The ebb and flow of a real estate market.

OK, today I want to take a little trip down memory lane. As most of you know I have been selling real estate in Poinciana Fl since 1994. I have seen this community grow from 7,000 people to almost 70,000 today. Poinciana has been the 2nd fastest growing PUD (planned unit development) in the country for many years. The oldest houses in Poinciana were built in 1973. So it took 20 years to get up to 7,000 people and then in 13 years we added more than 60,000 with most of the growth coming in the last five years.

I've come up with a little visual to show you how values in Poinciana have been affected over the last 17 years. I'm going to use a house that I have listed and sold 3 times since 1998 and had managed prior to that. This is a typical Poinciana house built in 1990 with 3 bedrooms, 2 baths, swimming pool and 1186 sq ft of living space. Here it is:

 

 

 

 

 

 

              1998                                                            2002                                                               2005

This house was bought new in 1990 for $86,400 by a man from England. I started managing it in 1994 and used to rent it out by the week for $450. Not much happened in Poinciana from 1973 to 1998 and values actually declined. I put this house on the market in 1998 and sold it for $79,900. After 8 years of ownership the value had decreased by 8%.

Now move forward to September 2002 when I sold it again for 102,000. From 1998 to 2002 Poinciana had experienced about a twofold increase in population and had about 17,000 people. This house's value had appreciated by 28% during this 4 year period. Things were looking up.

For the next couple of years values were slowly starting to increase but were still only averaging about 5% a year. Then we had three direct hits from Hurricanes during the summer of 2004. Poinciana was devastated. Surprisingly by the end of 2004 Poinciana started to recover and the real estate boom was upon us. This little house was gutted after the storms and rebuilt from the studs up.

In June of 2005 I placed it on the market again and sold in one week for $165,000. The boom was in full affect and values were increasing rapidly. The Seller experienced a 38% increase during his 21 months of ownership!

The second half of 2005 was amazing!! By the end of the year this house had a value of $215,000. From late 2004 to late 2005 values doubled in Poinciana and our population tripled. From 2002 to early 2006 we now had a population of over 60,000 people up from less than 20,000 in 2002!

Now fast forward to today. The last two sales(this month), of similar homes, were for $158,000 and $145,000! This is down from a high of about $215,000. That's a decrease of about 30% with most of that coming in the last 6 months. The fall out of the sub prime market had a major affect on values in Poinciana Fl. Inventory is on the rise and values are declining rapidly. My prediction is we are in for a rough ride for a couple of years. I think 2008 will be better than 2007 but I don't see a substantial positive change until maybe late 2009. But of course this is just an educated guess based on years of experience.

Poinciana's growth was due to affordability. It is Not a destination market. People move to Poinciana because they can't afford to live in Kissimmee or Orlando. Now they can. Our prices need to drop another 15% to 20% in order to be a value driven market. It's also an investor driven market. Once values come down, to where rentals make sense, the investors will be back. In my opinion, that's the first thing that will happen. Investors will swoop in as they did in 2005 and 2006 because the values make sense. Until that happens we are dead in the water.

Now I don't have a crystal ball, so of course, all of this is speculation on my part. So we'll see. In the meantime, I have some leads to sell you! So what's happening in your market?

All content copyright © 2007 – Broker Bryant Real Estate Ramblings

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