Gulf Coast condo activity is picking up!

All along the Gulf Coast condo sales have been picking up.  This appears to be true from the Sarasota condo market all the way to the Gulf Shores Alabama Condo market .

I am sure you are aware that the condo market had become extremely overbuilt in the go go days of easy financing when everyone and his brother was getting “rich” on real estate and could do no wrong nor make any bad decisions. While those days lasted a long while, the day of reckoning finally came and the excesses are being paid for by the guilty and the innocent.

It is truly amazing the number of people that believed that property values could keep rising meteorically while taking no breather nor making any corrections. Being a quasi economics afficianado, I pretty much saw the writing on the wall before the correction began (remember the term “Irrational Exuberence” from the prior bubble?). However, I have always disclosed that I don’t have a crystal ball!  If I did, I would be living in West Palm Beach with a mega yacht tied up out front.

We do have data though, and data is what we should we should use to make rational decisions.  The data indicates what is going on at the present time, so you can break out your own crystal ball to see what you think will happen from here forward over the next few years.

What the data indicates!

• New developments that were started at the market peak have been completed for the most part (or halted). This should stop the growth of unit numbers that contributed to a large part of the supply glut.
• Lower and mid priced units have corrected in price substantially and while it took a long time for sales activity to appear, it seems that there is a pricing area where units will find buyers.
• Higher end units have also corrected in price substantially, however we are yet to see a whole lot of activity in that sector. The pricing is right on many of the units, but the availability and cost of Jumbo Loans is simply keeping those that need that type financing from entering the market. Those with cash though are picking off some nice units at bargain prices.
• Short sales which were plentiful 6 months ago seem to be fewer in number.  From watching the growth in foreclosure notices in the newspaper and bank owned proprties on the MLS, it is reasonable to assume that many properties which were being advertised as short sales were simply too upside down and buyers too few for many of them to get sold prioe to foreclosure.
• Inventory remains high and will take a long time to be absorbed, but price reductions have brought prices down to a level that would be in line with longer term trends for appreciation or lower. This indicates that there are bargains out there for buyers.

There were some positive real estate numbers reported on CNBC today and the negative real estate news is not near as plentiful as it has been.

Confidence in the market will come with absorption and the numbers generated by those purchases.  There are many condominium complexes that have these recent sales – in other words it appears that a bottom has formed and pricing discovery has been made.  The same should begin to occur in higher priced luxury units sooner than later.  For that to happen, there must be price discovery and that will only happen when offers are made and accepted.  If you have been in the market for a condo opportunity, it is time to get pre-qualified for financing and begin making offers that are supported by recent data if available or in the event of the higher priced units, analyzing square footage values of recently sold units that were under the Jumbo Loan price levels and making offers based on those figures. Prices will be discovered by those that make offers and there will be some happy buyers if they do their due diligence with their REALTOR.

This post was written by Cal Carter.  Cal is the leader of the GulfShoresLife.com Team which is active in the Gulf Shores Condo and Orange Beach Condo markets.  Orange Beach is at the Florida / Alabama State line touching the FL panhandle.