As we wrap up the 2007-2008 "season", activity remains at a higher level than is fully reflected in recent statistics. Showing appointments (at least in our office) have increased substantially during the past 45 days, but offers acceptable to Sellers have not followed suit. Apparently, many Buyers are still of the opinion that additional price reductions are on the way.
We interpret the increase in showing appointments (buyers working with RealtorsŪ are typically more "serious") as indicating that demand is present and is strengthening. In contrast, the number of people visiting open houses (not so serious) has fallen off significantly - we attribute this decline to the recent departure of our winter residents, many of whom appeared to consider Sunday afternoon "open-housing" to be a competitive sport. Both scenarios support the idea that a number of potential buyers have gotten serious enough to have established a relationship with a RealtorŪ and are currently being squired about town by their chosen one.
While it is true that March's median and mean selling price levels were each $40,000 lower than September's (which prompted us in January to call September/October as "the bottom"), both rebounded smartly this month, increasing by $60,000 each, whereas the fourth quarter of 2007 continued flat through year-end until closing prices increased nearly 18% in January and maintained those levels on higher volume in February. With April's results now on the books, March appears to have been a hiccup instead of a reversal.
From a seasonal perspective, 40 transactions closed between September 1st and December 31st (the 4 month median was $397,500 and the mean was $449,200). Year-to-date 2008 we have 52 closed transactions - when we eliminate the $3.9M January closing (to minimize distortion) the median is at $403,000 and a mean sits at $449,120). (Adding the big one back in takes the median to $409,000 and the mean to $515,000.)
This is exactly what we meant by "skipping along"... This month's 16 new pendings have a median list price of (gasp!) $349,900, down $70K from the 21 (new ones) in March. The mean declined about half that, $38K, benefiting from the presence of five $450K+ and one $650K (list prices). 57 homes listed at prices below $400,000 (out of 224 active listings) is also indicative that we'll remain at these pricing levels for a while... Interestingly, on December 31st there were 52 homes listed at prices below $400,000; if 26 have sold thus far in 2008 for less than $409,000, replacements appear to be coming on the market at a rate faster than they're selling...
While we're not going too far into the 500s anytime soon, that 30% increase in volume (Jan-Apr vs. Sept-Dec) and the number of pending transactions are what have us still thinking positively. We're moving our Price Trend Indicator from Down to Unchanged this month (we had it there in February and March, but we just couldn't leave it there after March's numbers).
One final comparison for this month - as reported above, during this "season" (9/1/07-4/30/08) we've had 92 closings. During the same period a year ago, there were 61 - we ARE at lower prices, but a 50% increase in transactions closed ain't too bad...
We're keeping it short this month because we're a bit distracted - a new MLS system is going live tomorrow and we'll be paralleling and learning until early June, activity levels have indeed increased, and we're attending Ken's daughter's wedding in Minneapolis on the 10th - lots of things to do before we leave on the 8th.
A reader has suggested we add highs and lows to our Median and Mean Closing Prices chart - we think it's a good idea and will be looking into making that change this month. Remember, your comments and suggestions are always welcome.
May 5, 2008
*****
April '08 Commentary
March was certainly an eye-opener as we assembled statistics for our website!
We always start (our data collection process) with active listings because they WILL change on the 2nd of the month. We usually then move on to the current pendings followed by the activity levels, finishing up with closings since they're a little more involved calculations-wise.
We were about halfway through our process and had to leave for a social event - we knew we would be asked about "the market" so, not having time to compile the whole set, we quickly reviewed closings...
Hmmm... February had 17 (as previously reported), a VERY healthy number, and for March we only have 10? (the 11th was not reported on the MLS until April 3rd and the 12th was just reported today - we're getting A LOT of practice with these calculations).
But on the 2nd of April, our thoughts were based on 10 - and look at those means and medians! Below $400K? So much for our "bottom, eh? We trust everyone remembers we did say we'd probably "skip along" at the low end levels for a while, AND...
March matched January's number of contracts written at 21, higher than any we've seen since mid-06 (18 each in April & May, 20 in June and 19 in October - January '07 had 19 - the high since then was 15 in July '07), and probably before (but we weren't keeping track ourselves).
Even more importantly, at month-end there were 29 contracts awaiting closing (1 written in early January, 4 in late February, and the rest since March 1 - apparently 3 have fallen through since month-end) - to repeat ourselves from last month - the true health of our market over the next year or so will be determinable more from transaction activity levels and Days on Market than on price levels.
And, since we brought it up, DOM for these new transactions at first appears to have increased by almost a month-and-a-half (to 156 days) but, buried in that average are some really long ones (a 324, a 413, a 453 and a 500 - these 4 average over 420 by themselves - the other 17 average 93), proving once again that "Hey, they're just numbers"...
On the down-side, it appears that the big bucks still haven't shown up. The Mean listing price of those 21 new contracts is just over $430K and the Median is just under $420K, and where they'll close, hardly anyone knows (a true demonstration of poetic license). Two have closed as of this writing: a $275K sold for $230K and a $750K sold for $685K; both within 90% of list - these activity levels, while not sufficient to support price increases, are allowing Sellers to stand firmer when offers are being negotiated.
Since it's a quarter-end, we looked at Burnt Store Isles - rather than build a web-page, here we go: 44 residences are presently listed at a Mean of $550K, the Median is at $499K and DOM is 240 - higher prices and 50% longer than PGI; 3 currently pending in the high $400s (Mean) after 158 days. During the quarter, 4 transactions (9% of current actives?) closed at a Mean Selling Price of $438K, the Median was $434K and DOM was 96.
And since we're talking quarters, PGI had 37 closings (almost 16% of current actives) at a Mean of $536K, a $403K Median and 133 DOM (remember PGI had a $3.9MM closing in January, hence the Mean/Median differential). Four 200+, two 400+ and two 500+ Days on Market counts helped push that number up - 22 of the 37 were on the market less than three months.
Still in quarters mode, Vacant Land is still at a one-a-month rate, although PGI had 4 sales close this quarter - the Median and Mean were both in the low 200s and Days on Market averaged 164. BSI had no vacant land transactions. BSI had 9 in 2007 and PGI had 11...
Our moving 12-month Closed Sales count (we made it up in January when YTD suddenly didn't mean much) stands at 122, up a bit from 2007's 117 total number of closings - again, those 29 (now 27) pendings are a nice perspective to have going forward.
On a somber note, SkyBus' demise last week was not the greatest news for Charlotte County - or Columbus, Ohio either - reading comments posted on a website operated by the NBC affiliate in Columbus was not very uplifting, but REALLY! Some of those contributors actually had the nerve to write that they were worried about their family and friends who were "stuck in Punta Gorda"!
Yeah! They really miss the cold and snow and ice and just can't put up with having to stay in Southwest Florida for one more day. While we can't ignore that some of those stranded had to spend some extra bucks to get back home, we just had to laugh..."stuck" is not the word we'd use, although, come to think of it, given our past two years' real estate market, some of our current Sellers might...
See you next month.
April 8, 2008
*****
March '08 Commentary
February provided a definite POP in PGI Residential waterfront closing activity with 17 closings evenly split between Sailboat and Powerboat. We haven't seen any month near this level (within 25%) since August '07 (which, you'll recall, was itself a surprise) when we hit 16. There were 14 each in February and March of last year and we've got 4 in the box so far this month (along with 6 new pendings) - another high-teen closing count would be a welcome extension of the mean and median prices we're seeing and tend to confirm that the bottom (17 in September and October (COMBINED) at the lowest mean / median combinations for the year) is history from more than one perspective. But hey, these are just numbers, right?
Speaking of means and medians - those measures of PGI waterfront residential closing prices each declined in 2007 to 80% of their 2006 levels (full-year calculations), but have begun to produce a substantial corroboration for our now-infamous bottom call. October's mean was THE low point at $430,200 and this month we're at $493,500, up almost 15% on a reasonable volume (49 closings over four months but remember, 1 was at $3.875M); the median, from THE low of $380,000 in December, jumped in January on a low transaction count, but managed to maintain that level in the low 450s this month, up an even better 19% from the low. Actually, the average selling price of those 49 closings is $527,180 and the median is at $403,000. For the same 4 month period ending February 28, 2006, there were 31 closings at an average selling price of $550,110; the median was at $480,000. Prices were higher, but this year's level of activity is 50+% higher (which, in our opinion, means healthier).
Per our Active Listings Price Range chart, one-third (49 today) of all Sailboat listings are priced below $500K and almost half (35) of the Powerboat listings are priced below $400K - a total (let's call them "lowER"-priced listings) of 82 for the pair. We didn't dissect "undefined" active listings but they appear to track Powerboat's levels with 40+% below $400K, so we added those 11 to the Powerboat column for a grand total of 93, split right down the middle. Per the medians in our tables, Sailboat closings have maintained the low-to-mid 500s and Powerboat seems to be having an inordinate amount of difficulty in reaching the $400K mark (definitely a drag), so we took a closer look at these listings to get a feel for their potential impact on our statistics going forward.
We put together an arbitrary set of criteria that we feel are "non-positive" attributes and tallied the results as follows:
For Sailboat residences - Built before 1978 (> 30 years old): 18 (38% of those priced below $500K, 12% of all) Built before 1988 (> 20 years old): 37 (75% of those priced below $500K, 25% of all) No Pool: 9 (5 pre-1978, all pre-1988) Less than 1,600 sq. ft. (under air): 8 (5 pre-1978, all pre-1988, 3 with no pool)
For Powerboat residences (including Undefined) - Built before 1978: 29 (63% of those priced below $400K, 29% of all) Built before 1988: 40 (87% of those priced below $400K, 40% of all) No Pool: 14 (13 pre-1978, all pre-1981) Less than 1,600 sq. ft. (under air): 13 (all pre-1978, 6 with no pool)
There are three pre-1968 homes on Sailboat water with less than 1,400 sq. ft. under air that do not have pools currently listed between $399,000 and $550,000 (we removed the upper price limit for this last search).
There are six pre-1975 homes on Powerboat water with less than 1,600 sq. ft. under air that do not have pools currently listed between $199,900 and $375,000.
Utilizing only the three criteria (advanced age, lack of a pool, and lower square footage under air) and without considering upgrades or length of seawall or time to the Harbor et cetera, when (and if) these properties sell (particularly given the higher number of Powerboat listings without the Sailboat premium), the effect on the mean and median selling prices will obviously be to keep them at current (or not much higher) levels for the foreseeable future.
While we'll still report the means and medians, our sense is that the true health of our market over the next year or so will be determinable more from transaction activity levels and Days on Market than on price levels. We've already commented on this month's higher transaction counts and well... look at that... DOM is at a level we haven't seen since May '06 (May '07 was inordinately low on one of the lowest transaction counts ever recorded).
A healthy market is one in which activity levels are sufficient to facilitate the completion of transactions between parties at price levels that motivate Sellers to sell and Buyers to buy within reasonable time frames and are comparable on some objective basis.
Another point before we sign off - 260-270 active residential waterfront listings isn't that momentous considering there are about 4,000 residences in PGI (on- and off-water). That's just under 7% or 1 in 15...and all we need is 1 out every million or so people in America to decide they want a home on the water...
See you next month.
March 11, 2008
*****
February '08 Commentary
Well, a bunch of people on Sailboat water decided to list their homes in January - 32 new listings went on the books, a net increase of 18, while Powerboat and the infamous "Undefined" both saw decreases in the number of active listings.
The median sailboat water list price dropped from $591,950 to $568,000 (just over 4%) and the mean list price dropped from $744,178 to $724,788 (just over 2.5%). Of course, some of these declines stem from price reductions on existing listings, but those 32 new listings had a median of $549,000 (the low was at $350,000 but the upper half included 7 in the $900K+ range, rendering the mean very highly skewed).
While price reductions are not desirable from a Seller's perspective and are more indicative of a weak rather than a strong market, they do get attention from Buyers - 21 waterfront residential listings in PGI (11 on sailboat water) went under contract in January at a median list price of $430K. One of them has already closed at $3,875,000 and another $1,299,000 is still pending - as in the above instance, the means are not statistically valid -
These high-end transactions are, in our minds, another indication that we have seen the bottom for PGI Gulf-access waterfront - if you closed in October or November, you were probably there...
When we made our "bottom" call last month, we certainly were not saying it's straight up from here. We're probably in for a period of "skipping along" at these levels and we're certain we'll see a few more "steals" - but the increase in general activity levels and the resulting number of contracts being agreed to both indicate that change is underway, and our opinion is that it's positive.
For the record, we consider closed transactions to be a more accurate indication of which direction prices are headed. Just about anyone can find someone who will list their property at whatever price they specify, but the real dollar values are set when someone buys and someone sells. And the median selling price of Punta Gorda Isles Waterfront Residences sold last month went up...
As everyone is aware, Amendment 1 passed and we now have the ability to "port" any existing Save Our Homes property tax discount to another property anywhere in the State. This should be more of a potential stimulus to the general market, but we still remember when people were selling in Naples to move to Punta Gorda - this might just be the kick-start that could get that ball rolling again...
As we proceed further into 2008, the general demeanor of the public appears to be turning more negative each day. We won't disagree that there are some issues that need to be dealt with, but even the Fed's unprecedented interest rate cuts are now being viewed negatively, whereas prior to their announcements, just the possibility that they may happen was considered good news. And who is this guy named "Investors" that the stock market commentaries all report as being the culprit whenever anything happens, good OR bad? Somebody ought to find this guy and put him into mutual funds so he has to win or lose along with the rest of us, instead of being the direct cause of all this volatility.
As always, we welcome your comments and suggestions, even the one that suggested we look for a new line of work, and Thank You again for allowing us to share our thoughts with you.
February 10, 2008
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January '08 Commentary
2007 is over, done with, written in history, whatever -
The number of PGI Residential Waterfront Sales increased to 117 in 2007 from 101 in 2006. 66 were on Sailboat Water, 51 on Powerboat Water. Our "Undefined" category saw 7 closings, all of which were on Powerboat Water (we're still somewhat amazed that Sellers allow that category to exist).
2007 closings totaled $57.6M versus $62.3M in 2006, a decline of $4.7M or 7.5%.
At the median, a $500,000 home closed for $464,000 in 2007 versus a $619,900 for $580,000 in 2006, a decline of $116,000 or 20.0%.
The average closing price in 2007 was $492,458 (at 91.0% of its then-current asking price, $541,223) versus $613,646 (at 92.1% of its then-current asking price, $666,104) in 2006, a decline of 19.7% from the 2006 level, remarkably consistent with the median. On average, the original listing price was reduced 9.0% ($50,000+) prior to going under contract.
2 residential transactions closed at $250,000 during 4Q; both were early 1970's vintage; 5 others closed below $300,000; the lowest Sailboat Water closing price was $318,000. At the upper end, 7 closed in the $800s (5 Sailboat and 2 Powerboat) and 1 closed at $1.3M (on Jamaica Way).
In Burnt Store Isles, the number of transactions declined from 25 in 2006 to 20 in 2007; the median closing price declined 15.6% and the average declined 19.7%. 1 closed below $400,000 and 2 closed in the $900s.
On the Vacant Land front, 11 transactions closed in PGI (versus 20) and 9 closed in BSI (versus 4). Combined closing prices totaled $6.4M versus $8.7M; BSI's average closing price declined 17.1% and PGI's increased 3.0%.
So what does all this mean? We think we are poised for a healthy season and things are already picking up.
Average listing prices have declined from $697.3K in January to $634.7 in December (end-of-month readings), a 9.0% change.
In 4Q 2006, 16 PGI waterfront residential transactions closed; in 4Q 2007, 32, albeit at the lowest levels of the year.
Sure, you're thinking - from Moody's Economy.com on December 28, 2007:
"America's market with the biggest projected decline Punta Gorda, Fla. Key Stat: Forecast peak to trough decline: 35.3% Punta Gorda will be the U.S. city hardest hit by the home price turn-down."
But let's put things in perspective -
First, be advised that these numbers are compiled for the area defined as the Punta Gorda MSA (Metropolitan Statistical Area) which includes all of Charlotte County (it's called that because we're the only City in Charlotte County).
And remember, Charley gave us a last-minute bump in prices that pushed us higher and extended our run-up longer than most other locales.
Here's an excerpt from a Market Forecast from the same source: (June 2006-June 2007 - we think this was published during 3Q 2007)
Long-term (which is what real estate is), we've always said we're doing pretty well...
In our opinion, we have seen the bottom for PGI Gulf-access waterfront -
There, now we've said that too!
There will continue to be downward pressure on our mean and median selling prices - roughly one-third of the homes currently listed were built prior to 1980. The average list price of this group is $447,000 - granted, many of these have been substantially improved since they were built, but 25% of that third (19) are listed below $350,000 (perhaps not improved, eh? - we hadn't done this particular calculation before, and probably should have on previous occasions when we were wondering how many "could possibly be left").
BUT -
People considering purchasing are already here (another Open House we held on December 30th was very well-visited), more are on the way (as they've planned), and prices are VERY attractive. In fact, from a "glass is half full" perspective, all the headlines about how terrible our market is should be construed as a nation-wide alert that we're on sale and bargains are to be had - buyers should be showing up in droves!
Very few people HAVE TO move to Punta Gorda Isles - they're looking because they WANT TO, and in many cases, the general economy (which isn't doing anyone any favors these days) is not their primary concern.
Already this month we have 7 new contracts in place (one in BSI) at an average list price of $505,857 (2 were listed in the $600s) and it's only the 11th...
We've changed our "Recent Price Trend" opinion from "Down" to "Up (skipping "Unchanged) - from our October Mean Closing Price of $430,200 (the low point in 2007) we went to $440K in November and $450K in December. While those new contracts appear to be a further endorsement of our new position, our Buyers' Market is still in place.
This will be our longest edition to date because we feel compelled to remark on the proposed property tax amendment on the January 29th ballot. We do understand that SOH has proven not to be an ideal methodology for equitable property tax collections, but since that's what we have, we feel that portability is a necessary modification to the existing situation
The following comments are excerpted from a message to all Prudential Florida WCI Realty associates from Rei Mesa, the President of our Division.
The first component of the plan is portability. This will be especially helpful to people who have owned a home for a while and find themselves "locked-in" to their property.
It's very important to note that if this amendment passes on January 29th, 2008, portability will be retroactive to January 1st, 2007. That means that everyone who purchased in 2007 and moved from an established homestead will be able to "port" their savings for next year. Their taxes will be readjusted!
Portability allows homestead owners to take up to $500,000 of accumulated tax savings with them to their next homestead. It also allows two years to establish that next homestead anywhere in the state.
There is a difference in how much you will port if you are buying a more expensive home versus buying a less expensive home.
If buying "up" to a more expensive home, the homesteader simply transfers the difference of the "just" value and the assessed value from the old homestead, and subtracts that amount from the new "just" value. In most cases, the homestead property owner will also receive an additional $50,000 in homestead exemption but I'll explain that further in a few minutes.
If buying "down" to a less expensive home, the homesteader will port an amount equal to the ratio of the old assessed value to the old "just" value. Rather than allowing the homeowner to "port" the actual Save Our Home differential, the formula was designed so that if a homeowner had a 50% assessed value to "just" value ratio in the old home, they would maintain that 50% assessed value to "just" value ratio in the new less expensive home. This approach avoids the problems that could otherwise occur if taxpayers move large differentials from high-priced markets to lower priced markets.
One other very important point is if someone does use portability, they will still maintain a three percent assessment cap on their new property as they have today. Save Our Homes does not go away under this plan.
The next portion of the amendment is an increase in the homestead exemption. This will exempt the $50,000-to-$75,000 tier of a homestead's value from local government taxes, but not from the school portion of taxes. The current $25,000 Homestead exemption will remain in effect for the school portion.
Another important piece of the plan is the 10 percent annual assessment cap on non-homestead property. Similar to Save Our Homes, this will limit the assessed increases of commercial, rental and second homes to a maximum amount per year beginning in 2009. This will protect these property owners against high spikes in taxes from year-to-year. While it is certainly not the lower assessment cap that we want, it will offer some relief and protection to those properties in high-value markets and waterfronts which have previously experienced very unpredictable tax increases year to year.
Finally, another important section of this amendment is the $25,000 Tangible Personal Property exemption for businesses. This tax is paid to local governments on items such as shelving, desks, computers and other office equipment.
If this amendment does not pass, our next chance to vote for any property tax reform at all will be November of 2008, and the portablility option contained in this amendment may not be included, especially if this amendment fails in this election.
And remember . . . if you or a friend is a registered independent voter, you can vote on this amendment on January 29th even though you don't have a presidential candidate to vote for that day.
END of excerpt
As always, we welcome your comments and suggestions, and Thank You again for allowing us to share our thoughts with you.
January 11, 2008
* * * * *
December '07 Commentary
Well, we've done it! Another successful (?) hurricane season has officially drawn to a close. The second consecutive year with no headline-making storm activity affecting Florida is another one of those "shoes" we've been waiting for "to drop", although come to think of it, not one person has mentioned it to us so far this month.
At the State and regional levels, tourism should post stronger results for this season with the natural result that some of those visitors will want to own property in Florida. December's inauguration of commercial air service at Charlotte County Airport will give our area an additional boost. We are Florida's newest destination and have now become even more convenient (and more economical) for visitors from another section of the Midwest, a lot of whom have already been coming to this area for years.
We held an Open House yesterday, and six couples stopped in - this was not on a well-traveled thru-street either - they had to make some turns to get there. One couple were neighbors whose own house is for sale and hasn't sold - scoping out the competition? - and one couple were "regulars" - they've been looking for a while and "just haven't found the right one". But the other four were seriously looking, one of which had driven over from the East Coast for the day, had visited here before and will be coming back!
To put it mildly, we take this as yet another favorable indicator for the upcoming season.
November was a bit mixed, generally appearing to hold its own count-wise with 10 new contracts and 11 closings, but composite closing prices (medians and means) have not seen the $450,000 level since August. A look backwards reveals that in September and October, the dollar spread between Powerboat and Sailboat homes declined sharply when some Sailboat residences closed at surprisingly low levels. In November, three Powerboat closings at an average selling price of $296,667 was the big drag - the eight Sailboat closings averaged $503,000 and the median was in the low $560s, a pretty healthy increase from October. One of those Powerboat closings was at $250,000, the lowest price this year - until another Powerboat closing at that same price occurred last week. The new contracts tell a similar story - the average list price of the 10 is at $411,000 with Sailboat list prices averaging the in low $540s (4) and Powerboat averaging in the low $320s (6). While the spread appears to have returned, it is not for the more desirable reason.
Maintaining an average of 10.6 contracts per month for the last five months was a step in the right direction - if this rate should improve in December (only 4 thus far) and through the remainder of our season, it will only be a matter of time before prices start to firm up.
From the glass-is-half-full perspective, keep in mind that the county Property Appraiser will be setting your assessed value as at December 31st. In that regard, ending the year at these price levels perhaps isn't as terrible as it sounds, certainly not if you're not trying to sell...
So on January 2nd, look out!
We wish each and every one of you a happy holiday season and that 2008 will be the best you can imagine, particularly in your real-estate-related endeavors.
December 17, 2007
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** PERMANENT FOOTNOTE: Please remember, the numbers that we collect and subsequently present to you and that we interpret to form our opinions are derived from an MLS database. There may be other transactions that have taken place but are not included in our numbers. Our data and opinions are intended to relate only to gulf-access waterfront residential properties in Punta Gorda Isles and Burnt Store Isles. Statistics pertaining to other areas and property types may be available upon request.
ZIP Code: 33950 Approximate Location Boundaries: Punta Gorda Isles Gulf Access Waterfront Residences
Location Characteristics: A Waterfront (30+ miles of canals with Gulf access) / Golf Course (St. Andrew's South) community with an active Civic Association - the Isles Yacht Club is also located in Punta Gorda Isles. PGI is wholly contained within the Punta Gorda city limits, a substantial benefit of this being that seawall maintenance is provided by the City via a separate taxing authority. Visit our website and learn more about Punta Gorda on our Relocation Page.
About Ken & Karen Rolland:
Whenever you see "Me" & "My" in either this newsletter or on this website, it's really "us" & "ours".
We live in Section 12 of Punta Gorda Isles, we're the second dock in from the perimeter canal about twenty minutes from Charlotte Harbor via the channel at Ponce de Leon Park. We are boaters, we are boomers, we were "second home" purchasers in 2001, dutifully utilizing the equity in our then-primary residence (on Lake Minnetonka in Minnesota) for the down payment, as all boomers should.
We are pleased with our decision to become full-time Florida residents in 2002 (a "return" for Ken) and would welcome the opportunity to share the rest of our story with you. We are both full-time real estate consultants and offer our own (midwestern) definition of professionalism for your consideration.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
