To be trapped with real estate is not an enviable thing. To be trapped inside of real estate is worse, but absent any earthquakes or F-something tornadoes most of us will never have to know how much worse that really is. Owning real estate can be fun. It can be testing. It can also be downright miserable. If you purchased your “dream” vacation home in Marco Island in 2006, you likely know what I mean. And perhaps, if you did that, you would have preferred to be trapped inside of real estate rather than trapped with it, but that’s likely just an exaggeration. Unless, of course, you purchased a condo at Angler’s Cove that year for $350k and now it’s worth $150k, perhaps then there is no exaggeration.
Being stuck with unwanted real estate is a rough situation to be in, and unfortunately it is one that has no easy out. This burden of unwanted or unaffordable real estate ownership is what has escalated the housing crisis of the last four years to apocalyptic levels, and it is what will continue to strain the foreclosure system for years and years to come. With negative equity and a mostly illiquid market, many have little other choice but to walk. Of course you could hand your deed back to Bank Of America and just rent your old home back from them, but if you did that you couldn’t strip out all the light fixtures first and sell them on Ebay, so what’s the fun in that?
I’m taking my time getting to the market at the Abbey Villas. The market there is soft, as it has been for several years, and as it likely will be for several more. During 2011 there was some semblance of a volume recovery, but it was more like a volume stirring than a full fledged recovery. Prices remain soft, some sellers remain somewhat desperate, and others still find nothing wrong with the market and prefer instead to price their condo as though it is still 2006. That was a great year, so it’d be hard to blame them.
Something else is occurring at the Villas though, something good. In the face of an illiquid market, homeowners are embracing a drastic measure to cope. They are doing what was previously unthinkable. They are doing something so outrageous, so unpredictable, that they just might start some sort of wacky trend that might end up impacting not just local and regional markets, but national and global ones as well. China, listen up. In the grips of a dry market these vacation homeowners are choosing to pull their properties off the open market and actually, wait for it, and actually… use them!
This is a strange phenomenon. The idea that real estate can actually be enjoyed is something we have lost sight of over recent years. The idea that equity, positive or negative, does affect one’s mood and finances but it does not affect the cooling qualities of a pool on a steamy Friday afternoon. Negative equity and the fact that your neighbor Bill cannot sell his unit does not make the walk to your moored boat any less swift, and it doesn’t mean you can’t have friends over for a drink and a laugh after Sunday evening boat ride. Life, it seems, can go on.
Whether the inventory has shrunk at the Villas because of this, or simply because sellers are tired of not being able to sell, the net result is positive. There was a time when the Abbey Villa market was saturated with inventory. Today, there are just 12 properly listed condominiums available in the MLS. Never mind that not a single unit is pending sale today, the shrinking of inventory is a positive sign. Remember, if we must go over this again, a market heals in several different ways but typically the pattern is the same. Inventory will shrink, volume will pick up, prices will remain soft, and ultimately the rate of absorption will grow to a level that the market will accept price increases once again. This is how markets heal, anyone telling you otherwise likely hoards cats.
The 12 units currently available in the Villas range in price from below $200k to over $400k, and while much of the difference is caused by lakeview and non-lakeview properties, much of it is also caused by sellers dictating list prices. There is a market for the Abbey Villas, and they will more than likely see some volume this summer as some of the units available are quite nice and make for simple, affordable vacation homes in the heart of Fontana. The only sale this year was at $331,250 for a harbor front unit, but the MLS description said it was “the best of all worlds”, so there’s likely some inter-galactic component to that condo that contributed to the appeal. If an economical vacation home in this world is on your radar, let’s chat.