Investor Column | Betting on what hot Bradenton-Sarasota housing market will do is not easy

Hey, we just sold our home in this crazy market. Ironically, selling it was more challenging than I expected, and hopefully, it closes by June 2, 2021.

I’m moderately conservative regarding risk, and I did not buy a replacement property in advance. Good move because, to my horror, I had about the only home in Manatee County that took more than a year to sell.

Now the cost of a decent replacement home has gone up sky-high. Homes are selling for more than asking price and in just hours after being listed. I have a sense of deja vu that it is 2006 all over again.

I am sure many of you are in the same ballpark. My goal is to avoid paying too much for a home in a red-hot housing market, especially now that I am downsizing and want to economize.

My wife Jeannine has her heart set on a gorgeous 55 and over community in South Manatee County. She likes the Cascades because it’s gated, has an incredible clubhouse and top-notch amenities. Best of all, it’s located 20 minutes from just about everything, just off Lockwood Ridge Road and 63rd Avenue East.

Scary, but a two-bedroom, two-bath with a den St. Kitts model in the Cascades that went for $290,00 in December is now approaching $420,000. Supply is super limited, too.

I’m getting stressed out. Many home prices have increased by 18 percent or more for Manatee County in the last 12 months. I remember 2008 when a hot market collapsed practically overnight. Back then, I remember a home valued at $720,000 declining to $450,000, dropping in value by 40% in a few months.

It’s hard reading tea leaves. Will a flood of distressed properties entering the market and higher interest costs lead to more homes coming on the market? Or will millennials buy homes in a tight housing market and fuel even higher prices?

Ending the moratorium on foreclosures and evictions may cause more homes to come on the market, improving supply. New sellers, who are now vaccinated, may decide to move after postponing sales due to the lockdown. Additional supply may cause prices to fall — or not.

Passage of a $2.3 trillion American Jobs Plan and the $1.8 trillion American Families Plan, in my opinion, is a giant wild card.

So, the obvious question is: Is the rise in home prices a precursor to the housing bubble leading up to a 2008-type-crash? Sure, there are fewer predatory lending practices, but ultimately supply will likely catch up with overbuilding. In the last housing fiasco, about 10 million Americans lost a home when the market collapsed.

America may be discovering the quality of life, good schools, low taxes we enjoy in Bradenton and Sarasota. Florida has jobs, schools, and opportunities. Northerners who can work from home and new retirees are bidding up Florida real estate in a post-pandemic world.

So, here is what I’ve decided, I’m going to rent an apartment at a new complex called Solaire, a new luxury apartment complex on the corner of Honore and Desoto Road.

Yeah, I’m worried. Not buying now may be a costly mistake. Still, hunkering down at Solaire won’t be so bad, either. For sure, drinking wine in the elegant wine tasting room or hanging out with friends watching Monday Night Football in the media room sounds fun. There’s a clubroom with indoor and outdoor seating. You should see the enormous fitness room with tons of equipment, even a Peloton biking room, and a resort-style pool.

Rent for our two-bedroom unit is $1,895 a month. My wife and I are opting for a 14-month lease with a two-month out when our Realtor Kathy Valente, of Michael Saunders, finds our next home. I think it’s prudent to rent for a while. If I’m wrong, I’ll have to sweet-talk my wife to move to another neighborhood or “rough it” longer at the cushy Solaire.

But what if rents go up, too? My wife will ask me to move from Solaire to the doghouse. For my sake, I hope 2022 has a lot of good deals in the Cascades, though.

Jim Germer is a Bradenton CPA and financial adviser at 3655 Cortez Road W, Suite 110, Bradenton 34210. Call (941) 746-5600 or email jim.germer@ceterafs.com. Securities are offered through Cetera Financial Specialists LLC (doing insurance business in CA as CFGFS Insurance Agency) member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Cetera entities are under separate ownership from any other named entity. This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.