Distressed Market Overview

Fort Myers, FL



Fort Myers is a city in SW Florida that has been hit very hard by the recession and the housing crisis.  It was near the top of economic and population growth per capita before the ‘bust’ and had lots of investors buying up it’s homes at that time.

As a result, the prices have corrected more than most other cities in FL and in North America, from hitting about $285 000 median price in late 2005 to hovering around $85 000 median price summer 2009.

I think Fort Myers is attractive because of it’s value and also since the likelihood of future growth is very good once the economy picks up again.  The area is very attractive to retirees, which there will be plenty of in the future.  I recommend focusing on newer foreclosed homes and condos.

There are several reasons why Fort Myers is attractive for investing:

Forbes.com listed Fort Myers as #2 in future economic and population growth of U.S. cities:   FORBES ARTICLE

October 15, 2009:

Most cities in FL have bottomed-out in prices and started small increases.  Fort Myers has slightly decreased sales this fall from last summer while the median price has remained stable around $85 000.  Fort Myers continues to have decent population growth.  Miami also looks affordable at $182 000.  The city has suffered a lot with the housing decline, but shows positive population growth in 2008 after a large net out-migration in 2007.

Orlando is a large city with excellent population growth and economic growth in the recent past.  Condo prices are very depressed (maybe because of over-building?) and seem to be a great opportunity, although more research is required.  Condo prices in Orlando are the lowest in Florida at $52 600 versus the state average of $102 000.  The population growth of Orlando has been very impressive during the boom, but dropped off to a meager 0.6% increase net migration in 2008.  This is likely to increase again once the economy improves.

July, 2010:

Fort Myers home prices have continued to inch up and is now hovering near the $100 000 range, although we may see some weakening of prices with the summer months and lack of government purchase incentives.  Inventories continue to decline, although we may see increases in the short term as more foreclosures hit the market.

LAS VEGAS, NV


yours truly at Freemont Street


 I believe it is the ideal time to invest in Las Vegas right now.  It is one of the only cities in the U.S. where prices have still been dropping the last few months.  Foreclosures are still very prevalent and the unemployment rate in the city hit over 13% in August.  There are a lot of buyers and investors already making offers on lower-end listings very competitive, but this will just get worse the longer one waits.  More foreclosures are in the pipeline, though, which should guarantee lots of opportunity during the next 8 months or so.

Last month the median price was about $139 000, dropping from a figure over $200 000 one year ago.  I’d focus on newer homes and condos.  More details will be added here in the future, as I start buying properties here myself.

October 15, 2009:

Las Vegas has continued to have good population growth, even while the local unemployment rate reached 13% in August.  Prices are still going down and deals are still available, although lower-priced foreclosures are getting competitive.  It’s a great time to buy right now!

July, 2010:

I believe Las Vegas is the current "land of opportunity" for buying single family properties, as the housing market and economy is lagging compared to other U.S. cities.  Sales have decreased sharply with the expiration of the Tax Credit and the struggling economy (unemployment rate still over 14% as of May) means a good supply of foreclosures and short sales.  Average prices have stayed around the $135 000 range for several months now and even saw a very small (0.6%) increase last month.

 
PHOENIX, AZ

Phoenix has also hit a low of around $130 000 median price during the last few months, dropping from around $200 000 a year ago.  There is still opportunity there, but it’s very competitive.  The supply of homes for sale still makes it a ‘distressed’ market, but the supply of bank-owned REO’s has dwindled to below 4 months supply and is very competitive for properties under $150 000.  I believe it is a market that will pay rewards in the future, though, if you want to deal with the high competition for properties, as population growth into the city remains very large and it is an attractive future destination for retirees.  Maricopa County, which is located on the west side of Phoenix, was the county with the largest number increase of residents in the U.S. in 2008.  90 000 people moved into the county during 2008.

The only issue I see, which is also possible in Las Vegas, is a predicted water shortage in the future.  This could also result in "dust bowl" conditions similar to the early 19th century.  But, this is only speculation and should be at least considered when investing in this area of the country.

October 15, 2009:
Phoenix, AZ continues to have huge population increases into the area and that is likely why the single family market has stabilized so quickly, even though the recession continues.  Lower priced foreclosures are difficult to get at this time, as multiple bids are common.  Prices have stabilized and increased a fraction last month.

July, 2010:
The Phoenix market has seen increased demand from investors and first-time homebuyers (due to the tax credit), but still remains a distressed market, although lower inventories show signs of some stabilization.  Large population growth makes it remain a good bet for the future, albeit also a competitive investor's market.  The city is currently seeing a large increase in short sales and lower foreclosures, with a large proportion of sales still distressed.  A large supply of properties in the latter stages of the foreclosure process may mean an increased supply of bank-owned sales in the near future.  Opportunity abounds but there is lots of competition for lower-priced properties.


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