Seeing a buyer's market
Some say Florida real estate prices bottoming out, suggest it is prime time for purchase
Maryann and Fred Davis aren’t anywhere near ready to quit working. But with housing prices temptingly low, the Danvers couple decided it was a good time to buy a second home in a warm climate that could serve as a winter getaway now and a place for retirement later.
The couple became hooked on Naples, on Florida’s southwestern coast. So last summer, with the help of an acquaintance working as a real estate agent there, they bought a three-bedroom, 2,400-square-foot home with a small pool, overlooking a lake, in a gated community. The price: $200,000, or roughly 40 percent less than what it sold for in 2005.
As the Davises show, this could be a good time for New Englanders thinking of winter escapes and warm-weather retirements to buy in popular Sunbelt locales, such as Las Vegas, Phoenix, and Florida. Home prices in these markets, among the hardest hit in the housing bust, have plunged by about half since 2006. With mortgage rates low, that means bargains are available — with a few caveats.
Further declines remain possible in some markets. As a result, said Stan Humphries, chief economist at real estate website Zillow.com, those expecting to sell in two or three years are better off not buying. But buyers who plan to hold the property for 10 years or so are taking much less of a risk.
“If they have a long time horizon,’’ said Humphries, “it’s a real buying opportunity.’’
Real estate prices vary from city to city and neighborhood to neighborhood. Naples, for example, where the Davises bought, is showing some price appreciation. The median sales price for single-family homes last year was $209,000, up nearly 13 percent from 2009, according to the Naples Area Board of Realtors. That’s still less than half of the 2006 median of $468,000.
“We have basically hit bottom,’’ said Rae Wakelin, an agent with Amerivest Realty in Naples.
Naples and nearby Bonita Springs have long been popular with “snowbirds.’’ The area’s beaches drew Terry Cox and his wife — whose name is also Terry — to buy a condominium in Naples last spring.
The Lynnfield couple, both in their 50s and parents of a teenage son, don’t plan to retire for a while. But they decided prices were so low, it was time to invest in a potential retirement property. Mrs. Cox began surfing the Internet to research locations. She eventually homed in on Naples, found an attractive condo, and called the listing agent. They sent a friend who was visiting the area to see the property.
A couple of weeks later, Mr. Cox, while on business in Miami, drove across the state to see it himself. He liked what he saw — not to mention a price about half of what it would have been at the height of the real estate bubble.
The Coxes plan to vacation in Naples a couple of weeks each year, and rent it at other times to help with expenses. They’ve already found a tenant for February and March. Even if they end up buying a different home for retirement, Mr. Cox said, the condo represents a “toehold’’ from which they can explore the area.
“We wish we were there now,’’ said Mrs. Cox, noting recent snowstorms hitting the Boston area.
Both the Coxes and Davises stress the importance of having a local agent. The Coxes’ closing, for example, went smoothly because their agent’s firm, John R. Wood Realtors, had an in-house lawyer experienced in short sales — when property sells for less than what is owed the lender.
The best local agents can warn clients away from developments that may be financially unstable, and can provide advice on issues that typically aren’t encountered in their home markets. Florida properties, for example, are more likely to have mold than those in New England. Experienced agents know to include protective language in sales documents to cover such potential problems.
Sometimes, buyers get lucky and find a savvy listing agent online. Others feel more comfortable with referrals. Veronica McManus, an agent with Re/Max Leading Edge in Woburn, likes to refer clients to agents she meets through professional networking groups, such as the Women’s Council of Realtors.
Pam Cote, an agent with Re/Max Advantage in Beverly, urges buyers to do their homework and take their time — especially in Sunbelt markets, which were hit hard by overbuilding and have large swaths of inventory. “People from New England can get somewhat overwhelmed,’’ Cote said.
Marianne Doane, 50, of Beverly, found that out when she began looking on Florida’s east coast. “When you start to look, there’s so much on the market it’s almost scary,’’ said Doane.
She and her husband, a consultant, are considering property in the Delray Beach or West Palm Beach areas as a vacation and possible retirement home.
They’ve decided to rent first, until they feel comfortable buying. Prices in those communities are down roughly 60 percent from 2006.
“I don’t want to buy too quickly,’’ she said, “because if I don’t like the area, I won’t be able to sell.’’