Southwest Florida Home Prices Rise $100,000 Since 2013It’s hard to believe we’ve watched local Southwest Florida home prices rise $100,000 since 2013.  Official numbers were just released for November which shows the median home price in SW Florida at $245,000.  The average home sale price in November was $317,109.  Compare that to 2013 when the median sales price in November was $170,000 and the average was $236,550.  That’s not quite $100,000 difference but you only need go back just a few more months and we’re there.

Southwest Florida Home Prices Rise

What’s caused home prices to increase so much, and will it continue?  The past is always easier to explain than the future is to predict, so we’ll start there.  Our market over-corrected to the downside so we had lots of room for upside pricing.  Our market statistically bottomed in 2009 but not for all price ranges.  The upper end took longer to correct.

The boom only did one thing.  It brought needed housing to SW Florida. Because the boom involved flipping, we didn’t have the end user to sustain the market.  It was a False high.  The error wasn’t the increased housing the boom brought.  It was the speed of which that occurred.

Southwest Florida needs more housing.  Rents are sky high and prices have been rising.  Florida is an expanding market.  Immigration leads to need for more housing.  And don’t forget Florida is a net migration state winner as well.

High tax states like New York, New Jersey, and Illinois are losing residents by the droves.  They are leaving high tax, foul weather states and moving to states like Florida, Texas, and Arizona.  Notice a trend here?

Low taxes, great weather.  If all we had was low taxes, we would gain residents.  If all we had great weather, we would gain residents.  Because we have both, it’s winner, winner chicken dinner for Florida.  Texas is seeing transplants from CA.  We’re seeing Midwestern and east coast migrations.

After Hurricanes Maria and Irma battered Puerto Rico we expect to see more migration from there as well.  Going forward this leads us to believe home prices have more to go on the upside.

We do not see a downside price risk like we did back in 2005.  The difference is end users.  We have them now, we didn’t back then.

Tax Reform Will Help Florida

The new tax reform also will help Florida.  Local, state, and property taxes deductions are capped at $10,000 under the new law.  Florida doesn’t have a state income tax, and many people’s property taxes are below $10,000, so most Floridians will benefit from the full deduction.  People in high tax states will not, and this will make Florida look even more attractive.

We could see some companies decide to relocate as well.  Because the new tax code is favorable to companies, we don’t believe they’ll need to relocate, but some smaller companies could.  Each time this occurs it hurts the northern states because they’re not competitive and it helps our state.  As more and more people leave those states, it brings an increased tax burden on fewer residents, which further exacerbates the situation.

Florida really is sitting in a good position.  Hopefully our planners are planning for more schools and better roads, because we’ll need them.  It will be interesting to see how fast the new tax code revs up the economy.  Some say it’s already started.  We think 2018 could be a good year and 2019 could be even better.  We’re keeping an eye on interest rates and a few other things, but overall, we see good things for Southwest Florida real estate.

If you’d like to search the MLS like a pro, visit www.LeeCountyOnline.com  You’ll see All the homes, and in real-time too.  No more missing out on great buys to other buyers.

Of course, you can always call us at 239-489-4042.  If you’d like to list your home, ask for Sande or Brett Ext 4.  We have buyer specialists ready to help you make your move as well.

Always call the Ellis Team at Keller Williams Realty for all your real estate needs!

This past week I’ve spoken with several real estate agents in Southwest Florida and all have offered varying perspectives on the current state of the real estate market.  Two feel the market has stalled and not doing much while others feel the market is on fire for December. We believe Santas sled bringing gifts Southwest Florida.

Just looking at the quick Market Watch statistics provided by our local MLS we can see that in the last 7 days 291 new listings came on the market in Lee County and 265 went pending.  That sounds like a pretty balanced market.  If you look further, you’ll also notice 257 price reductions.

Santa’s Sled Bringing Gifts to Southwest Florida

It’s possible we placed so many homes under contract because, so many sellers adjusted their price to get in line with the market.  Price reductions are not a bad thing.  Imagine getting a D or an F on a test and being stuck with that grade.  It kind of stinks doesn’t it?

We’ve probably all had that one teacher that allowed test re-takes and makeup homework.   This teacher was more interested that you eventually learned the material than if you learned it on time the first time when it was due.

Price reductions are a lot like test re-takes.  You misjudged the market the first time.  Your final grade can still be salvaged, if you respond to the teacher’s directions.  You must show up and try again.  Some say you must try harder.  Wanting that A isn’t the same as working for it.

An A in a real estate sale is selling at fair market value in the time-frame that works for you.  If you overprice the home and it eventually sells for less because it became stale on the market, you don’t get an A.  When your home takes longer to sell, and you miss your ideal time-frame because you overpriced the home, you don’t get an A either.

You can still get a B though.  The sooner you react and make changes, the higher your grade will be.  Sellers who price correctly upfront receive higher sales prices and faster sales than sellers who overprice the market.

In a shifting market, you never want to get caught chasing the market down.  I’m not convinced we’re in a shifting market.  We had 5 closings last week and several more for the month.  That’s the result of hard work in October and November.  The sales we have in January will be a direct result of the hard work we’re putting in this month.  December is a month where many Realtors take off and ride easy into the New Year.  They tell sellers nobody is buying in December and we’ll go get them next year.  The truth is sales are there, if you’re hungry and willing to work for them.

The Ellis Team is hungry, and we work hard all 12 months for our buyers and sellers.  We’re getting Top Dollar for our sellers.  When the market doesn’t respond, we’re honest with our sellers.  Just because your home doesn’t sell in the first 30 days doesn’t mean you have to take an F in the class.  In fact, if you’re time frame didn’t dictate a 30 day sale, there’s still time to get an A.  If you absolutely must sell your home quickly, over-pricing it doesn’t make much sense, does it?

We’ll be glad to sit down with you and discover your needs.  Together we’ll come up with a marketing and pricing plan to get you on your way.  Santa is bringing gifts, so you might as well get yours.  The market is good!

Always Call the Ellis Team

Call Sande or Brett Ellis at 239-489-4042 Ext 4 if you’d like to explore selling your home.   If you’d like to shop around on the MLS, check out www.LeeCountyOnline.com for Free.  It has all the listings and is updated instantly when new properties enter the market.  You’ll beat out other buyers to hot new listings.  It’s like having the teacher’s test ahead of the other students, so take advantage.

Happy Holidays from the Ellis Team at Keller Williams Realty.

New Southwest Florida real estate blog

Putting off that home purchase?  Perhaps you’re saving up for the down payment, or you’re waiting on sellers to reduce prices?  That might cost you in the long run.  Let’s explore the cost of waiting to purchase SW Florida real estate.

Cost of Waiting to Purchase SW Florida Real Estate

In October median prices were up 6.7% and average prices were up 8.6%.  These numbers are indicative of how we’ve been running all year, so we’ll say they’re legit for conversation purposes.

Cost of Waiting to Purchase SW Florida Real Estate

Let’s assume home prices increase 5% going forward.  That’s reasonable compared to this past year.  The Federal Reserve is expected to hike rates this week and the consensus is 3 times again next year.  Right now, as of time of this article the Fed Funds rate is 2.1%.  It’s expected to climb to 2.7% in the next year and 2.9% into 2020. That’s almost a 1% incline in rates.

If rates go up 1% and home prices go up 5%, it will cost a buyer about $12,500 in price which translates to an increase of $190.38/Mo in payment.  Over the life of the loan that’s an additional $68,537.

When people see it broken out like that they realize the true cost of waiting.  This doesn’t even factor in the equity gains over 15 or 30 years. If someone were to rent and never purchase, they would never end up with a paid off home for retirement.  Buying real estate is the single best option for people to build wealth.

Sure, perhaps you could have been lucky and bought Bitcoin 8 years ago.  You’d be wealthy today.  However, you could have lost everything, and you still could as the jury is still out on its long-term value.

Real Estate a Hedge Against Inflation

Tangible assets are a hedge against inflation.  Therefore, people buy real estate, gold, silver, etc. in inflationary times.  The difference is if the price of gold or silver goes down, you can’t live in it.  Gold or silver can’t be rented out and you can’t draw income from them either.  You can live in real estate whether it’s up, down, or sideways.  You can usually rent it out too and have someone else pay your costs of ownership.

At present we don’t know what’s in the final tax bill.  We don’t know if it will even pass, although we believe something will.  There are some provisions that may not be as friendly to real estate.  Hopefully this will be offset by provisions that should jump-start the economy.

Florida stands to gain versus other tax heavy states which could lead employers and people up North seeking more tax favorable states.  We could envision a scenario where companies decide to relocate to tax friendly states like Florida, Texas, and other low tax states.  This could offset possible mortgage interest deductions and deductions for state and local income taxes.

Nothing we’ve seen in the bills so far would hurt Florida.  Whatever they do to real estate, Florida will be less impacted than most.  Florida stands to gain if other states are hit hard.

No Benefit Waiting

The bottom line is we don’t see any benefit in waiting to buy.  It will only get costlier both in terms of rate and prices.  And if sellers are waiting to sell their properties up North, right now might be the time.  Imagine an exodus out of high tax states.  That’s not a fun time to sell when everybody else is selling, all the while buyers are high tailing it down to Florida.

We’re already seeing net migrations out of NY, NJ, IL, and CA.  This could heat up in a few months if tax policy plays out like they’re talking.  Florida stands to gain, and you can too if you beat the rush.

www.LeeCountyOnline.com has all the listings, and it’s updated instantly.  Finding properties on the  Internet that sold months ago or have incorrect pricing is frustrating.  It’s difficult to beat out other buyers to hot new listings with bad information.  Our website fixes all that for you.  When time and expertise advice matters, Always call the Ellis Team at Keller Williams, 239-489-44042, your one-stop shop for great real estate success.  If you’re thinking of selling, ask for Sande or Brett Ext 4.

We get a lot of questions about the standard residential purchase contract versus as-is agreement.  Let’s go over the differences and how each should be used.

Standard Residential Purchase Contract Versus As-Is Agreement

First off, the seller is required to disclose known defects regardless of which contract is used.  In the old days agents always used the standard purchase contract which provides for automatic repairs of certain items.  There was always a fight about what was covered or not, so the contract was cleaned up and made more precise.

Standard Residential Purchase Contract Versus As-Is Agreement

Since the foreclosure crisis it’s become common practice to use the as-is agreement.  The as-is agreement has no automatic repair provisions, so it allows the buyer to cancel for any reason.  What invariably ends up happening is a fight about repairs.  Buyers get ticky-tacky about little things and demand they are repaired.  The seller says no, it was sold as-is and we’re not doing it.  The buyer walks and finds another property.

Meanwhile the buyer is out the inspection costs and starts all over.  The seller had their home off the market for 10-15 days and lost marketing time.  If the buyer wasn’t prepared to accept minor issues they should not have written an as-is contract.

Under the standard contract the seller is responsible for repairs up to 1.5% of purchase price for items like roof, water damage, heating, cooling, plumbing, septic, etc.  Cosmetic conditions are not covered.  And yet even with as-is contracts buyers ask for cosmetic repairs and get turned down and are left searching for another home.

Buyers are Fearful

Buyers are fearful the problems are bigger than they are, or that costs will mount.  Buying a home is an e emotional event, and fear often gets the better of buyers.  The time to talk about all this stuff is before they purchase a home.  Once buyers know what to expect, the process becomes much easier for them.

Sellers are emotional too.  They often feel like the buyer got the better of the deal in negotiations, and now they want stupid repairs on top of it!  You can hear their frustration the minute we present them with repair issues.  The as-is contract was supposed to cure all this and make contracts simpler and less argumentative.

People are people, and no contract is going to suppress the emotions of fear and greed.  So long as this is reality, it might be best to consider using the standard contract which addresses certain issues quite well.

Agents Should Counsel Buyers and Sellers

At the very least agents should be counseling buyers and sellers up-front as to expectations and the process once an offer comes in.  If buyers and sellers are properly educated, the emotions are tamed, and the experience of the agent takes over.  Each side has confidence they are being treated fairly and according to protocol.

This is one more reason for sale by owners have such a difficult time selling on their own.  They don’t have anyone counseling them on how to act and feel.  More importantly, there isn’t a neutral party the buyer trusts counseling them on how to feel and act either.  Invariably the deal blows up and both sides are more frustrated than ever.

Agents, have upfront consultations with your buyers and sellers.  If your buyer is skittish or emotional, consider using the standard contract.  It will keep more deals together for you as the contract is specific about what is covered.  The as-is contract is like the old Wild West, and in the Wild West anything goes.  And usually somebody dies.  Don’t let your contracts die needlessly.  Rely on your agent’s wisdom and experience to get through these issues.  Hopefully both sides are using an experienced agent.  Learning on the job is not fun for buyer or seller.  Experience matters.  Either use an experienced agent with hundreds if not thousands of transactions experience, or someone on a team who has access to all that experience from a team leader.  Experience isn’t costly, it’s priceless when you need it.

If you’re looking to buy or sell, always call the Ellis Team at Keller Williams Realty 239-489-4042 or visit our website www.LeeCountyOnline.com for more tips.

Ellis Team Weekend Open Houses

Parker Lakes

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Parker Lakes Ellis Team Weekend Open Houses
Parker Lakes – Gated Community

14811 Crystal Cove Ct Unit 1102

How Much is Your Home Worth?

 

News Flash.  Home sales in Lee County will be down in 2017.  Current Southwest Florida home sales trail last two years, and this occurred before Hurricane Irma.  Since the hurricane sales have lessened.

Current Southwest Florida Home Sales

Lee County is not alone.  Tight inventory has caused much of this.  If home inventory is down, it stands to reason homes sales would be down.  While inventory has been up year over year for the better part of 2017, it has been falling since February.

Last year inventory grew from October through February.  The same will probably happen this year.  What is not growing, at least since the hurricane, is the new pending sales.  Of course, they were down drastically in September -47.8%.  Some thought we’d see a rebound in new pending sales in October.  We’re still down 3.5%

New Pending Sales Southwest Florida Home Salesest

We know closings are down for 2017.  We also know new pending sales are down.  If new pending sales are down it means we don’t have a reasonable way to catch up to last two previous year’s numbers.  It wasn’t likely before the storm and sure isn’t likely now.

Real estate agents are probably wondering what they’re going to do.  As we’ve written in previous articles, this is the time of year agents evaluate their position.  Board dues are coming up by the end of the year.  Bunches of agents will get out of the business.  Still others will get into the business.  The merry-go-round will continue in 2018.  There are just as many who want to join as those that try and give up.

We think you’ll see two things in the 1st Qtr. of 2018.  First, more agents will join teams.  They’ll have to, or they won’t stay in business.  It’s costly to advertise, lead generate, pay assistant salaries, broker splits, etc.  It’s also costly to do all on your own and struggle.  Real estate is a very costly business.

Even though real estate is costly, it costs even more not to use an agent.  Several studies have shown that using an agent more than pays for itself in attaining a better price.  Saving a commission does not help, a seller nets less at the closing table than if they had used a broker.  And the seller did all the work.

The second thing we think we’ll see is increased listings.  They always go up this time of year, and we think 2018 will continue this trend.  Prices are up nicely over 2016.  In fact, October median prices were up 6.7% and averages sale prices were up 8.6%.

So, what’s the takeaway from these two predictions?  If you’re a seller, make sure you list with an agent that is going to stay at their brokerage through 2018.  Ask the agent you interview how their sales are.   Ask if they’re contemplating making a move, and what would happen to your listing if they did move?  Would they assign it to another agent and collect a referral fee, or could they take it to a new broker?

Agents, develop your business plan for 2018.  Before you take new listings be sure you’re at the place you’re going to be for the next year.  If not, do everyone a favor and make the move now before season.  It’s kind of like recruiting season for football coaches.  Recruiting season is now through Feb 1, and yet some coaches won’t be there next year, and they know it.  The coach can jump around but the players are locked in.  The same is true for sellers.

Look at joining a team or develop a strategy that can carry you through the next year.  You’ll have to invest in your business.

Sellers, all you can do is select the right agent, and price your home to today’s market.  The days of picking any agent to sell your home are over.  You’ll have to get selective again, and ask the tough questions.

If you have real estate questions, please call Sande or Brett Ellis 239-489-4042.  Or visit our website www.LeeCountyOnline.com and you can search the MLS for Free!

Good luck and happy selling!