MARCO ISLAND MARKET REPORT (PART 1)

This is the first part of a three part report on the Marco Island Real Estate Market. The purpose of this report is to give you a perspective of the Marco Island real estate market based our observations and opinions of what has happen, what factors contributed to the current market and where it could be headed. Keep in mind, we are not trained economists, nor do we possess a “crystal ball” that predicts the future. However, we feel that we need to educate our clients as to the current market trends and opportunities based on our understanding of the market..

Where We’ve Been

Since the mid-1960’s, when Deltona Corporation started to develop Marco Island as a retirement community for the middle-class America, people have been drawn to it’s beautiful weather, gulf access properties and pristine sandy beaches. It was a tropical island paradise where one could get away from the cares of normal life without leaving the United States. Since its development, Marco Island has experienced steady growth through the 70’s, 80’s and 90’s. However, many investors soon discovered the potential that this market had to offer. As more buyers realized the growth opportunity associated with the impending baby boomer migration, the 2000 technology bust and the increased valuation of the euro dollar, the feeding frenzy was poised to begin. Lots started the move up in 2001, experiencing better than normal growth through 2003. Little did we know, we were just getting started?

The period between 2003 and 2005 proved to be record-breaking. Fueled by real estate speculation, low interest rates and fear of missing out on their piece of paradise, buyers scurried to pick up anything that they could get their hands on than flip it back on the market for a hefty premium. It almost seemed too good to be true. Tainted by the uncertainty of the stock market, everyone from the most saavy to novice investors flooded into the market to search for their hidden treasure. The banks were bending over backwards to lend money to would-be investors and second home buyers. Enticed by interest-only and pay-option arm mortgages, some buyers couldn’t resist extending themselves to their brink anticipating the sweet profits that were being had all over the country, particularly the Marco Island and Naples markets. In 2004 & 2005, Money magazine rank the area as one of the top appreciating markets in the county.

Unfortunately, all good things must come to an end. The ripple started even while would-be investors were paying top dollar for the increasing inventory that started to materialize in 2005. Driven by the investor’s vision of fast profits and the first of two extraordinary hurricane seasons, second home owners and retirees started fishing their properties on the market to capitalize on the incredible appreciation that they had experienced. After all, some had seen their properties increase 10 fold from their purchase price.

By the time Marco Island seller’s market peaked in 2005, the market momentum was showing signs of exhaustion. Buyers were losing confidence in the opportunity. The real estate boom was starting to wane. The media was predicting a real estate bust. Could it get worse?

Enter the 2005 hurricane season, the most active season in recorded history. After seeing what Hurricane Charlie did to Punta Gorda, Katrina put the final nail in the coffin of the Marco Island real estate boom. The media exposure kept our eyes on the carnage left in the path of Katrina while a direct hit on Marco Island sent property owners reeling from TMI “aka TOO MUCH INFORMATION”. By the end of Hurricane season, the cooling period was in full swing.

High real estate prices, fear of storms and a downturn in the nation’s real estate market perched many buyers firmly on the fence to wait for the next opportunity to reenter the market. As purchases slowed down and investors, as well as transitional homeowners, looked to cash in on their hidden treasure, an excess inventory of properties accumulated. So, where are we NOW?

Stay tune for Part 2 of the Marco Island Market Report: WERE WE ARE NOW.