From the Real Estate Investment Center

Home owners, investors and real estate agents are feeling the pain of a hard hit real estate market in North Port, Florida, according to a recent article in the Herald Tribune.

For example, a 75-year old home owner has been trying to sell her 10-year old house to move into a condo but say, "The business of selling houses is not good.  There's a lot of houses for sale on my street."

Randy Martin, a pool contractor, speculated on the North Port real estate market and spent about $740,000 to buy six homes.  He sold one home at a profit of $100,000 before the real estate boom ended, but still owns the other five and paying interest on nearly $500,000 in loans.  In the meantime, he's trying to rent the houses to cover his expenses, but the rental market has been hit hard and rental prices are down, too.

Another investor bought two houses at foreclosure for less than $110,000 in 2004 and 2005.  Not a bad deal, you
would think, but she can't attract buyers, even after more than a year on the market.

Roger Clyne, a real estate agent with Exit Realty, put it bluntly, "There's a tremendous supply of homes on the market and demand is way down.  Property values are melting like ice cream, and no one knows how far they will drop.  The only way to attract buyers is to keep moving the asking price below the rest of the pack."

North Port Became a Bubbleville Market

North Port went on a building spree that increased the popluation from about 24,000 in 2000 to over 40,000 in 2006, according to University of Florida data.

Builders constructed 9,700 homes in North Port since 2002, mainly aimed at working-class buyers.  They were convinced that retiring baby boomers would contine the growth spurt for years.  Today, that's all come to a stop. The homes that are on the market, or soon will be, represent a 4.7-year supply given the current rate of home sales.

As of mid-June, there were a total of 885 homes for sale in North Port, about 200 FSBOs and 400 houses that builders erected on speculation and are holding inventory, and 195 homes have been foreclosed on by banks, while 305 more are waiting to go through the same process.  This is according to information provided by the local MLS, RealtyTrac.com and a local appraiser, Dennis Black, that interviewed builders.

Too Many Speculators

Dennis Black and two associates did some further research and spent May driving around 1,700 roads in the North Port market, logging the number of homes for sale and those that looked vacant.  They discovered that there were far fewer owner-occupied units than anyone had previously thought.

Traditionally, about 85 percent of the 20,000 homes in the city were homesteaded, ie, bought by home owners.  By 2005, that figure dropped to 67 percent.  Two-thirds of the non-homesteaded buyers lived in Florida, suggesting that they were speculators and not snowbirds.

What Lessons Can Investors Learn from the North Port Real Estate Market Decline?

Do your due diligence on the real estate market you are targeting.

• Be cautious about housing markets fueled by speculators.

• Be cautious about housing markets that depend on the real estate and building industries to fuel the local economy.

• Be cautious about housing markets that predominately are made up of blue-collar buyers.  Many are marginal buyers who need to rely on getting a subprime loan to buy a house.  With the sub-prime lending meltdown, these types of buyers will likely be shut out of buying a home.

Get Your Money Out of Bubbleville and Invest in Real Estate in Bargaintown

• Buy discount real estate property - foreclosures, pre-foreclosures, tax sales, real estate auctions, real estate repos and other distressed-seller opportunities.

• Consider commercial real estate investments - apartment buildings, retail centers, storage unit facilities, office buildings.  I have provided you with an awesome commercial loan resource at my website to buy these properties with as little as 3% down on certain property types.

• Buy in Bargainville - the next hot emerging real estate markets across the country.

• Get a mentor.  Learn from real estate investing experts who have already done this successfully.  There are a number of them featured in the Real Estate Investing Guide Section of my website.

Source: http://www.heraldtribune.com/article/20070715/REALESTATE/707150625

Technorati Tags: money, finance, real estate, real estate investing, north port, florida real estate

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