This week, new president of the Marco Island Area Association of Realtors Gerry Rosenblum, and the association’s executive director, Shirley English, shared their opinions on the state of this particular South Florida housing market.

As for the Marco-specific figures, Rosenblum said it was a welcome innovation for the association.

“More than 30 percent of properties in the Marco MLS (Multiple Listing Service) are not on Marco,” he said. “Off-island properties in Naples, Port of the Islands and surrounding areas like Fiddler’s Creek and Hammock Bay were included.

“We wanted to see what was going on in Marco,” Rosenblum said.

The result of that, he said, is a set of figures just released that show a more realistic perspective. Among those figures (for all property types sold) are comparisons between the months of December, 2005, and November and December of 2006 in terms of Florida home mortgage activity.

Closings were 42 for December, 2005; 41 for November 2006, and 41 for December, 2006. Average sale prices for the same months and years were $1.35 million, $985,000 and $1.05 million. Median sale prices were $1.3 million, $1.6 million and $2.7 million. Total sold dollar volumes were $56.8 million, $40.4 million and $43 million.

Rosenblum said the interesting buying trend at the moment is that luxury homes are outperforming mid-range homes. Part of the reason for that, he said, is that investors/flippers are now out of the equation.

“They went for the mid-range market,” Rosenblum said.

Instead, he said, high-end buyers intent on staying here are coming to the forefront. On top of that, English said, the upper end of the high-end market is outperforming the lower high-end market for those applying for Florida home loans.

Both English and Rosenblum said the general outlook for real estate is looking better, though.

“It’s an opportunistic market,” Rosenblum said. “A lot of people who bought (in the 2004-5 boom) just don’t want those properties any more. They realize they’re not going to get the big profits, and in some cases will sell for break even or even moderate losses just to move on.”

English said insurance and property tax moves afoot at the state legislative level could turn out to be a huge boost to the market. Also significant, Rosenblum said, is that declines in real estate association membership are likely to be less than expected.

“I think, to be honest, we’ll see a decrease in membership,” he said. “But we have a lot of members from outside the county. They might drop out, but the core group will stay.”

With Florida home mortgage demand so quiet, one way developers and sellers have tried to drum up interest is through real estate auctions. But the Marco Island market is proof this doesn’t always yield results.

“People a lot of times hear the word ‘auction’ and think it’s a deal, but that’s not always the case,” said Ken Gandy, a broker for Keller Williams Realty. “The implication of an auction implies low prices, and that’s bad publicity for Marco Island and Marco Island property values.”

Problems with local auctions

All of Marco Island’s auctions held have been what’s known as “reserve auctions,” meaning that bids must be agreed upon by the seller before closing. With buyers looking for cheap buys and hot deals in a market which has been witness to incredible increases in property values, the question remains:
What is there to gain by selling in an auction and are there deals to be made at all?

“In a down market, auctions don’t work very well,” said Erik Hansen of Premiere Plus Realty, who helped organize two of last year’s Marco Island auctions. “When the market is going down, buyers are looking for extremely low prices from an auction. We’ve got so much inventory on the market that something has got to change. Very few things are being sold and those that are selling are getting sold much lower than average market prices.”

Still, auctioneer Randy Kincaid of Kincaid Auction - who presided over two of Marco Island’s real estate auctions last year - said that there is value to be had and benefits to be reaped by auction transactions.

Kincaid noted that he has witnessed real estate auctions in the Florida housing market gain in popularity, estimating that last year he was an auctioneer at approximately 30 real estate auctions.

“We did those auctions last year (in Marco Island) at a time when the market was taking a nosedive, post-Hurricane Wilma,” he explained. “The market has pretty much stabilized now, but we’re still off some 20 to 30 percent.”

More about the market

In Florida, high real estate prices - coupled with high insurance premiums following the deluge of recent hurricanes - have aided in crippling the real estate market. When it comes to auctions, the invisible costs - known only to the seller - may influence whether a seller will accept a bid or not, especially when sellers are asked to consider a bid well below their perceived property value.

“What goes up has to come down, that’s just the natural cycle of real estate,” said Kincaid. “In the interim, we are going to have natural fluctuations in the market. As auctioneers and sellers, you don’t set the price - whether that is in a conventional sales environment or an auction sale - ultimately it’s the buyers who set the price. Being able to present to the [Florida home loan] buyers that you are going to have value (for sale) at the auction is crucial.”

Whether or not low bids are the key culprit in deciphering why properties haven’t sold at local auctions remains known only to the would-be sellers. But in real estate auctions, price may be best justified by the bidders.

“As auction companies, we are going to have to be much more selective in the properties we accept, to ensure the listed properties are in-line with market pricing at the time (of auction). We had buyers there and we could have sold most of the properties at those auctions, but the sellers didn’t have realistic expectations,” noted Kincaid.

Gandy, meanwhile, sees the fate of local real estate auctions a bit differently.

“I don’t feel auctions in resort properties are a good idea,” he added. “They can lower the market value of the properties. In the Marco Island real estate market, I don’t think they’re a good idea.”