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SouthWest Florida Real Estate Market Cycle

May 23, 2008 UPDATE: April 2008 Sales in Cape Coral – Fort Myers real esate market up 57% over this time last year. View Details.

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Where are we in the real estate market cycle in SouthWest Florida? The “rational decline” phase.

This illustration shows where we’ve been, where we are, and where we’re going. In 2003 and 2004 and part of 2005, we had irrational growth. Property inventory was low, buyers out-bid each other, speculators speculated, and there was no end of price increases in sight.

growthcycle.jpg

In late 2005, the much needed market adjustment began, starting the cycle of irrational decline, meaning sellers started out with Original List prices much higher (30-40%) than the market could absorb, and gradually dropped prices to the level before the irrational growth began.

Now, in the fall of 2006, we are seeing realistic Original List prices that are in-line with what would be normal appreciation (had we not gone through the irrational phases) and are nearing getting back to the basics of a rational growth period.

growthcycle-a.jpg

Prices have declined to what we see as at or very near “the bottom” and the premium properties, once they hit the right price, are going quickly. By premium, we do not mean the most expensive properties, but rather the best in class for a given property type. Those who are waiting until winter may find slightly better prices, but the better properties will be picked over. As an example, the better Gulf Access homes around $375,000 – $425,000 have sold in the last couple of months, with the remaining inventory being those that need lotsa work, have small square footage, or are in stagnant neighborhoods (and often all three).

Related Posts: Buyers Wanted, Still Sunny, Long-Term Outlook, NAR Says Florida to Remain #1

Search Local MLS on SageRealtor.com for homes, condos, or multifamily properties.

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One Comment Post a comment
  1. Brett Ellis #

    Nice post. Glad to see agents who study the market.
    Brett Ellis

    September 27, 2006

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