas in one term."
Regardless, Jackson looks into the economic crystal ball with guarded optimism.
"I think we're already on the road to recovery," he said. "But it's going to take a
little more time to get there."
Source: http://www.cape-coral-daily-breeze.com
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