West Bradenton Condo Update July 2011
In general, sales are up. In fact, unit sales in the 12 months ended July 31, 2011 are the highest 12 months for sales since 2005. Likewise, inventory levels are back to 2005 levels. However, prices remain mired at or near original construction levels (ie 30 -40 years ago). The S&P/Case-Shiller index shows that home prices are down roughly 48% from the peak for the Tampa market. My guess is that West Bradenton condo prices are down closer to 65% from peak.
The under $100,000 price point contains over a third of the July 2011 inventory and over half of all sales. Nearly half the sales in the past 12 months in this price point have been from distressed listings (either short sales or foreclosures). Like other areas of the region, distressed inventory is running dry. Distressed inventory now comprises just 27% of total inventory at this price, down from 47% last year.
The next price point between $100k and $200k contains 45% of total inventory and accounts for 35% of sales over the past month. Distress sales have been just 12.5% of total sales for this price point. Distressed inventory is an equally negligible 8% of total inventory.
These two price points collectively account for the most of the inventory and sales – 82% of the inventory and 91% of the sales. The bottom line here is that West Bradenton condos are amazingly inexpensive. Admittedly most are older (30-40 years), but they also come with huge chucks of green space and generous floor plans. With the holding costs running between $6,000 and $8000 per year (that’s taxes, maintenance fees, and insurance) and interest rates (both mortgage and savings) being so low, the purchase price is almost irrelevant. The mortgage interest costs are likely to be less than half the holding costs.
While there may still be some short term depreciation risk, it is much smaller than anytime in the past 7 years. You can take your pick - smaller because after 5 years we have to be near the end or smaller because with a sales price around $100,000 there just isn't that much left to depreciate. The maximum possible loss is less than what others have already lost.