Hidden Gems There are opportunities to mine for business in every market. Industry experts seek out the next niches.
The New Year has arrived, and it’s brought with it the usual round of happiness and wariness for real estate professionals who were happy to put 2008 to rest, but who remain a bit apprehensive about what 2009 might bring. After operating in an unusually volatile market through most of the last 24 months, real estate professionals ready for a silver lining will be glad to know that it may come in the form of new opportunities that are within reach.
Residential and commercial associates and brokers alike will find nuggets of gold in this article, which highlights what some believe to be solid market opportunities for 2009. From the investors to first-time homebuyers to international buyers, there is—as they say—“gold in them thar hills” [or, for Floridians, on the sandy beaches] for real estate professionals willing to tweak their business plans to adapt to today’s market. Investors Are Lining Up
They may not be standing in line with wads of cash in hand, but today’s savvy investors have noticed falling property prices. A more conservative bunch than those who poured money into the condo market during the real estate boom, today’s investors are looking for the best possible deals in a market they know will turn around at some point.
“Some areas of Florida saw the greatest real estate appreciation in the country during the boom, and prices have definitely adjusted since then,” observes G. Stacy Sirmans, Kenneth G. Bacheller Professor of Real Estate at Florida State University in Tallahassee. He sees the once-hot condo market as an area of particular interest for investors, but points out that the “bottom isn’t exactly visible yet,” leaving many of those buyers to stand on the sidelines for another few months.
Sirmans adds that the foreclosure and short-sale markets—both of which also present opportunities for real estate professionals who learn how to work with such buyers and sellers—may be buoyed in 2009 by three-year adjustable-rate mortgages that were written back in 2006. “A lot of people are waiting for visible evidence that this is the right time to buy,” says Sirmans.
Tim Kinzler is one sales associate who’s putting time into the investor market. At Coldwell Banker Real Estate in Delray Beach, Kinzler works with such buyers, most of whom are looking purely at the property’s investment value [e.g., rental income vs. appreciation], compared to their strategy during the boom, when 25 to 35 percent annual appreciation rates offset any deficiencies on the rental income side.
Kinzler’s biggest challenges right now include finding communities that have not banned owners from renting out their units during the first year of ownership. “We’re seeing more cash buyers take advantage of extremely good values, making their offers more attractive to sellers who do not want to risk a delay in closing for questionable-credit buyers,” says Kinzler, who works his sphere of influence and word-of-mouth referrals to find investors looking for deals in his area.
He expects to do more business in the sector this year, based on his perception that “housing inventory in Florida is finally beginning to decline, thus signaling a tipping point where prices will no longer be going down.” International Flavor
As managing partner and head of franchise distribution for Engel & Völkers in Naples, Timo Khammash is always looking outside the United States for opportunities to grow his company. For 2009, Khammash sees the global approach as a good solution for real estate professionals looking to overcome the challenges being inflicted by a global “financial crisis” that’s affecting the domestic real estate market.
To get to that international audience, Khammash says, his firm produces lifestyle/architectural magazines for potential U.S. buyers in Switzerland, Austria, Germany, Ireland, England and other areas where currency is strong against the U.S. dollar. The main targets are potential second-home buyers who want to invest in Florida real estate and live the Sunshine State lifestyle by investing in a second or third home.
Although many Europeans are feeling the pinch of the international financial market turmoil, he says, those looking in the $1.5 to $2 million range tend to be flush with cash and ready to invest. Some are getting exceptionally good deals in the process, says Khammash, who recently closed on a lot purchased for $250,000 by a German couple who just a few years ago would have paid $650,000 for the same piece of land. Commercial Market Shifts
Initially insulated from the shifts taking place in the residential market, the commercial side of the industry felt its share of challenges in 2008, due to the financial crisis and limbolike business moves that took place as Americans waited for the election outcome. At the end of 2008, Cynthia Shelton, director of investment sales for Colliers Arnold in Orlando, saw many firms reducing their office square footage to save money and accommodate fewer employees, while others closed down completely.
So what does that mean for commercial brokers this year? Shelton sees particularly good opportunity in land sales, due to the drop in prices to more affordable levels. Compared to a few years ago, when a piece of land was not only hard to come by but also priced out of range, commercial buyers are now finding deals. Concurrently, an increasing number of landlords are offering concessions and incentives to tenants in an effort to offset high vacancy rates.
The good news for these customers—and for the commercial professionals who assist them in their selection, purchase and/or leasing activities—is that “Florida always springs back,” according to Shelton, who expects to see higher vacancies and more concessions and incentives in 2009. First-Time Homebuyers
They were squeezed out of the real estate market during the boom, but now first-time homebuyers are back with a vengeance, ready to take advantage of lower home prices made possible by market stabilization. “There’s pent-up demand from first-time homebuyers right now,” says Rei Mesa, president and CEO at Prudential Florida Realty in Sunrise. With 45 offices and 1,800 sales associates, Mesa sees significant opportunity for associates that put the time into working with these homebuyers, many of whom belong to generations X and Y.
And while obtaining financing is likely to be a continued challenge, Mesa says finding the customers and matching them with FHA and government-sponsored first-time homebuyer programs should be fairly easy if the commercial professional is willing to put time into learning the market.
“Go into rental properties and find the people who are paying the same or more than what they would as homeowners,” says Mesa, who urges real estate professionals to use the historically low interest rates and high housing inventory to market to this audience via first-time homebuyer seminars. “There are entire rental communities full of potential buyers out there, ready to buy.”
In any market there’s a silver lining if you’re willing to learn a new facet of the business. Take advantage of your time to educate yourself on these opportunities and set yourself up for a profitable 2009. Bridget McCrea is a Clearwater-based freelance writer.