Delve into 12: Real Estate Recovery

Nearly a half dozen new neighborhoods took root across the East County in 2011, as the area saw its most successful residential real estate year in recent memory.

Homebuilders and Realtors alike saw the market begin to bottom out, as declining interest rates and low prices made 2011 the time to buy in the East County. In 2011, Neal Communities alone sold more than 375 homes — 46 of which sold in November — and had 451 gross contracts spanning all price points, contributing in a sales volume of more than $115 million.

“Our business has performed extremely well,” said Mike Storey, President of the Building Division for Neal Communities. “We’re up dramatically from where we were last year.”

Neal Communities’ President Pat Neal agreed.

“2011 was an outstanding year for us because of the daily commitment put forth by every person on our team,” he said.

And the trend doesn’t appear to be stopping anytime soon, as builders, Realtors and financial experts agree the best is yet to come.

A YEAR OF CHANGE
In 2011, the East County saw its residential inventory drastically decline as more homebuyers took advantage of declining costs and additional incentives.

“Buyers and sellers have become more informed,” CornerStone Title President Tom Howard said. “People are skeptical. Titles need to be clear. Incentives, the economy and the market are more sophisticated, forcing them to want more data. It forces buyers and sellers to be more sophisticated and educated.”

According to the Manatee Association of Realtors, as of October 2011 there were 1,627 single-family homes available across Manatee, a 32% decline from the previous year, and the overall inventory supply for the month was down 40.8%.

A similar trend was reported for townhouses and condos with only 887 available — a 22.2% decline.

Homebuyers also continued to see prices fall, as the average sale price for a single-family home fell from $213,113 to $198,715 in 2011, while the median sale price dropped to $150,000. As a result, sales increased 6.6% (2,414 single-family homes) and pending sales rose 14.5% (2,645 single-family homes under contract).

“We’ve seen lots of activity,” RE/MAX Alliance Broker Associate Monte Davis said. “It’s not just activity with (individuals) out looking, but they’re looking and buying. It was quite nice and quite a surprise.

“I think the market has bottomed out,” she said. “Buyers now are seeing what a great opportunity it is for purchase, and they’re seizing the opportunity as well they should.”

Interest rates also declined — much to the surprise of title companies and financial experts.

“The theory was there needed to be something to make up for the (market),” Cornerstone Title Relationship Manager and Partner Mary Howard said. “Everyone thought interest rates would go up, so this definitely puts more buyers in the market out east.”

As of year-end, interest rates were the lowest on record since 1951, hovering right around 4%.

SHORT SALES
One of the most significant impacts in the resurgence of the real estate market in 2011 was the ability for an increased number of short sales and foreclosures to get through to closing. As the year progressed, many Realtors saw increased success in short sale negotiations.

“A lot of short sales are getting to closing, which is important,” Davis said. “Short sales are always so iffy because the owner can agree, but the final negotiation is with the bank, and the bank may or may not accept. A lot of buyers of short sales (ultimately) walk, but this year, we’ve seen a lot success with short sale negotiations.”

“The acceptance of short sales has been (huge),” Tom Howard said. “Short sales are almost the new resale. The acceptance level not only of consumers but more the acceptance of banks realizing (this is what they need) to do has made the process a lot quicker and more attractive.”

THE OPAL EFFECT
In the past year, the East County has seen an influx in the number of homebuyers, particularly those who are older but are still looking to maintain an active lifestyle, purchasing new homes.

Older people with active lifestyles (OPALs) have become a target market for homebuilders such as Neal Communities, which has designed neighborhoods, such as University Park and Central Park and Country Club East in Lakewood Ranch, to specifically meet their needs.

“The OPAL is our primary buyer,” Storey said. “The OPAL is in the best position to buy a new home. They’re the most savvy and they recognize the value in the market today. Most of them come down and spend two to three years looking before they buy. This year they recognize the bottom has hit, and we’re seeing more of them buy.”

“OPALs are very busy,” said Leisa Weintraub, Vice President of Marketing and Creative Director for Neal Communities. “They’re really active, and they really like to be around a variety of people.

“Every time we design a community, we look at who the buyers are going to be, and we tailor the amenities to that,” Weintraub said.

A YEAR OF OPPORTUNITY
While 2011 was a year of change for the East County’s residential real estate market, 2012 appears to be a year of opportunity.

With only 16% of the local population with negative equity and 30% with no mortgage debt, homebuilders and Realtors are optimistic.

“It’s just going to get better,” Davis said. “Prices will very gently escalate, but there won’t be a huge appreciation as in the past. Next year is still going to be very exciting.”

According to leading economists at a Florida Realtors 2012 forecasting event, Florida’s real estate market is on an upward trend despite both national and global headwinds.

“Our state is in a mini-recovery,” said Florida Realtors’ chief economist and Sarasota resident, Dr. John Tuccillo. “Sales are trending up, listing inventories are falling, and the supply of lender-related properties has stabilized.”

“There is now a sense of urgency,” said John Neal, President of John Neal Homes. “Luxury home buyers have noticed that prices are no longer declining; in fact, they are starting to increase. They recognize that the time is now to build their dream home.”

In 2012, a handful of new communities are scheduled to open in the East County. Neal Communities, which has opened 12 communities in the past three years, has plans to open three new communities in 2012, including Fairfield on State Road 70 just west of Interstate 75, the Harborage on Braden River and Forest Creek Phase III in Parrish.

Fairfield, which is scheduled to open in the fourth quarter of 2012, is another master-planned OPAL community featuring paired villas.

“This product doesn’t exist in the market today,” Storey said. “This tends to be a very attractive product for the maintenance-free OPAL buyer.”

Additionally, Taylor Morrison will begin construction on Esplanade at Lakewood Ranch, a gated, maintenance-free community of 450 detached villas and single-family homes on 207 acres north of State Road 70.

Finally, the Harborage at Braden River on State Road 70, are scheduled to open Jan. 14. The neighborhood will feature 37 home sites, all with access to the Braden River, ranging from $500,000 to $800,000.

“The No. 1 thing in 2012 will be how people feel — whether they’re confident and optimistic or fearful and pessimistic,” Tom Howard said. “The way people feel will heavily fuel 2012 in relation to our market. That’s the No. 1 factor — people’s sentiment and confidence.”

Contact Jen Blanco at [email protected].

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