I got a good laugh this morning when I came across yet another real estate commentary making the ridiculous claim that the market bottomed in 2007. These bottom calls usually come from groups with self-serving interests. If you've read this blog for a while you'll remember my post on "Calling the Bottom" back in November. The market has not bottomed. Some individual properties have sold for prices that may represent the bottom for that particular property type, but, the amount of inventory coupled with the increasing number of troubled sellers is sure to push the "market" lower. However, real estate is not the Dow and no one buys the market. People buy individual properties. Forget the market and concentrate on the specific property type that you want and be aware of recent sales and asking prices of comparable properties. Most of all, work with someone you can trust. If your agent is using the B word; run, Forrest, run. Saying the worst is over for this market will not make it happen no matter how often or how loud one makes the claim. NAR is the worst offender as they began calling the bottom is the fall of 2006 and have been repeating it every few months since.
Having established that the market as a whole may move lower, an educated buyer can begin sorting through the isolated outstanding opportunities with an objective eye. Even if the market bottom happens much later, some buyers will have picked off the best deals months in advance of the overall low. All sellers are not at the same level of motivation, hence the wide disparity in asking prices. Consider the following sales that closed this week:
A never-lived-in 2350 sq.ft. 4 bedroom 2.5 bath luxury townhome with a 2 car garage that sold for $299,000 in 2006 closed this week for $195,000. That's new construction for an unbelievable $83 per square foot. You can't build this unit for that. Asking price on the last day of 2007 for this unit was $289,000. Definitely not a bottom then, however, at $195,000, this may very well be the bottom in this complex. Consider that there are seven units listed this morning in this complex for prices ranging from $289,000 to $410,000.
How about a unit occupying the entire 6th floor of an oceanfront building that closed this week for the original 2002 pre-construction price? Not likely to be repeated in this building.
I expect our inventory to creep back up after March as those units that were rented for the season come back on the market. Sales are holding at a level somewhat below this same time last year with only 17 closed condos in February as of this morning in Cocoa Beach and Cape Canaveral. This is good news for buyers as the pressure is still on the sellers. If you'd like to keep up with a specific property type and deals within that market segment, shoot me an email at firstname.lastname@example.org and I'll keep you in the loop. In the meantime, all this bottom talk got me to thinking about how good our sand bottom has been for the surf recently. Here's an example of the results of a good bottom in south Cocoa Beach.
Everyone is entitled to their own opinion, but not their own facts.
Daniel Patrick Moynihan