INDIAN RIVER COUNTY — In terms of barrier island real estate, 2009 could prove to be a turnaround year, foreshadowing a major rebound ahead in 2010 for those shopping for high-end homes.
Late winter and early spring, when the bulk of residential real estate transactions in the 32963 zip code normally occur, panned out to be a “nonexistent” season according to most realtors.
With potential homeowners and investors both stunned from the stock market meltdown and nervously awaiting for the market to hit bottom, most buyers and sellers found themselves at a stalemate.
Unable to make deals happen, realtors attempted to bridge the gap between sellers clinging to long-gone home values from few years ago and bargain-seeking buyers — many of them paying cash — making offers that were in some cases downright insulting.
The occasional highly motivated — or extremely realistic — seller conceded to get out from under their home during the great race for the bottom. April, which is known as the month when you either sell your beachside property or hold it until next season, showed 25 closings in the condo market, reflective of sellers who were unwilling or financially unable to wait another year for a better offer. But overall, widespread reality had not set in on either side of the bargaining table.
Over the summer, the market began to heat up.
July and August — traditionally a slow time for closings — saw barrier island buyers and sellers beginning to come together, though often at 30 to 40 percent off peak values. A small percentage of barrier island home buyers were assisted by tax credits offered over the summer.
“After a slow start to 2009, I am greatly encouraged by the activity and sales in the barrier island market over the past 6 months,”said Matilde Sorensen, broker-owner of Dale Sorensen Real Estate. “Seventy five percent of my sales volume came in the second half of the year.”
Despite some significant movement in late summer and early fall, skeptics determined not to overpay waited and waited. Deep into the fall, prospective buyers began circling closer, hoping to swoop in at the moment the market hit absolute rock-bottom.
Meanwhile the Dow Jones Industrial Average crept back up over the 10,000 mark. The Dow, in fact, has been a decent predictor as to how comfortable buyers feel in making the decision to finally start putting offers on homes they’ve been looking at for months or even years.
Rule No. 1 of investing is to try, whenever possible, to sell high and buy low. Michael Thorpe, broker/owner of Thorpe-Sotheby’s International Real Estate said his clients are seeing a chance to do this in the barrier island real estate market.
“I’ve seen people taking money out of the equities market and putting it into real estate,” Thorpe said. “And what’s even more hopeful is that vacant land is beginning to sell, which indicates that there will be more new construction in the residential market soon.”
Thorpe said he and others had hoped that 2008 would be the rebound year, but that the “global financial armageddon,” as he describes it, created an extremely cautious group of buyers, who felt that prices could still be dropping.
This psychology of the market prevented buyers from making a move, and could have actually been a self-fulfilling prophecy, with the law of supply and demand sending prices further downward.
Thorpe said that mindset is more relaxed and secure now as people have seen the balances in their brokerage accounts and their retirement accounts recover.
“People are feeling better and returning to their natural habits, the snowbirds are back, we’re experiencing in-migration again and there are tax incentives for buying right now,” Thorpe said. “The second phase of the tax incentives go up to $800,000, which helps the people in our sphere.”
As the year comes to a close, opportunities abound for those with liquid assets or good credit, to live in neighborhoods they would have only dreamed of five years ago.
“In 2009, we kind-of followed the health of the equities market,” Thorpe said. “Now buyers are looking at more than just prices, they’re looking at lifestyles and at where they want to live long-term instead of just a quick turnaround on an investment.”
The much-desired Central Beach location was by far the most popular “non gated” area on the barrier island in 2009 with 34 sales. The ever-popular John’s Island, which does not report its sales via the Multiple Listing Service, rounded out the year with 23 single-family homes and 22 condominiums sold in 2009.
The Moorings had 40 sales inclusive of homes and condos and Castaway Cove was next with 23 sales throughout its different waves or sections. Sea Oaks condominiums sold rather well at 16 closings and the Orchid Island Golf and Beach Club in the north end of the island netted 12 sales. (note, all sales figures are through Nov. 30 as reported by MLS).
Dale Sorensen Jr., managing partner at Dale Sorensen Real Estate, tracked this progress not only in the ultra-luxury home and oceanfront market, which is the niche of several barrier island Realtors, but also in the moderate market of homes and condos starting in the mid $100s and has seen solid indicators of a turnaround on both ends.
“In 2009 we saw a dramatic increase in buyers willing and eager to take advantage of the best priced opportunities in the market. This is evidenced by our 30 plus percent increase of unit sales on the barrier island,” Sorensen said. “While inventory levels have slightly decreased there are still an abundance of properties available across all market segments.”
To offset that slightly reduced inventory, some sellers who had let their listings expire have taken the plunge and re-listed their homes.
Kay Brown, owner-broker of Premier Estate Properties, which deals exclusively in homes of $1 million and up, has said throughout the year that buyers are scooping up Vero’s oceanfront properties — especially the remaining inventory of brand-new spec homes on the beach.
“We have been extremely surprised with the increase in market activity in the luxury homes that we have for sale and also in oceanfront and oceanfront homesites in the last 6 months, it’s been extremely active,” Brown said. “We’ve had some excellent sales and, even though the prices have not been what the sellers would have liked, we’ve been able to accomplish bringing buyers and sellers together.”
Brown said most of the activity prior to the summer was in the $1 million to $2 million dollar range, but that now the more expensive estates in the $4 million and up range are seeing more action.
Looking ahead, with recent market survey reports predicting only a .35 decrease in values for Indian River County real estate in 2010, it’s hopeful that 2010 could be the year that hundreds of families upgrade to a larger home or better neighborhood and investors get back into real estate.
For those still waiting, watching and prognosticating that prices will still go down, Thorpe emphasized that the smart money on the barrier island is betting on the fact that time is of the essence.
“I think people have learned from the past and they’re not going to wait until prices go up to where they were in 2005,” he said.