Sanibel will never have highrise condos.
Why does this matter?
Consider the story of my buddy Rob. He grabbed a great deal on an older condo on Miami Beach early in the boom. Luxury condos were built on either side and were selling for big bucks. Rob was happy that he got in first.
Surely, this new development would be a boon to his investment. Boy was he wrong.
Sanibel limits condos to only 4 stories. Very few new development opportunities exist, and they will have deep setbacks from the beach.
The towers went bust. The units were sold for pennies on the dollar. Rob’s 1970’s era condo couldn’t compete against these beautiful new properties. Depreciation was brutal. The market for his condo went down 70%.
Would Rob have lost money in our down market had luxury towers not been built nearby? Absolutely. But I bet it wouldn’t have been nearly as much.
Even without the bust, new condo inventory coming into the market capped his potential appreciation. And I didn’t mention the shadows these new towers cast over his pool and balcony.
You can’t predict the future, so make sure you bet on what you do know: Supply and Demand govern free markets. Use this to maximize your investment and buy your home in a community where the supply is limited and the demand will remain high.
