We like to include charts to illustrate latest trends in the SW Florida real estate market. For years we’ve tracked numbers and reported the upside and the downward trends in the market. For the past year or more all market trends have been to the upside. Preliminary numbers gathered by the Ellis Team indicate single family home listing inventory in Lee County went up for the first time since January 2011. Granted, back in January single family home inventory was 34.54% higher than it is today, but this past month is the first time we’ve seen inventory rise in months.
Listing inventory only rose 43 units which accounts for about .5%, so it’s not an alarming trend, just a slight change in direction we’ll keep our eye on. Due to space constraints we didn’t include that chart; however we’d like to draw your attention to the SW Florida Sales Chart and the Pending Sales Chart. Both these charts support findings in the inventory levels.
Sales in SW Florida have been falling since March which isn’t out of the ordinary the past several years. What’s interesting is that September 2011 sales are slightly behind 2010 levels, but not by much. Again, it’s the direction of the change, not the actual numbers we’re looking at.
Pending sales have also fallen since March. This confirms that pending sales are an accurate indicator of future closings. While it makes perfect sense, sometimes in life what appears to make sense doesn’t always match reality, but in this case it does match. For months inventory levels have gone down and many have speculated that’s the cause of decreased sales. We think there is a lot of truth in that.
Listing inventory just went up this past month, so does that mean sales will go up? When official numbers are released next week we don’t think so. We think they’ll mirror what we’ve been reporting and will be down slightly from the previous month. So if inventory has been a legitimate reason sales have fallen, why wouldn’t the increase signify increasing sales going forward?
The answer is it could, but there are other factors. We must look at the mix of inventory as well as other factors. The mix refers to traditional sales versus foreclosed homes and short sales. Not all short sales close, and their timing is anything but predictable. Foreclosure inventory looks to rise some in the 4th qtr of this year and more in the 1st qtr of next year. If this bears out, sales will almost assuredly be influenced by the exact number hitting the market as there is a large appetite for foreclosed bargains.
Other wild cards influencing the market are the availability of credit. Banks are requiring buyers to jump through more hoops and regulations than ever. The new Dodd Frank Act is making it more difficult to close even approved loans. Regulations have become burdensome and making it impossible to meet certain deadlines. We always say time is of the essence in our contracts, but that’s not the case as Congress has changed so many regulations for the worse.
There are waiting periods for HUD closings statements to be approved, so if there is any little change, all prorations of fees may need to be re-approved. If a buyer selects a different rate or program, the bank must re-disclose everything and a new waiting period begins. This makes it difficult to meet certain deadlines in short sales, and many times that property is foreclosed instead of a successful sale because Congress saw fit to add additional layers and slow everything down.
Congress always has good intentions, but they don’t use their head. Loans take hours to underwrite now and certain loans banks don’t even want to mess with because of the new regulations. This hurts certain segments of the market. I hear almost everyday complaints from loan officers on how tough their industry is. Of course, lending affects our industry, and real estate affects the economy. Sometimes I wish Washington DC would listen to people in business and get out of the way. We’d all be better off if they regulated less and let business do business. That’s the way to create tax revenues.
While we can’t control Washington, we can keep our eye on Main Street. Main Street is ok in SW Florida, and we’ll continue to monitor. One month doesn’t make a trend. We’re simply reporting a slight change in direction, and we’ll watch the trends going forward to see what sticks. If we can help you with your real estate needs, don’t hesitate to call 239-489-4042 or visit our website www.Topagent.com