Yesterday I was helping a friend find a home in the $200,000 range and I was surprised by two things; first there are a lot of homes that used to sell for $300-400 thousand that are now listing in the $200,000 range and two, homes are selling like hotcakes in the low $200's. Since I do not buy homes myself on a regular basis I was caught off guard a bit by all of the activity that I witnessed. Granted, I live in Naples, Florida where it is now tourist season and there are lots of retirees with money to spend this time of year. I guess what really surprised me was the pace of the sales. I called a few brokers about their listings and before I could get more than an address out they interrupted me (politely) with "that one sold a day or two ago and we have a back-up contract". We are all the sum of our experience.
I like to use my family and friends as a benchmark for what is realistic. In other words, if my family and friends can afford something, then I think most people can. This yard stick of sorts has served me well in the past.. I was in a new development a couple of years ago and the project manager was telling me about all of the great amenities they had to offer. I asked what the HOA dues were and he told me "only $350 per month".. I not only balked but I must have looked disgusted as he followed with "you have to remember this is relative to other communities". What he was trying to say is "hey our dues are cheap!".
All I could think of was my parents who are not poor, but would never live in a place where after the home was paid-off they would still have such a large monthly payment FOREVER. Let's just say that place is not doing so hot these days.
Okay, back to our regularly scheduled blog. So in the process of showing my friend some homes we stumbled onto a NEW subdivision. I put emphasis on "new" because I have not seen a new project in years. Even here in Naples where the people with real money live. So I stopped into the sales trailer and was stunned to see a bunch of people (I am talking about a mob here) waiting to speak with a sales person. As I observed the festival atmosphere I could not help but wonder what had caused all of the excitement. Then it hit me - the asking prices for new homes ranged from $190,000 to $299,000 - these are prices my folks would pay. Hmm. Very Interesting.
My point is I think many builders, developers and flippers forgot about my parents and the MILLIONS just like them. When this foreclosure nightmare is over I can see what segment of the market is going recover first - the one that people can actually afford. I know my recent experience is local and does not reflect the rest of America or the world. But it is a ray of hope. It is one positive sign after many less than positive signs (Cliff Drop Off Ahead).