We studied local market trends very carefully before pulling the trigger," Wilson said of his purchase. "I also relied on my 20 years of experience managing London Bay through previous housing cycles, although this one is certainly different, he admitted. "In hindsight the purchase has proven to be very timely because we bought it at a low point in the market and on very favorable terms."
Now, as the market continues its gradual ascent from the bottom, luxury home buyers are finding they can benefit from his business acumen. At the height of the housing boom, some home sites in gated luxury communities such as Mediterra were priced at upwards of $1 million. The market downturn has significantly reduced that number. And Wilson’s timely purchase gives London Bay even more flexibility to price its home sites at Mediterra very competitively.
Today, home sites at Mediterra start in the $130s with larger premium estate home sites still available for an average price of about $400,000. "The term buyers market may seem a bit overused today, but when you look at where prices were, and where they are today, there are definitely bargains in the market," Wilson said.
Luxury homes sales in Naples slowed to a crawl during 2009. But during the first five months of 2011, 49 homes and home sites have been contracted or closed at Mediterra alone, valued at $49.2 million. "We have seen many people who have been considering a home purchase for several years now signing on the dotted line. They believe that home prices are going to start accelerating and they are locking in their best deals right now," Wilson said.
During the last 30 days, London Bay has closed on lot purchases at Cortile in Mediterra, in Mirada at the Estuary at Grey Oaks, and in Matera at Lakewood Ranch in Sarasota. According to Wilson he’s in discussions with several other possible home buyers and he noted that he’s sold two model homes during this period as well. "The inventory of luxury homes in the Naples market is continuing to diminish," Wilson said. Statistics show that 86 more homes price at $1 million and above sold during the most recent 12 month period as compared to the same period a year earlier. And, the average price showed a very modest increase during that period, confirming that price declines in the luxury sector have abated.
Calling upon his 20 years of experience in the Naples real estate market, Wilson now believes that the area is poised for another period of home appreciation. "When inventory declines, it has the effect of raising values and that’s what we are beginning to experience," he said. An additional factor that could support Wilson’s belief is that there are currently no new luxury communities coming out of the ground. "The established communities such as Mediterra and Grey Oaks don’t have a large supply of home sites remaining. "If someone is looking for a custom home in a country club community where the lifestyle is already in place, limited inventory will drive prices up," he said. "It simple economics."
Another factor that’s working to the benefit of new home buyers right now is the principle of supply and demand. With new construction hovering around all-time lows, the cost of building materials and labor has declined by about one-third during the last five years. As an example, London Bay is now building luxury homes for as low as $181 per sq. ft. in the Naples market compared to about $275 at the market’s peak. In Sarasota, the price is even lower. But Wilson is quick to caution that those costs are beginning to rise.
In December 2010, the Bureau of Labor Statistic’s Producer Price Index for building materials registered its largest increase of the year -- a 4.5% increase. Home building analyst Ivy Zelman is also seeing some sharp price increases in lumber and wallboard, with smaller increases in roofing, insulation and concrete. "For those people who have been waiting for the perfect time to buy, my advice is don’t wait much longer, or the opportunity will be gone," Wilson said.
Experts believe that as the economy improves and baby boomers once again start looking for their retirement destinations, Florida will continue to be a major beneficiary. The Bureau for Economic and Business Research estimates that as many as 1.3 million baby boomers will relocate to Florida in the next 20 years. "While housing prices have certainly changed, the one thing that hasn’t is the beauty and allure of Southwest Florida," Wilson said. He cites another recent report that showed after four straight years of decline, million dollar home sales rose on average 18.6% in the nation’s 20 major metro areas in 2010. "The appetite for luxury homes and lifestyles has not changed. Many people may have postponed their purchase, but as the stock market and economy continue to improve, it boosts the confidence of these people. Pent-up demand does exist," he said.
As Wilson admitted, "this real estate cycle is definitely different." It’s been deeper, longer and more unpredictable that any he has even seen. But he remains confident about his industry, the markets where he operates, and the future. "Bad things aligned to create this perfect storm, but sooner or later the clouds disappear and the sun comes out again. Right now, good things are aligning to create great opportunities for home buyers," he concluded.
