Report from Florida

I’m sitting in Oakland writing about my 1 night trip to Florida last week (March 4-5). I have to say, in my VERY short time there I learned quite a bit.

Florida - lanai view

Lanai view of the pond

When I visit Southwest Florida, as I have done yearly since 2004 (yes I visited before that but not necessarily for research or clients), I take a pulse of the real estate market and general economy. This visit was about as expected with restaurants closing (way too many), house prices falling, developments stalled, and people generally uninterested in real estate.

View out the back of a typical Florida home

View out the back of a typical Florida home

What was more interesting though, was my clients telling me about their friends’ feelings on the stock market. The picture I was painted was downright gloomy. My clients told me that their friends were moving all their money to CD’s! They were disgusted with the market! They couldn’t take it anymore – stop the losses please! For anyone reading this that knows anything about how markets turn, this is a rather positive sign.

Often a rally occurs when everyone has given up, sold out, gotten disgusted with investing. It seemed from talking to my clients and discussing the conversations they have been having with friends, we were getting near a bottom. I pointed out that some great companies were selling for 5-6 times operating cash flow (I discussed this in a bit more depth last week in my previous article here). I had a feeling that the stock markets might rise soon after hearing all of this negativity. Why you ask? Prices in any market fall when there are mores sellers than buyers (or no buyers!). If everyone is out, no one is left to sell – get it?

As far as real estate goes, I did visit one new community called Magnolia Landing in North Fort Myers – it was very nice, it had golf (which is an attribute I would consider to be a big positive) but it was out of the way. It was built on a vast track of land in the northern part of North Fort Myers (go to the link and check it out) and is a rather far drive from the beach and downtown. But maybe you like it like that?

The clubhouse was nice and it seems that the residents were very happy there. But there was a lot of open space – many lots that won’t be developed too soon. However, being a bit contrarian, I did notice some mildly attractive prices at my client’s community – a house on a waterway was selling for much, much less than 2 years ago (a price drop from the 500’s to the high 200’s/low 300’s). I’m certain that if I wanted a decent place at an acceptible price to me, I could find it now.

While enjoying the 80 degree respite from the cold of Boston for one day, I had these thoughts running through my head:

1. The market might not have bottomed but the despair from people made me think it was near, at least in the short term

2. Florida real estate may go cheaper but there is a ton of affordable stuff down there now for those who were waiting and wouldn’t mind negotiating.

3. This is my last winter in Boston (truth be told, I already decided that a couple of months back)

I still want to go to the  Jacksonville, Florida area sometime – a location I feel offers a lot of value and in certain places such as St. Augustine, a beautiful place to be. When I do I’ll report back on my thoughts but that trip is probably a few months off.

Chris Grande