As you can see from the SW Florida Sales chart, SW Florida single family homes sales have been somewhat seasonal the past few years with sales peaking around April and declining after June or July. Although it’s too soon to tell, early indicators tell us 2011 may repeat recent history as pending sales are trending even with last year and closed sales have begun their descent.
Even more importantly this year may be the lack of inventory compared to previous years. We’ve seen a major decline in inventory in recent years. Currently single family inventory stands at 6.89 months supply, but even that number is a little high because many of the short sales are tied up and not closing. In fact, last month only 13.8% of the pending short sales closed which is much lower than traditional pending sales. It’s unreasonable to think all pending sales will close, but 13.8% is practically nothing.
If we took out active short sales from the equation, the month supply of inventory would be lower. I believe the month supply of inventory is deceiving as many homes on the market aren’t really on the market as they’ll never close.
As you can see from the listing inventory chart, it’s really come down in the last 18 months. Lehigh Acres inventory is below 1,000 homes for the first time in years. Of the 975 homes on the market in Lehigh, 470 are short sales and 117 are bank foreclosures. 60.21% of all homes on the market in Lehigh are distressed, and last month 63.06% of all single family sales in Lehigh were distressed.
Cape Coral and Fort Myers inventory has come down too however the ratio of distressed sales is much less. For instance, Cape Coral distressed inventory now stands at 44.15% compared to 60.21% in Lehigh. Fort Myers distressed inventory stands at 37.18%. On the closed sale side, Cape Coral distressed sales were 50.51% last month and Fort Myers distressed sales were 42.97% last month.
Buyers are finding they just don’t have as many choices today. They love the prices, and they realize homes priced $150,000 or less have seen rising prices, but they’ve been increasingly frustrated by competing with other buyers with multiple offers, or long wait times on short sales. This is just all part of the SW Florida housing market and it may last another few years.
Foreclosures will run their course in due time assuming the economy picks up in the next few years, but short sales may remain for awhile until prices return to points where a seller can afford to sell. We see increasing prices in the low to moderate end going forward; however we don’t envision a return to 2005 levels. The market has reset and people are accepting the new reality of the market.
This is good news for the younger generation as they’ll be able to purchase the American Dream and not be saddled with debt their parents have endured. It’s a fresh slate and we can only hope generations going forward can study the past and learn from it.
While we believe buying real estate today may be a great investment long term because eventually prices will rise, we also recommend buying a home that suits your needs versus focusing strictly on investment potential. Investment potential is what caused so many people to buy into the last market frenzy and some forgot the whole purpose of buying real estate is to fulfill a need, especially if it’s your primary home.
If you’re buying a second home or investment home, there are some factors to look for that may assist you in making the best decision for you. Real estate can be a good investment, and it helps to clearly define what your goals are and think long term. If you’re buying a primary residence, it’s rarely a good idea to buy solely on investment potential if you don’t like the home or it doesn’t meet your needs. Plan B is always to keep it awhile longer until the market works in your favor, and if you’re unhappy with the home, that’s harder to do.
It is a good time to buy, so if you’re in the market, seek professional advice on current market conditions, and put your best foot forward. Don’t be afraid, be informed. Call us at 239-489-4042 if we can help.