The South Florida Real Estate " Bubble "
You must analyze the
content of the bubble to know the whole story.
A large amount of the Naples Florida real estate market is not in the bubble.
Speculators flooded the
South Florida area during 2004 and drove up prices. Many
apartment complexes converted to condos to feed the appetite of the speculators.
Developers all over South Florida went wild offering pre-construction opportunities to the speculators.
Naples home prices went way up.
By Jan. 2005, we had reached the peak of the speculative market frenzy in Naples with inventories low and prices high. Sales began slowing by spring and inventories began to build. The hurricanes and the negative media coverage about the South Florida property market made matters worse and sales really began falling hard by summer. Sellers were slow to believe that the market had changed from a sellers market to a buyers market during the fall of 2005, so the stocks of unsold homes and condos surged.
It's important to know what the
speculators bought, because that is where the bubble comes from.
During
the past 2-3 years, the lowest priced properties appreciated the most.
Many of the condos that were around $150,000 went up into the $300-400,000 price
range. The market was flooded with thousands of low to
moderate priced apartment complex conversions and thousands of pre-construction offerings in
new projects, which is what appealed to the speculators.
The bulk of the space occupied in the " Bubble "
is made up of the " Speculator Products ". Some very well-healed
investors speculated in the higher price ranges as well in an attempt to reap
larger profits during this frenzy. So the bubble also has some of
this product in it.
However, there are still many
homes and condos located in well established
neighborhoods and on the beach that
escaped the speculative frenzy.
Remember the old slogan; " Location -
Location - Location ". Homes and condos in the well established locations have
appreciated in a more orderly fashion. Homes and condos in
the well established areas are still selling and will always sell no
matter what the market conditions happen to be.
It will take quite a while to flush out the speculator inventories and to end the negative press about the bubble. During this time, prices will fall for the speculator products and prices will remain flat to falling slightly for the " Bread and Butter " products. In May of 2005 you could count on one hand the number of condos priced under $300,000 in the better locations. However, in May of 2006, there were hundreds on the market in the same locations. Prices throughout the Naples area have already fallen to the pre-2005 levels. Astute buyers are taking advantage of this situation right now and are purchasing in the well located communities.
So, when is the best time to buy? Scores of sales are occurring daily for the " Bread and Butter " type products that I mentioned above and on occasion a good offering will sell right away. In my opinion, Winter thru Spring 2008 should shape up to be an excellent time to purchase if you are looking to buy in an existing neighborhood or on the beach. I feel that prices for those products will reach a low during that time. The safest bet is to buy in the existing well located neighborhoods.
I can help you to buy wisely.
www.petesmithnaplesrealestate.com