Moody's expect Sarasota real estate prices will drop

A report by Moody's Economy.com, a private research firm, suggests that Sarasota real estate prices are expected to drop.

The research firm places the drop at 14 percent during a period running from the last quarter of 2005 to the third quarter of 2007.

Wachovia Corp. economist Mark Vitner thinks the firm is going overboard when it calls the Southwest Florida experience a "collapse."

"I would not call this a collapse, because in their worst-case scenario, we are not even losing a year's appreciation, and it's over an 18-month period," he said.

Raul Elizalde, a former Wall Street equity and bond researcher says, "They are not the best forecasters I have ever seen. When I was in research, they were always just lagging. They were totally late."

Moody's economist Brian Carey acknowledged that their predictions do not include the wealth and buying power of Florida's retirees. "We have no input for retirees. We only know the incomes of working people," said Carey.

In the majority of the markets that Moody's studied, lowering prices were characterized as "market corrections." But in those where prices were predicted to tumble more than 10 percent, the decline was characterized as a crash.

Vitner, the Wachovia economist says "I think we are likely to see prices fall in markets that have historically been relatively inexpensive markets, such as Fort Myers, Cape Coral, Port Charlotte and Bradenton."

Sarasota and Naples, which have always been expensive, are not as overpriced in Vitner's estimation.

Vitner has been on top of the potential for pricing drops for more than a year. In June 2005, he wrote "once demand cools, as it invariably will, many of the markets that are currently seeing the largest gains in home prices are the very markets that will most likely see outright declines."
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