Sales for the month of July were down about 25% from 2008 with 15 properties closed (SF-9, Con-5, Dup-0 & Lot-1) compared to 20 closed in July of 2008 (SF-9, Con-6, Dup-4 & Lot-1) although a little higher than July 2007 (12) and July 2006 (13). As you can see from the charts below sales this year continue to run about 24% lower than last year with July 2009 Y-T-D at 122 versus 161 for July 2008 Y-T-D. Again this month, comparing the last full 12 months sales to the 12 months ending in December 2008, average and median sale prices are down for single family and condos but holding steady for duplex’s and lot’s. Pending properties (properties under contract) continue to be very strong at 52 (SF-29, Con-20, Dup-2 & Lot-1).
There continues to be good signs in the market, distressed properties (short sales, pre-foreclosures, in-foreclosure & bank owned) continue to remain low at under 5% of the inventory. The inventory continues to decline with 535 properties for sale on the island (SF-270, Con-183, Dup-39 & Lot-43) compared to 548 last month. The optimum number we’re looking to get to for normal inventory is in the high 400’s and we’re approaching that now.
Rentals have been up significantly this year. Last year was a very good year for rentals and we’re up 20% over last year. The summer season (Florida drive market and surrounding states) has been particularly strong. We think it’s because many people, looking to economize, have decided to drive to the beach rather than get on a plane. Another is all of the good press the island has been getting in national and international publications. The latest being the travel section of the New York Times. A recent addition to our rental team is Michael Lesnick who recently joined us as operations manager. Michael reports to Larry Chatt and will be responsible for quality assurance on the rental side of the business. He will be working to improve the quality of the cleaners and vendors who do work on our owners properties as well as the services that our guests use when staying at one of our properties. The team is very excited because no other rental company on the island has a dedicated manager responsible for quality assurance.
I mentioned in the last several newsletters that, with prices at rock bottom and interest rates at 40 year lows, there won’t be a better time to buy. I found a graphic that does a good job of graphically demonstrating this point. See on my website alan@alangaletto.com to see the 30 year fixed mortgage rate chart from 1972 to 2009…..WOW. Also check out the chart showing the principal and interest payment on $200,000 over that same period of time. I think you’ll see what the interest rate does to your buying power and your pocket book.
Apply those low interest rates to one of Frank & Al’s Great Buys. The short sale on 312 64th St the large half a duplex condo with a common pool has more square footage then most homes on the island and the price has just been reduced to $329,000. Who knows what the bank will let it go for. The two unit condo unit at 202 38th St is a bank approved short sale and bigger than most single family homes on the island. At 2500 sq ft this condo unit has no common area and priced at a lower price per sq ft then any condo’s currently sold with a gulf view. Check it out at $775,000.
To summarize the island market, the inventory continues to fall and that’s very good. The number of sales are lagging behind 2008 but on par for 2007. The banks continue to be difficult to deal with in approving loans. They have loosened up their rules in dealing with appraisers, due to the government allowing them a little more flexibility, but appraisals are still knuckle biter’s because of the distressed sales in the market. Loans on condo’s are requiring 25% down and the associations are getting a lot of scrutiny. Associations without reserve funds at about 10% of the annual budget are hard pressed to get loans approved in their complex. As far as condo motels are concerned, there is no financing because banks will not touch them at this time. When we look back on this year I expect 2009 to be the bottom of the island market.