The real estate market in southwest Florida is definitely one to watch — after all, Florida was severely hit when the housing bubble exploded from 2006-2013, leaving millions with underwater mortgages or facing foreclosure. However, the coastal communities like Bonita Springs and Naples are resilient, and thankfully, the market has improved considerably and shows no signs of relapsing into what was a dark time in Florida real estate. Although some naysayers believe that the housing bubble is back, there isn’t enough evidence to support that theory.

With that said, when you’re considering buying a luxury home, like The Colony in Bonita Springs, you need to have an understanding of why the current bloom in real estate isn’t a bubble that’s going to burst any time soon. Rest assured with your decision to choose a luxury home in Bonita Springs — read on to learn why.

What Caused the Bubble to Burst?

Before we give you all the facts showing why there isn’t a bubble that’s about to burst, it’s important to know what causes devastating real estate crashes. According to Investopedia, the factors that cause a bubble to burst relies on the laws of supply and demand, and specifically include (1) an increase in interest rates, which adds to supply (2) a downturn in general economic activity, which decreases the demand for housing, (3) an increase in supply, as a result in exhausted demand and individuals losing their homes due to depreciation. Essentially, when you have no demand and too large of a supply, you’re headed for trouble. Mix that in with unscrupulous lending practices, and you have the exact recipe for what was perhaps the greatest housing crash to date.

Moving in the Right Direction

The good thing is that none of that is happening — interest rates can be capped due to the Save Our Homes initiative and also transferred, thanks to the 2008 Amendment that allows for portability of the Save Our Homes assessment cap. Additionally, the economy in southwest Florida, specifically in Collier and Lee Counties, is flourishing. In fact, the two counties are leading the state in economic growth, as recently reported in the Naples News. And as far as an exhausted demand — well, that doesn’t seem to be happening any time soon as both county’s populations are growing as well. Things are good, but not too good to be true. The growth is apparent, but steady. The S&P/Case-Shiller reports that at the time this was written, the National Home Price Index is up by 5.42%. Just this past summer, Zillow’s Chief Economist Stan Humphries was quoted in a Forbes article asserting that the market is returning to normal: “New and existing home sales are both up, and home price growth continues to slow down. The fact that these indicators are moving in opposite directions actually means the market overall is

moving in the right direction – back to normal.” Things are indeed moving in the right direction.

Returning to Normalcy

Last month, NBC-2 News of southwest Florida reported that there are a million fewer underwater homes than last quarter. This means that home values are continuing to increase in value — something that needed to happen after home values hit rock bottom when the last bubble burst. That’s a part of the recovery process. The home values are not anywhere near the over-inflated values of the past, but they are returning to a healthy, more stable value. Specifically, in Bonita Springs, home values have “returned to pre-recession norms” after experiencing a large jump.

Fair Mortgages

Furthermore, the past risky and shady behaviors of the banks, which significantly contributed to the last bubble burst, have been exponentially regulated. People can’t just get a mortgage for anything — they have to prove that they can afford it, which is a good thing. It means that people will not be able to purchase a home that is beyond their means. And that means that your neighbors in your luxury highrise condo won’t be freeloading, waiting for the foreclosure process to get on its way. Mortgage services experienced a stranglehold of regulatory and compliance restrictions after the fast and loose practices were discovered. As the government and banks work to streamline processes and increase oversight and transparency, it is clear that mortgage services are still under a microscope. To keep abreast of what’s happening currently with mortgage service regulation and compliance, head over to the National Mortgage News, which recently published a breakdown of the changes mortgage services will face in 2016.

Additionally, for those individuals who won’t be buying their next luxury home with cash, Florida 30-year fixed mortgage rates are at 3.49% as of March 18, 2016. With the low mortgage rates that Florida has to offer, luxury home buying becomes an affordable option for those who qualify.

The Path to Continued Success

So take a deep breath, and relax. After all, isn’t that what’ Florida’s about?! Florida’s real estate market is clearly in a good place. I’ll leave you with one last tidbit of information: Meyers Research, a consulting firm that focuses on real estate, published a report written by their Chief Analyst Dr. Kevin Gillen, who contends “Florida’s continued success will be driven by its steady stream of business from tourism, international trade, and construction.” We couldn’t agree more. Florida is a great place to live — come join us at The Colony!

Contact Colony realtor, Jill Kushner, to learn all there is to know (and love!) about The Colony in Bonita Springs, Florida!

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