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Timing is Everything

There would be fewer real estate booms and busts if regions typically prone to these extremes—mainly within Florida and other Sunbelt states—weren’t so desirable as to periodically invite rampant, unsustainable property speculation. This happens to be the basic premise behind Brett Ahrends’ latest real estate column in the Wall Street Journal.

Entitled “Here Comes the Sunbelt” the article essentially blames Florida’s enviable winter weather for the up and down cycles that occasionally affect our state’s real estate markets. Ahrends then goes on to suggest that the exquisite timing of three horrific winters in a row—combined with the imminent retirement of the first of 77 million baby boomers—could be the perfect storm that ultimately revitalizes our local property market.

For sure, home buyers are combing Southwest Florida neighborhoods with a vengeance this winter; and doing way more than simply having a look-see. They’re buying in numbers we’ve not experienced in some time. Nevertheless, it takes more than the weatherman to explain why all this is suddenly happening now.

“This has been the third appalling winter in a row,” explains Ahrends to his readers. “And if you think this weather is miserable when you’re 50, just try it when you’re 75.”

Ahrends is suggesting that many Baby Boomers—though on the immediate verge of retirement—are woefully unprepared to meet the financial challenges of their golden years. Therefore many of those who aspire to weather such as ours will want to conserve as much of their accumulated home equity as possible by opting for less expensive markets. Which, of course, would have totally excluded Southwest Florida just a few years ago.

At the height of our property boom in 2005, home prices here were at parity with such snowy and expensive metro areas as Chicago. Now with prices 40% (or more) below their highs, it’s as if the boom never happened; making Southwest Florida less than half as expensive as living in Manhattan or the Windy City. That’s a huge consideration, even for affluent retirees.

“In practical terms, the price gap today may be even wider than it appears,” Ahrends continues. “That’s because there now are so many foreclosures down here that an aggressive shopper can find ridiculous bargains.”

These days you don’t need a weather vane to decipher which way the economic winds are blowing. In addition to low housing prices and historically low interest rates more and more home buyers are discovering the incredible values in our market just as their own property markets and local economies are beginning to recover. A 2% reduction in payroll taxes, a vastly recovered stock market and a slow decline in the jobless rate are clearly behind the recent surge in discretionary spending on big-ticket items. The Dow Jones is above 12,000 for the first time since June 2008 and last week saw seven straight days of positive gains.

Meanwhile, perennially singled-out as one of the best places in the U.S. to retire, Southwest Florida’s has recently garnered even wider acclaim by being named one of the top places in the world to retire. Author and essayist Ted Fishman, who has circled the globe to catch “a glimpse of a world population that is growing ever older,” concluded in his new book Shock of Gray that few American communities outside of Sarasota offer a more invigorating venue in which to age well. In his estimation, our region is doing everything “exactly right” to engage its aging demographic; in stark contrast to other communities which he says “often communicate to people in their 50’s and older that they are well past their use-by dates.” Meanwhile, an invigorated downtown—with its burgeoning arts and entertainment scene—is simultaneously attracting the younger demographic that used to pass us by.

Bouncing back from this “mother of all recessions” could never be fast enough to suit anyone. Still, all signs appear to be lining up at just the right moment to convert Southwest Florida’s first tentative steps toward recovery into much more confident strides. Who knew that Old Man Winter would also get into the act at just the right time by making Florida the only state in the Union to miss out on all the ice and snow? Timing, as they say, is everything.

  • User Gravatar Lorrie Vervoordt
    February 13th, 2011

    Given the recent, painful correction in Real Estate pricing, Sarasota is more attractive then ever, and if moderate climates enhanced her economy during farming and ranching days, why not today? However, given the lower-paid workforce and the para-transit needs of an aging demographic, it appears that we might be on the verge of a perfect storm. We really need to invest more in county systems and mass transit. Fortunately we have more control over this than the weather.

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