Lee County’s real estate market cooled again slightly in July.  Single family home sales were down 32% from July 2005, and down 22.11% from June 2006.  There were 694 sales in July which signals buyers are still buying, just not as much in previous months or years.  The median single family home sale price dropped 8% from July 2005 levels, and dropped 1.27% from June 2006 levels. 

Many sellers have adjusted their asking prices to compete in this market, and some have not.  Some sellers are being caught chasing the market down.  Each time they make a price drop, they’re still behind what has already occurred.  Many sellers are pricing their properties in line with what other sellers are asking, not what actual buyers are paying.

It’s very difficult determining the correct price because in many cases there are few sales to base it on.  This is where knowledge and experience of your agent comes in.  Sellers who have broken through the "Ask in line with what other Sellers are asking" mold have had success selling, while the bunched group of sellers properties remain on the market.

The seller sets the price, the market determines the value.  This is true in a rising market, a flat market, and of course in a declining market.  In a hot market, the asking price was bid up over full price.  In a declining market, the property just sits.  When there are no offers and few showings, it’s either incorrect pricing, lack of marketing, or both.

Here are some other interesting statistics as of August 23, 2006:  

 Lee County Florida Current Market Statistics.

August 23,2006 Active Pending Months Supply of Inventory
Single Family 12,168 1,261 13.10
Condo 7,391 557 14.18

 

 

July 25,2006 Active Pending Months Supply of Inventory
Single Family 12,053 1,343 12.97
Condo 7,387 591 14.17

 

 

May 27, 2006 Active Pending Months Supply of Inventory
Single Family 11,838 1,426 12.74
Condo 7,414 644 14.22

 

Inventory levels for single family homes in Lee County Florida have actually increased slightly from 12.97 months supply to 13.10 months supply.  Condominium inventory levels in Lee County have remained fairly steady the past several months.

What comes first, the chicken or the egg?  Or is it Residential roof tops Vs. Commercial businesses in downtown Fort Myers real estate?

This is the question.  Retailers, bars, and restaurants needs consumers, and consumers want businesses before they decide to live in an area.  This scenario has been playing out for the better part of 3 years now.  Investors have lined up and purchased units, however downtown needs end users for a vibrant business climate.

This could all be about to change, just not overnight.  It’s still a process, and we’re in the middle of it now.  Within 5 years we’ll see significant change.  The issue is how many are willing to wait, and for how long?

We’ll be sure to keep you posted on downtown Fort Myers development in the future.

 

Florida Sales Report 2nd Quarter

ORLANDO, Fla., August 15, 2006In second quarter 2006, Florida’s housing sector followed the national trend, showing signs of a market adjusting to a better balance between buyers and sellers. Statewide sales of single-family existing homes totaled 53,161 during the three-month period, a decrease of 27 percent compared to 72,870 homes sold during the same time a year ago, according to the Florida Association of Realtors® (FAR).

“Sales of existing single-family homes in Florida behaved like much of the U.S. in the 2006 second quarter, with the declining strength of the domestic economy continuing to act like a stiff wind in the face of the existing real estate market,” says Dr. David Scott, executive director of the Dr. Phillips Institute for the Study of American Business Activity and professor of finance at the University of Central Florida (UCF).

The statewide existing-home median sales price rose 9 percent to reach $254,800 in the second quarter; a year ago, it was $234,500. In 2001, the second-quarter statewide median sales price was $127,400, which is an increase of about 100 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.

This environment is likely to endure across the remaining months of 2006 owing to several factors, Scott says, including the declining rate of growth in the real gross domestic product (GPD); a tepid increase in the number of jobs being created over the past three months; rising conventional mortgage rates; and a rising inventory of homes for sale. He notes that the rising costs of gasoline and energy are starting to strain many household budgets while wages are just barely keeping up with the recent price inflation of about 3.6 percent a year.

Looking to Florida’s existing condominium market, sales of existing condos also decreased during the quarter, with a total of 16,522 condos sold statewide compared to 24,599 in second quarter 2005 for a 33 percent decline, according to FAR. The statewide median sales price for condos rose 1 percent to $219,100 for the three-month period; a year ago, it was $217,900.

The latest economy outlook from the National Association of Realtors® (NAR) notes that the housing market is in the process of stabilizing with little change in overall sales volume expected over the balance of the year. Analysts report that the level of activity remains high historically — 2006 is expected to be the third best year for existing home sales. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.60 percent in first quarter 2006; last year, it was 6.24 percent.

Among the state’s larger markets, the Orlando metropolitan statistical area (MSA) reported 8,189 existing homes sold for the quarter, a decrease of 23 percent compared to the 10,585 homes sold a year ago. The market’s existing-home median sales price increased 18 percent to $265,500; a year ago, it was $224,500. A total of 1,456 existing condos sold in the market over the three-month period, up 24 percent from a year ago, while the existing-condo median price rose 1 percent to $163,500.

The Gainesville MSA, one of the smaller markets in the state, reported that 992 homes changed hands in the second quarter, down 24 percent compared to 1,297 homes sold a year ago. Over the same period, the market’s existing-home median home price rose 21 percent to $214,300; a year ago, it was $176,400. A total of 426 existing condos sold in the market during the second quarter, up 37 percent from a year ago, while the existing-condo median price rose 16 percent to $146,600.

The student population is a strong stabilizing factor for our condo market, and with prices rising, condos are a good product for many first-time buyers,” says Deborah Minck, president of the Gainesville-Alachua County Association of Realtors and broker-vice president of Tioga Realty Inc. in Gainesville. “Conditions now are more balanced for buyers and sellers, and the key is working with someone who knows the local housing market. That’s why it is so important for buyers and sellers to work with a Realtor — someone who knows the ins and outs of the local real estate market and can help them with all of the complex details involved in buying or selling a home.”

The Fort Myers/Cape Coral MSA reported single family home sales off 28% Vs. 2nd quarter sales a year ago.  Single family home prices were up 2% to $278,800 Vs. $273,500 a year ago.  Condominum sales were off 61% in the 2nd quarter of 2006 Vs. 2005, although prices were up 11% to $306,200 from $275,600 from a year ago.  According to Brett Ellis of RE/MAX Realty Group, the weakness is an example of over supply due to investor purchases the past several years.  “they really just over supplied our market, which hurt us in two ways.  Number one, we have more homes for sale than actual buyers who will live in the properties.  Number two, investors helped drive up the market such that they influenced how sellers value their properties.  Sellers became convinced that each and every one of their homes was worth the Top of the market, regardless of whether there are actually buyers today willing to pay that price.  The fact that one day in the past a buyer was willing to pay a certain price doesn’t mean that is the price for ever more.  Values go up and they come down, and today they are down from the highs.  Some sellers are stuck in yesteryear and refuse to believe what is happening, which further prevents them from selling.”

Two charts showing statistics for Florida and its MSAs are attached. One chart compares the volume of existing, single-family home sales and median sales prices in the second quarter of 2006 to the second quarter of 2005, based on Realtor-closed transactions from local Realtor boards/associations within the MSAs. The second chart compares the volume of existing condo sales and median sales prices in second quarter 2006 to second quarter 2005, based on Realtor-closed transactions from local Realtor boards/associations within the MSAs.

It’s that time of year again.  We want to provide the best back to school coverage in SW Florida, so check here for links that will aid you in the back to school process.

In Lee County, 80,000 students return to school, and the district does have a teacher shortage.  Late school start times cause headaches for some parents.  Lee County changes it’s solicitation policy after students received offers from various businesses, including some controversial material.  Lee County Schools bus routes, South Zone, West Zone, East Zone.  Lee County School Bell Times, Trasnportation and Bus Routes.

44,000 students return to school in Collier County. Here’s what parents need to know in Collier County to avoid back to school chaos.  Each School in Collier County has a different uniform policy.  Collier County Schools bus stops.  Collier County August 2006 school lunch menus.  Collier County’s First Day of school off to smooth start.

Charlotte County is rushing to bring in new teachers to meet growing demand.

Home builders in SW Florida have hit hard times.  Many are cancelling projects, especially large condo sales in towers.  Builders are also offering discounts and incentives to compete with existing home sellers who have adjusted to the changing market.

We provide links to News Press articles relating to home builder woes, as well as other trades that are affected by the slowing in home building.

Many agents are finding the changing SW Florida real estate market to be tough times.  Buyers aren’t as plentiful as in years past, and sellers are more demanding.

Sellers want systems.  They want to know what’s going to happen, when, and what the communication will be.  They particularly care about where and how often the property will be advertised.  Gone are the days when sellers would shop for the lowest priced agent.  It’s now a "Flight to Quality".  Sellers are scared, they see the For Sales signs go up and only a few come down.

Many agents relied on investor buyers for commissions last year.  Investors were easy because they have no emotional attachment to the home.  They just buy anything they thought would go up in value.  Values aren’t going up anymore, so investors have shut-off.

To make matters worse, many home buyers read the media reports and believe the market is going lower, so they’re holding off as long as they can.  This may or may not be wise because it takes quite a price drop to make up for increases in interest rates that can be locked in today.

A $200,000 mortgage at 7% interest rate has a principal and interest payment of $1,330.58  If rates go up 1 %, the payment increases to $1,467.51  That’s a $136.93 increase on interest rates alone.  To keep the payment at $1,330.58 at 8%, the new loan amount would need to be reduced to $181,336.09  That’s a reduction of $18,663.91

Because you usually put something down when you prurchase a home, I assume a 10% down payment which equals a 90% loan to value ratio.  To borrow $200,000 and putting 10% down would make the purchase price $222,222.22  To save that $18,663.91 you wouold need to buy a home for $201,484.54  That’s a savings of $20,737.68 a buyer would need to save just to make up for the difference in the interest rate.  That’s a 9.33% price reduction in the house.

Prices have already come down significantly, and many believe we’re close to the end of price drops.  While the jury is still out on that for sure, a buyer needs to bet that home prices in their price range will drop another 9.33%  If they beleive it will, they may be better off waiting.  If they believe we’re getting close to the end and fear interest rates could creap higher, or if they really need housing, now is the time to buy.

Back to the lonely SW Florida real estate agents.  Sales numbers are mirroring 2003 levels.  We have many more agents today than we did back in 2003, and many beleive we had too many back then.  We’ve started to see agents with little experience getting out of the industry, with many more to follow.  Too many agents have not experienced the ebb and flow business cycles of the SW Florida real estate market.  They’ve only seen one direction, and it was up.  Now that it’s not up they don’t know what to do or how to handle the sellers questions.  And when they do list a property, they quickly lose it.

We’ll follow-up later with another article on what an agent needs to do to be successful when the market changes.

County commissioners voted unanimously to reduce property taxes in SW Florida by at least 9.9%  They voted on only 4 of Lee County’s 6 tax rates, with another two to follow soon.  Rates could fall even lower if that happens. 

Right now the typical homeowner with a home worth $200,000 would save $79, even more if further cuts are approved. 

Don’t count on your tax bill going down though as Lee County only makes up about 1/3 of all the taxes you pay in your property tax bill.  Also, your assessed rate may have increased, offsetting any savings you might see from the reduced millage tax rates set by the County.

It’s no surprise that new home permits in SW Florida dropped in the latest month.  Lee County numbers dropped for two reasons.

There was a recent code change and builders flocked to get permits in the month of June before the new code changes.  Additionally, builders in SW Florida real estate have experienced increased inventory levels and have been forced to offer incentives to sell existing inventory.

Builders are reluctant to build speculation homes because of increased supply and decreased demand.  Demand is all but gone from investors who fueled the tremendous growth in the SW Florida real estate market the past 3 years.  We’re left with actual buyers who need housing, and they have much to choose from.