When is the market going to come back ???

I get that question everyday… When is the market is going to return? If we analyze where the market was, we can make a good guess when it will "be back". Back in the years 2000 and 2001 we were selling 300 units per month in Cape Coral / Fort Myers. 2002, we averaged 400 units per month, 2003 averaged just over 500 units, 2004 averaged 700 units, 2005 averaged 1000 units, 2006 - 700 units, 2007 - 400 units.

We can see the demand in the graphs.

 

The frenzy period between 2003 and 2005 was when the demand in the market was fueled by investors and speculating buying. It was this period where prices were rose 30%-40% a year. In general, in 2006 we saw a decline of about 20% in value and 2007 a decline of about 20% in value. Now, in 2008, we are still declining. After looking at the graph, the interesting thing is that market has "returned"! Meaning, the market is back to normal, with the same amount of demand we were selling in 2002, to end user buyers. The investor is still, in large part out of the market, as they have been out of the market since 2005.

If you are looking for double digit yearly appreciation again, it will most likely return one day, as real estate is cyclical. Booms typically happen every 10-15 years. For now, we are still currently declining in value, as a direct result of having a three-year amount of inventory available. Once we stop declining, we will be in a period of stabilization, where prices should remain somewhat stable, followed by a period of "normal" appreciation.

The one thing Florida has been building up is "pent up" demand, or demand that is there, in the form of buyers, but they are waiting to enter the market, when they feel prices have bottomed out. When this occurs, we will some small spikes in the market, and help the market from further decline. If and when the market ever gets back to the insanity period is anyone’s guess. Personally, I hope it never happens again, as it is the cause of the 1800 foreclosures that are currently happening a month in Lee county. However, markets are driven by human emotion, so it is inevitable that it will happen again one day.

Brought to you by the Cape Coral Fort Myers Real Estate Blog 

Comments

[John Susnik]

Not too sure about the market in Florida... but I sure hope the NE Ohio Market for home sales increase so we can sell more of our products.