Vultures Circling

Two articles juxtaposed in today’s Sarasota Herald-Tribune real Estate section tell a great deal about our times.

One article talks about how investing in real estate in Florida has beat the stock market returns for several years. Several stories relate how real estate agents are delivering the goods to investors and speculators. We read such comments as:

"I get calls from builders and developers because they know I have the buyers," he said. "With new product, you make money if you're the first in."

"It was appreciating for buyers while it was being built," said Riley, who has handled 51 resales. "We've seen the first resale there at $1 million." His client originally bought it for $552,000 and resold it for about $825,000. That buyer then made about $175,000 on it. Riley was involved in all three sales."

"I've been watching the same bubble for 20 years. Sarasota has the quality of life, the arts, location, environment and resort living everyday. Investment opportunities are not going to stop."

On the same page is the headline "Entrepreneurs preparing to snap up bargains if prices fall". Here we read about the expected slow down or fall in real estate values and the new breed of speculators that are waiting for this to happen.

"Yale economist Robert Shiller, who forecast the stock market decline and the dot-com implosion in his book "Irrational Exuberance," says that significant corrections in housing prices in some of the fastest-appreciating markets are now virtually inevitable."

"Jack McCabe of McCabe Research & Consulting, a project feasibility adviser to large residential developers and apartment owners, shares Shiller's bearish views. But he's getting ready to pick up the pieces after the storm. He is putting together a series of what he calls "opportunity funds" -- pools of investor capital -- to acquire new and converted condominium units purchased by speculators."

"Some condo projects in the Miami-Dade County area have sold "70 to 80 percent" of their units to speculators, "who think they're getting into a gold rush and expect to flip" the units within the year. In reality, McCabe believes, many of these investors will lose their shirts trying to resell at ever-inflating prices"

Who will be the winners, and who the losers? Undoubtedly some speculators (née, investors) will lose. For sure, the big losers will include the work force population, the artists, the teachers who will no longer be able to find affordable housing and work for the institutions and corporations that need their talents. Consider the considerable talent volunteered by our retiree community to our terrific non-profit organizations. These institutions and organizations make up our community and they are already seeing the effect of the speculation in the real estate market.

What about the money changers (née, real estate agent) that now want to be called "investor advisor"? They will get rich at the expense of their reputation and their community. Instead of building up their communities they are tearing them down. They will never admit this, but that’s the way money talks. Kind of like vultures circling for the easy pickings.

But we go merrily along. Bright times are most assuredly ahead, as the developers of the Pineapple Square project have proclaimed: "You haven't seen anything yet!"