The New Florida Real Estate Mantra: Location, Location… Timing
The Sarasota Herald Tribune, and probably everyone reading this, knows what they say about what’s important when it comes to buying a home - or building one to sell.
But the volatility of the Southwest Florida housing market have reminded us another word belongs with the age-old mantra: “location, location, TIMING.”
It’s a hard-learned lesson for first-time home buyers, investors, builders and everyone else who makes a living in the real estate market.
Mike Marcus of Sarasota Builders and Remodelers has been in the business for years, and is no newcomer to the game. But even an experienced contractor like him feels the pinch of the 2006 slowdown in both sales and home prices.
The Skinny: Marcus’ company built houses at a time when home construction costs were high, and is now marketing them at a time when sale prices have fallen.
The 1,600-square-foot, hurricane-resistent, energy-efficient houses are priced at $264,900. That’s not all that much more than they cost to build, but more than conventionally built new homes in the neighborhood, and that means the so-called green mortgages needed to buy the homes are going to be more costly.
“Therefore, I am very happy to lose some money on them,” said Marcus, who said he would be happy to get $249,000. “It’s nobody’s fault. It was good, sound business decisions, but things changed.”
“So what that has done is left us with some properties that have a very limited market. They would be ideal for somebody who has been through the storm and wants a high-strength home, with impact glass so they don’t have to shutter it up.”
His other targets are people who are used to higher home prices up North and want a Florida mortgage to buy a house with nice fixtures and finishes; a home that seasonal residents wouldn’t have to worry about when they’re away for the summmer. But they don’t look like bunkers.
“Since we put very nice finishes in them - lots of floor tile, granite, stainless appliances, real nice bath tile, light fixtures, stuff like that - somebody coming from up North, where a $250,000 home is still a bargain might find the houses a good deal,” Marcus said.
Marcus thought the difference in the electric bill for an “All Wall” house and a conventional house would be $100 per month, meaning that the buyer could qualify for a bigger “energy” Florida home mortgage.
There’s no question that the rise in the costs of heating and air conditioning have compiled the issue when it comes to house hunting for many buyers. But with energy prices not expected to fall, will that eventually be a selling point? And will Marcus continue to build more homes the way he does?
“I would hope to,” he said. “It’s going to be economics. If, during a normal real estate market, it could be profitable, we would continue it. If we find that we are not able to build in a more economical labor market, then it’s questionable it could be a profitable venture.”
