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The Truth About That 10% Real Estate Value Increase

Did you know that the second Tuesday of every month all of the real estate agents of southwest Florida show up at a secret location, one minute before midnight, to formulate a plan to manipulate the entire real estate industry? Well neither did I. Apparently, I didn’t get the invitation.

Believe it or not, there really isn’t a huge, clandestine plan to dupe the general public into buying real estate they don’t want or need. The market will and is ironing itself out. It’s true.

It shouldn’t be that hard to believe that a down real estate market wouldn’t last for forever. Not that any consumer shouldn’t be cautious and do their homework as they’re preparing to buy or sell real estate. Those same economists throwing around that projected ten percent value increase figure have been “off” before.

The fact of the matter is that the now watered down phrase “real estate is local” is true and has never been more important. The answer to the state of your real estate, not my real estate, not your friend’s real estate, has been sitting pretty, all this time, right there in the local numbers. All that most heard from the report last week was that real estate values in Naples would be up by “as much as ten percent” by the end of the year. It’s plausible given the market conditions but not a definite for every single real estate owner.

It’s sort of like the surgeon general announcing that the average life expectancy in the United States has been extended to the age of seventy-eight and then someone you know or love passes at the age of fifty-three. Rip off or reality? It was an average and unfortunately we all know someone out there who is going to draw a shorter straw than someone else in life expectancy and in the real estate market.

So, what’s a home owner or a home buyer to do? Get to the bottom of the numbers. Either figure out how to calculate the numbers yourself or find a real estate agent who is capable of calculating inventory absorption rates for you, for the area in which you live or are thinking of purchasing real estate. A simple calculation can tell you where the market stands and likely which direction the real estate values are moving.

The reality is that there are still a few communities out there with excessive inventory. I attended a meeting in a bundled golf community where the manager of the community boasted that only six percent of the real estate behind the gates of the community was currently listed for sale. Six percent sounds optimistic but given the rate of closed sales recorded in that particular community there was fifteen months of standing inventory. Meaning that theoretically, if no other real estate were listed in that community, ever again, it would take approximately fifteen months to sell off the existing inventory.

Unless there is a surprise run on real estate in that particular community it could be speculated that there is a strong possibility that they are not going to enjoy “up to a ten percent increase” in property values across the board when the New Year rings in. There may be a particularly popular floor plan experiencing a surge in sales that will, however.

It takes drilling down and running the numbers level by level from the county, from the city, to the neighborhood, to the street or even to the floor plan to determine the inventory, the direction of that particular local market and a reasonable projection of that market in the near future … that’s the local in “real estate is local” and the truth about which side of that projected “up to ten percent value increase” your real estate is currently positioned and where it might be at the end of the year.


Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area.  Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor.  If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.

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