We’ve been researching and studying the SW Florida real estate market ahead of official releases due out next week, and our preliminary research tells us we expect sales numbers to increase approximately 100% or more over last August sales numbers. The third quarter of 2009 is setting up to be another record quarter, and keep in mind 2008 numbers were near record numbers to begin with.
Lee County single family inventory levels are on the decline again and pending sales are remaining strong. The chart attached shows single family home inventory for Fort Myers and Cape Coral Florida. Listings in Fort Myers and Cape Coral fell by over 100 units as home buyers snapped up more property last month than came to the market. Separately, Lee County levels fell almost 200 units, suggesting buyers are buying faster than sellers and banks are bringing property to the market.
In the last several weeks we’ve addressed who is buying these properties, predominantly first time home buyers and long-term investors seeking to rent them out until the market improves. At today’s low prices, properties actually cash flow, and we have lots of renters who have been displaced from properties.
Now for some interesting observations we’re noticing that you won’t see in this chart. We think home sales will be down about 11% from the previous month, which is normal due to seasonality. Again, sales should be up about 100% over last year’s August, and last year’s August was down from July as well due to seasonality of the market, so no big surprises here.
Foreclosure inventory increased 4.14% in the past month and foreclosure sales fell 13.82% We’ve been saying for the past month or so banks are ramping up foreclosures for the next year and we expect double the write-downs banks will take, although because many of these properties will be in the higher price ranges it doesn’t mean we’ll see a doubling of foreclosure inventory. Foreclosure inventory and sales will definitely be something we want to keep an eye on going forward and may tell the story of how our market is doing.
Another trend we’re tracking is short sales to see if banks are cooperating more and agreeing to see short instead of taking back in foreclosure. Even though total sales are down about 11%, and foreclosure sales are down about 13%, short sales are up about 3.76%. This would suggest banks are cooperating more and our experience has been this is true; however it is still a very daunting process and not one a homeowner can reasonably attempt on their own. In fact, it is so daunting that many agents won’t deal with short sales either. If you’re going to attempt to buy or sell a short sale, make sure you’re dealing with an agent with lots of experience, preferably a CDPE (Certified Distressed Property Expert.)
Distressed sales accounted for 70.04% of Lee County home sales in August, up slightly from 68.6% in July. Distressed sales are here to stay for awhile. In Fort Myers, 66.45% of the sales were distressed, while in Cape Coral the number is 68.87% Lehigh Acres has far more distressed sales at 84.27% County wide, distressed sales percentage remained stable over the previous month.
Inventory levels fell in Fort Myers, remained fairly constant in Cape Coral, and increased about 2.35% in Lehigh Acres. So what’s the bottom line? We believe median prices may increase some over time as banks bring higher priced foreclosures to the market. Banks allowing more short sales may also increase the median sales price, but that doesn’t mean all homes are going up in value. If this occurs like we think, it simply would mean the bottom has formed in the lower price range, and we’re still seeing erosion in prices in the mid to upper price ranges, and as they become more affordable buyers switch “on” and buy them.
All real estate is local, and you can’t judge the entire market by a single statistic like median sales price. This is why we take so much time to really study the market and explain what is really happening with hard facts. We’ll keep an eye on the distressed end of the market, as these latest trends will offer us signs as to where the market actually is and where it’s headed.
Until we flush out the distressed properties, normal market assumptions do not apply. Supply and demand still rules, it’s just that it’s hard to get a grasp on supply without having a thorough understanding of what the banks are doing with foreclosures and short sales. Until then we’ll keep tracking it for you and reporting the trends.