Wind insurance, taxes hurting Island, Florida real estate
While the Anna Maria Island real estate market has always been different than the mainland, it's no secret that the Island market has been a bit sluggish.
More than 685 properties were listed for sale in August, according to the latest edition of the Anna Maria Island Property Sales Report, while only six single-family homes were sold the same month.
While July and August are generally considered the slowest months in the real estate industry, what has some Island real estate agents concerned is the ever-increasing cost of wind insurance along with the rising taxation for non-homesteaded properties.
Some areas of the Island are eligible for a wind insurance policy through Citizens, the state-operated wind insurance program, while other properties just across the street are outside the designated zone. Owners of those houses have to pay up to get a wind policy, if they can find one. The wind insurance premium on one Island home was reportedly $30,000 for just one year's worth of insurance, while another policy sold for $12,000.
Without some immediate legislation on the wind insurance problem, "Florida will lose its ability to attract people to Florida," predicted Don Schroder of RE/MAX Gulfstream.
"People still want Island real estate," he observed, but the high cost of wind insurance premiums can't help but contribute to the slowdown in sales.
"People buying know they will be taxed at the higher appraised rate," he said, but buyers also know they can homestead the property and hold the tax rate to a maximum increase of 3 percent per year. It's the wind insurance that makes some buyers reluctant.
Barry Gould of Island Vacation Properties agreed.
Getting some legislative control over the high cost and attainability of wind insurance is extremely important to the industry.
"Taxes are taxes and they can be stabilized," he said, but when taxes and wind insurance are added together, it gives buyers some pause for thought.
Still, Gould has reason for optimism about the Island real estate market.
The latest AMIPSR showed combined July and August sales on the Island were $31 million and 15 sales are pending. The average sales price of the pending single-family homes is $943,000, down about 5 percent from last year's figure, but still well above the prices of a few years ago when single-family homes on the Island sold on average for between $500,000 to $650,000.
Additionally, mortgage interest rates have declined the past few months and are now around 6.5 percent or slightly lower.
And it's not really comparing apples to apples to look at sales in the Island real estate market in July, August and September and say the market is a dud, he observed.
"August and September are traditionally slow months. It's not true that nothing is happening," Gould noted. Activity in the market is increasing and there are going to be some "exceptional deals," he predicted. The early winter arrivals who are looking to buy will get the best deals. It's going to be a buyer's market.
"The Island as a whole is reviving," Gould said, and Schroder agreed.
"We are seeing the real beginning of a turnaround in the market," Schroder added. "People recognize that Island pricing has fallen about as far as it can go."
Gould predicted an upswing in activity by the end of the year, while Schroder considered the first few months of 2007 as prime indicators the market was recovering.
But the wind insurance problem must still be addressed.
Schroder was hopeful that state Rep. Bill Galvano's effort to have wind insurance legislation enacted during the next session of the Florida Legislature would be fruitful.
The measure has the backing of the Florida Association of Chambers of Commerce and a number of influential politicians, including state Sen. Mike Bennett.
"There's pressure on everyone to come to an equitable solution on wind insurance and taxes," Schroder noted.
Without a solution to those two issues, Florida's real estate market - particularly in coastal communities - could remain stagnant for quite a long time.
National organization glum on Florida
The National Association of Realtors recently predicted that several areas of the country would continue in a down real estate market, including Florida.
The association said home prices could slump as much as 20 percent further throughout Florida during 2007 before any rebound could be expected. The average price of a new home in Florida is down about 10 percent in 2006 for all major markets, according to the Florida Association of Realtors.
Other down markets for 2007 were the northeast and California, the NAR said.
The NAR report was for all Florida metropolitan areas and did not separate mainland and beach-island communities.