Archives April, 2008

1

At Home Abroad

By now, everyone has heard that activity among international buyers, queuing up to purchase properties in Southwest Florida, has heated-up considerably—especially with their buying power vastly magnified by low-interest rates, the best local prices in years, and a seriously anemic U.S. dollar. Far from being unconfirmed hearsay, this positive development for the region’s recovering real estate market is now a matter of public record. Some of the most noteworthy sales of the year have involved international buyers, many of whom initiated their property search on michaelsaunders.com while still at home in their native countries.

Almost before the ink could dry on an analysis of year-to-date visitation to michaelsaunders.com—conducted just days ago by Google Analytics—the news broke that the second largest sale in Sarasota this year involved a European couple, now residing in the U.K., who found the perfect match in a waterfront listing from the St. Armands office of Michael Saunders & Company. They loved the property so much that they persevered through months of negotiations; finally spending $6, 387,500 to realize their heart’s desire.

The closing is yet another confirmation that far from being a much-rumored phenomenon, international buyers are doing a great deal more than simply daydreaming of owning properties here. They are visiting michaelsaunders.com in amazingly high numbers, contacting us by phone and email, getting paired-up with just the right associates, and often negotiating from halfway around the world before showing up to claim their prize. At closing they often assert their newfound buying clout in cold hard Euros, Pounds Sterling, Loonies or other equally robust currencies.

Google’s report indicates that year-to-date usage of michaelsaunders.com is not only up dramatically across the board—by 52% overall, compared to the first quarter of 2007—but is frequented in ever-growing concentrations by home buyers from outside the U.S. Visitation to michaelsaunders.com from the United Kingdom, for example, was up by 81 percent for the first quarter of 2008. Is it any wonder then why so many international sales are coming together involving buyers from the U.K? It wasn’t more than a few weeks ago that a citizen of the U.K., residing in Hong Kong, saw a listing on michaelsaunders.com, fell in love with the property and immediately flew halfway around the world to secure its purchase.

This noteworthy increase in Web visitation is not only indicative of heightened interest by buyers in all 50 states, but also proves that international buyers aren’t squandering what they confidently believe is a once-in-a-lifetime window of opportunity. It’s now or never for the best opportunities in a recovering market.

From every corner of the world traffic to michaelsaunders.com is being clocked at record levels. Compared to last year, the first three months of 2008 have shown a radical increase in visitation from countries as disparate as the Czech Republic (up 783%) and Costa Rica (up 330%). In raw numbers, the greatest amount of visits totaled 10,441 from Canada (up 250%), 5,666 from the United Kingdom (up 81%), and 1,247 from Germany (up 107%). This dovetails precisely with the 2007 Profile of International Home Buyers in Florida—issued by the National Association of Realtors—which indicated that British, Canadian and German nationals constitute the largest pool of foreign buyers for properties in Southwest Florida.

From inside the U.S., the number of visits thus far in 2008 amount to an astounding 216,722; up 46% over the same period of 2007.

The fortunate by-product of all this international activity is that each new owner adds that much more zest to the region’s growing international cachet; which in turn attracts more new buyers who are likeminded in their desire to feel at home abroad.

Random Thoughts On A Recovering Market

Just as every bursting dam starts by springing a leak, the good news out of our real estate market continued to trickle forth last week. It wasn’t necessarily screaming at us from front page headlines, but the ever-increasing volume of positive activity unquestionably speaks to the return of buyer confidence.

Largest Siesta
Sale In 18 Months

Here at Michael Saunders & Company, the news that we closed the largest residential transaction on Siesta Key in 18 months was bested only by the fact that precision teamwork from within the company brought both the buyer and the seller to the closing table. Listed through our Longboat Key office, the well-priced property found its new owners through our Main Street office and sold for $5,150,000—proving yet again that savvy buyers are more than willing to quit the waiting game whenever an exceptional opportunity comes knocking.

As if to bolster that point, just down the road in the Sanderling Club another waterfront listing sold last week for $3.4 million; while on Longboat Key a condominium in En Provence sold for $3.3 million—both to buyers working through our St. Armands office.

Meticulous interoffice teamwork also paved the way for another recent sale in which the buyer, also working through our St. Armands office, purchased a home listed by our Main Street office. In what proved to be a classic case of love at first sight, the buyer—browsing the Internet from his home in Hong Kong—viewed the property on michaelsaunders.com, contacted his sales associate immediately and flew here without delay to place it under contract for $3.5 million.

Other noteworthy sales last week included a $3.3 million residence in Positano, the imposing new waterfront condominium on Longboat Key. It was the second such sale in 10 days, leaving only one Positano condominium unsold.

Tip Of The Iceberg

As impressive as these sales were, they proved to be only the tip of the iceberg in a week of banner sales across all price ranges. For the week ending Friday, April 4th, Michael Saunders & Company closed on sales volume totaling $40,990,855, or just under $8.2 million each business day. This was 73.5% higher than an average week in March; 78.6% higher than an average week in February; and 123% higher than an average week in January.

The closed properties represent the widest possible spectrum of the market—from less than $100,000 to $5.15 million. There was a $1.575 million sale in our Siesta Key office; a $1.425 million sale in our Longboat South office; a $1.3 million sale in our Bradenton office; a $1.5 million sale and a $1.1 million sale—both from our Palmer Ranch office.

From Bradenton to Venice, the middle of the market exhibited potency as well. Among many others, there was a $375,000 sale in our Bradenton office; a $425,000 sale in our Lakewood Ranch office and a $292,000 sale in our Venice office.

Neal Sells 33 Homes
In A Single Month

We were delighted to read in the Sarasota Herald-Tribune that Neal Communities sold 33 new homes in March. According to the paper, Neal got a major boost from an aggressive new pricing strategy for Key West-style homes at Forest Creek, causing more than 1,000 people to show up on the first weekend following the launch of the new strategy. The company sold twenty-four homes in Forest Creek in March, and since introducing the new pricing strategy has generated a total of 34 sales, including four in a single weekend.”

Be it old or new, condominium or single-family home, wherever exceptional opportunities exist buyers are demonstrating a renewed willingness to act swiftly. As a result, the most competitively priced homes are selling with relative speed. Clearly for confident buyers in today’s market, it’s as much about “price-price-price” as it is about “location-location-location.”

3

The Lost (And Found) Decade

With the stock market and real estate market both reeling from the recent turmoil in the lending markets, prudent investors are doubly confused about where to park their money these days in order to safely maximize its long-term appreciation. Last week the Wall Street Journal complicated matters considerably by running an eye-opening front-page article that pulled the rug out from under the widely-held notion that blue chip stocks are generally the best investment when held for ten years or more. Entitled “Stocks Tarnished by ‘Lost Decade’” the article suggests that money invested in the stock market ten years ago is worth only marginally more today than it was back then, especially when adjusted for inflation.

Authored by E.S. Browning, the article led off with statistics that were no doubt unsettling to long-term devotees of the stock market. It read: “The Standard & Poors 500-Stock Index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday—below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen just 1.3% each year over the past 10 years, well below the historical norm, according to Morningstar Inc. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.”

Conventional wisdom in the stock market suggests that when investors purchase a broad variety of stocks and hold on to them, they generally fare better profit-wise than they would with other investments. Unfortunately, that rule hasn’t held true for stocks purchased in the late 1990s or 2000.

“Over the past nine years,” according to Browning, “the S&P 500 is the worst-performing of nine different investment vehicles tracked by Morningstar—including commodities, real estate investment trusts, gold and foreign stocks.” Big U.S. stocks were even outdistanced by lowly Treasury bonds, whose performance is typically much weaker. His overall conclusion: “Through history, lengthy stock booms have typically been followed by busts that can last a decade or more. Some economists believe that current economic troubles are severe enough that the period of stock weakness isn’t over.”

Here’s another eye-opener. In spite of all the bad things you’ve read or heard in the media about Sarasota real estate, the median home price ten years ago—in February 1998—was $112,500. Today, that price is $254,200, according to the February sales statistics released just two weeks ago by the Florida Association of Realtors. The median price represents the midpoint in the market; half the homes sold for more, half for less. This 226% median price jump between February 1998 and February 2008 includes the sizeable downward correction in the median price from its highest perch amid the wildly unsustainable real estate boom of 2004/2005/2006. Further, as Sarasota began its real estate correction sooner than most other Florida markets, statewide statistics now strongly suggest that it is emerging from it faster as well.

Unlike seeing the Standard & Poors 500-Stock Index remain disappointingly flat over the past ten years, if you’ve owned a Sarasota home for an equivalent amount of time you are looking at a substantial return on your decade-long housing investment. Even if you’ve only owned the home for five years it has appreciated to the tune of 147% since February of 2003.

For some stock market investors the past decade was marked by disappointment and lost opportunity. For Sarasota homeowners it was a decade of healthy appreciation, even factoring in the correction that has unfolded over the past couple of years. Alas, nothing is more reassuring than a comfortable nest egg, except perhaps the immeasurable pleasure of living in it.



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