We’re writing this article this week two days before official numbers are released, so by the time you read this official numbers will have been released. Absent this knowledge, we expect prices in August to be higher than last year and sales to be down from last year, however sales volume may be higher than July.

SW Florida Real Estate Bargains
Year End Median Sale Prices For Single Family Homes SW Florida

We’ve included a chart of average year end sales prices which is really an average of prices for that given year, not the Dec 31 average price. As you can see, prices fell from their peak in 2005 through 2009 where they stabilized and actually rose in 2010. In 2011 we’ve seen more gains over 2010.

We started writing articles and advertising back in 2009 that Florida was on sale and buyers flocked here in droves looking for bargains from all over the world. Buyers have been competing with each other for the best bargains and in fact many of these properties have seen multiple offers. As you can see from the year end chart, prices are still very affordable and are on par with 1996-1997 prices. If you look at the attached chart you’ll notice prices in July were up 14.33% over last year and up 19.1% over 2009 prices.

Median Sale Prices Single Family Homes in SW Florida
SW Florida Real Estate Prices 2009-2011

We are fielding calls from buyers looking for foreclosures, short sales, and otherwise good bargains. They just finished reading on a website or watching an older YouTube video how another buyer bought a $20,000 condo or $30,000 house close to the beach and they want to come here and buy the same thing.

If you ask any agent in this market I’m sure they’d chuckle because they’re answering some of the very same calls. This is where the perception that Florida is on sale, which it is, collides with reality. The days of buying newer homes for $35,000 are over unless the home has serious defective drywall issues or is gutted. We still have some inexpensive condos for sale. For instance we just listed a bank foreclosure 1 bedroom, 1 bath condo in Mystic Gardens for $27,900 which is a bargain. These deals are becoming fewer and farther between.

Unfortunately buyers from all over are calling and expecting homes close to the beach or on the beach for ridiculously low prices. While it is true back in 2009 we had some seriously under-priced homes from some of the banks, prices have gone up considerably since then. We’re still well below replacement cost in most cases and we’re not headed back to 2005 prices anytime soon, however we are still a bargain.

Florida Real Estate Bargains

I guess there is a difference between a bargain and a steal. The steals are over, but there are fantastic bargains and opportunities in this market if you’re realistic. If a buyer is unrealistic, they’ll suffer the same fate as an unrealistic seller, which is no transaction. A buyer who fails to buy in this market is just as damaged as a seller who overprices and misses the top. While the bottom may be behind us, we’re still close enough to it that we can see it in our rear view mirror and prices today will look like a bargain years from now.

Remember back in time when someone you know once said “Gosh, I should have bought every piece of property I could get my hands on back when prices were lower?” Well, in the future I’m sure there will be those that say, “Gosh, I should have bought everything I could back in 2010 and 2011. Those were the days when there was little competition from new home builders, interest rates were at their lowest, prices were below replacement cost, and at those prices they actually cash flowed.”

It pays to be an educated consumer, whether you’re on the buying or selling end. Remember, money is always made on the “Buy”, not the sell. Inventory is going down. If you’re truly a buyer, learn the market and step up now. I bet you’ll be glad you did.

It’s kind of funny how humans follow the herd mentality. When everyone else is buying, people feel more comfortable buying at the top, but when things are down, people are scared of overpaying. Back in 2005 you were overpaying, but most felt good about their purchases. Look what prices have done since. The smart money is buying and holding today. Failure to land a property now is a wasted opportunity.

Banks Revving Up For More Short Sales

Because Bank of America is the largest servicer of residential loans in the United States, it seems quite reasonable they would have the largest number of foreclosures and for a few years that was true. A few years ago Bank of America announced it was stepping up its efforts to assist homeowners with short sales in hopes of decreasing the amount of foreclosures. It takes time to ramp up, hire, and train enough people to lighten that load, and it used to be said that Bank of America was the worst at processing short sales. That can’t be said any longer as they actually closed more short sales in 2010 than foreclosure sales, and since they automated and moved their short sale process to Equator, an online sales management software tool, the process has become streamlined and much quicker.

No, we didn’t say Ecuador, a country in South America. We said Equator, an online tool qualified agents can become certified in to assist homeowners complete sales transactions. Not every agent will handle a short sale, nor should they. A short sale is a very complex transaction where the bank, or banks, asks for specific documents to help them make a decision on whether to accept less than the full mortgage payoff.

Banks Revving Up For More Short Sales
SW Florida Listing Inventory

This is a very complicated process because there are tax implications for some homeowners and investors, and the banks may sometimes ask for deficiency judgments in others. It gets really complicated when 3rd party liens are placed on the property, like HOA liens or judgments against the creditor. These must all be identified and negotiated as part of the process.

Listing agents are reticent to list these properties as they are more time intensive, and there is no guarantee the bank will agree to a short sale. Further complicating the process, the bank surely won’t agree unless every I is dotted and T crossed to satisfy their guidelines. This generally requires a hardship letter explaining why a short sale should be considered, a letter of authorization authorizing the agent to deal with all the various debtors and lien holders, bank statements, etc. Short sales also take time, as you may be dealing with a primary lender, the investor behind that loan, FNMA, a PMI company, and perhaps a 2nd loan and investor or a home equity line of credit.

Buyer agents are also reticent to show short sales as they’ve discovered some sellers are not a candidate to sell short, or the listing agent isn’t qualified to take the sale to closing. The short sale isn’t a sale to practice on, it must be done by skilled, tireless agents with experience and extensive training with the banks. If you’re a short sale seller, be sure to interview your agent and make sure they are a CDPE (Certified Distressed Property Expert) or similar designation and have lots of experience working with different banks. Wells Fargo, Bank of America, Nationstar, BSI Financial Services, ASC, and others use Equator and expect the agent to be qualified on that system. Others, like Aurora, SunTrust, Ocwen, etc. use their own proprietary system to consider a short sale and the agent must know how to reach each and identify what each lender requires. Ideally this information should be obtained at the time of listing, not when a contract is accepted as this will further delay the process. Learning on the job isn’t a great option for buyer or seller, so working with a listing agent who has experience closing these sales helps all.

Banks today are even reaching out to agents asking to help with our short sales. Two of the largest banks are sending their customers letters on how they may be able to short sale rather than lose their property to foreclosure and they’re even recommending qualified agents to assist. A short sale is not something a For Sale By Owner can do, nor is the bank looking for that.

As you can see by the graph, approximately 31% of all single family home listings today in Lee County are listed as short sale. Listing inventory is going down, and so is short sale inventory because successful short sale closings are going up.

If you’re on the brink of affording your home or property, talk to a short sale expert. It’s amazing that of the foreclosures, 71% of the homeowners never reached out to anyone for help. Help is available, and a short sale is much better on your credit. With banks today getting better at the short sale process, it pays to ask for help. Call your agent today and ask if they can help. If not, don’t hesitate to call us and we’ll see if we can get you help now so it’s not a crisis tomorrow.

The Ellis Team currently has 3 CDPE’s on staff. A CDPE is a Certified Distressed Property Expert, which requires intensive training and extensive short sale experience to attain. To help gear up for the increased short sale demand, the Ellis Team at RE/MAX recently hired Marisa Morgan who worked many years as a long time banker with Bank of America and also in the title business. For years Realtor clients came to her asking advice on how to properly package short sales so the bank would accept them. She sat down and met with several sellers so they understood the process, so it makes sense to add Marisa’s experience to SW Florida’s premiere team to help sellers sell their short sale properties.

Brett discusses short sale issues with Marisa on this week’s Future of Real Estate show entitled “Banks Gearing Up for More Short Sales in Fort Myers, Cape Coral, SW Florida” Video.

Unofficial numbers show SW Florida real estate sales rose in June. Official numbers will be reported July 20, so as we are writing this article early in the week we have to go with internal numbers that show sales rose in June even as inventory numbers fell once again.  We lost another 230 units of single family home inventory as many have been questioning where are the foreclosures banks said were coming.

From the beginning we questioned how many foreclosures would hit SW Florida as the distressed inventory directly impacts our market.  Nobody seems to have a firm answer other than to say more are coming, and we don’t doubt that.  The question is to what degree.

SW Florida Real Estate Sales
SW Florida Single Family Real Estate Sales

While sales rose in June, pending sales are down as we simply don’t have as much inventory to sell. Foreclosure sales in Fort Myers rose by 16 homes while Cape Coral foreclosures fell by 19 homes.  Lehigh Acres foreclosure sales rose by 7.

This past week we were assigned 3 more foreclosure listings, so perhaps this is the beginning of the banks being able to release inventory.  Banks have been hamstrung as legal proceedings have shown many of the banks didn’t follow proper legal procedures to foreclose on certain mortgages in certain states, and it’s caused banks to go back and start many foreclosures over and cancel hearings on others until they sort out where the mistakes were made and correct them.

In light of this legal situation, banks have increasingly been more diligent at handling and agreeing to short sales as it may take much longer for the bank/investor to be paid back partial principal if the home is tied up for months or years in foreclosure.  We feel there is no advantage to holding back inventory and the sooner we sell all distressed inventory the sooner our market can recover.  Others feel by holding back you can prop up prices.  We believe in an attempt to prop up prices you ultimately prolong the recovery and keep prices down for longer than if you just take the medicine and deal with it.

Listing Inventory in Cape Coral, Fort Myers Florida
SW Florida real Estate Single Family Home Inventory

Without naming names, we have seen some entities holding back, but this may also be that they can only show so many losses at a time on the balance sheet..  For the most part, most banks are bringing inventory to the market as quickly as they legally can.

As of today, foreclosure listing inventory is up over last month.  Fort Myers has 35 more units on the market, Cape Coral has 22 more units on the market, and Lehigh Acres has 15 more units.  This could be a sign that banks are releasing.  One month doesn’t make a trend, but it is a reversal in direction and July 2011 could be the beginning of that last wave to hit the market.

We’ve just added a new Cape Coral Real Estate Blog in German for our German readers. Be sure to check back for timely real estate information and videos in German. Sharyl Leifeld is a buyer specialist on the Ellis Team who speaks German and promotes education to German’s about the SW Florida real estate market.

 

 

Real estate agents today using video are turning to efficient ways to meet with clients and online video is fast becoming a favorite amongst clients to communicate with their agent.  Online video has been around for years, but it has come a long way recently and has become mainstream as industry giants have adopted the technology and incorporated it into their products.

Recently Facebook added video using the Skype service to its online chat, and Google, Yahoo, and Microsoft all have video chat and Instant Messaging.  Video chat is now available on smart phones as iPhone and Android have incorporated video into their handsets.

Real Estate Agents Using Video
Online Video Conference

The picture shown in this article is a video application called QIK that allows smart phones on the Sprint network to place video calls, record and share videos, upload videos to a library that can be shared, or just send a video mail message.  Skype has similar features, as do Google, Yahoo, Microsoft etc.  We use video conferencing over cell phones to host quick meetings amongst agents on our team when one of our agents is out in the field or can’t be face to face.

Similarly, clients love to video call as we can talk about contracts and even place items on the whiteboard for each of us to look at and talk about.  Sometimes clients have specific questions about a form or contract and it helps to have it on screen and talk about where to initial or how to sign a document.  Clients can also ask specific questions relating to a contract.

Photos can even be shared so we can talk about inspection items, details about what needs to be done with a repair, and bring all of the issues into proper context and perspective.

Agents can also use the technology to participate in webinars, and learn from other top agents from all around the country.  We’ve done video sessions where we discuss recent short sale trends regarding specific lenders, or shared foreclosure information to assist each agent’s clients obtain the foreclosure.  Agents can now share information regardless of which city they’re in and we find this useful in assisting clients. Clients are not only hiring one agent in a particular town, they’re now getting expertise from all around the country as agents have speedy access to talk to one another about particular issues.

In the old days agents would pick up the phone and call one another, or share information on groups and wait for other agents to respond.  Now agents who belong to powerful networks can video chat with one another instantly in many cases.

Agents can also post timely information up to YouTube.  Our YouTube channel is located at http://www.youtube.com/brettellisfl Many agents these days have YouTube channels in addition to websites and Blogs and are finding video is an important way to educate and communicate.  Today’s sophisticated webcams make joining a service relatively easy, and adds two way communication versus the standard way agents communicated via video on YouTube or websites.

We really believe video will replace much wasteful travel time in the future.  There is no replacement for seeing a home, but once the home is viewed an agent and client cannot always be in the same place at the same time.  For instance, a client make work odd hours, or have to go out of town for awhile and yet they may not want to wasted time waiting to return home.  Now that client can meet with their agent wherever they are in the world if the just have a webcam and an Internet connection, or simply even a smart phone.  Today’s technology is making video chat so easy and it’s free, and one day soon we’ll all look back and wonder how we lived without it for so long.

Don’t be surprised when we hear people say, “Remember the days when people used to call each other on the telephone?  Yeah, how crazy is that?”  I remember the days when fax machines were a novel idea, and people used to ask back in the mid 90’s “What’s the Internet?”  Thank goodness Al Gore invented it.  Young people today just don’t recall what life was like before the Internet, and in a few years people may have a hard time remembering life before video phone calls.

If you haven’t tried it before, the time may be now.  It’s not only a big time saver, but it’s free and fun.  We hope you have as much fun communicating with people online as we do.

 

Now that the 4th of July has passed, we’re entering the summer real estate market in SW Florida.  Aside from showing properties in the rain, traditionally the summer has been very good with many of the locals moving up, down, or sideways when they have more time after a busy tourist season.

Of course, the past few years the locals haven’t been making nearly as many moves as many are upside down on their current mortgage, or just flat out don’t like today’s prices.  There is no doubt today’s prices are too low, in fact artificially too low, but nonetheless in real estate today is all we have to work with.

Summer Real Estate Market in SW Florida
SW Florida Real Estate Sales Prices

Because foreclosures have dropped dramatically due to a number of legal reasons, there has been less pressure on the lower end of the market, thus raising median prices.  We’ve included another graph to put prices in perspective.

Many times we like to look at velocity of the market and measure the volume, much like Wall Street does with stocks.  Volume has been excellent, and would be much higher if we had more inventory to sell.  Lack of inventory will cut down on the number of transactions, and we’ve already felt it.

Agents are all too well aware that many properties receive multiple offers.  Buyers on the other hand are skeptical when their agent tells them they need to come in at or over asking price on many properties.  In all markets there will always be some properties that are over priced, and a buyer need not ask over asking price if the property is over priced as chances are another buyer isn’t going to come along and scoop it up, unless it’s a one of a kind property, and even then it may not sell.

All too often agents tell me their buyer isn’t listening to them.  This past week two agents lost out on two of our listings because we had multiple offers and one of the buyers didn’t realize what they needed to do until it was too late.  One of the properties had been on the market a little while so I’m sure the buyer figured their agent was just giving them a song and dance to try and get a sale, but as the listing agent I can assure this was not the case.

Even though this property had been on the market perhaps a few months, the property got hot when all other inventory like it had disappeared and this became the best thing on the market in its location and price range.

All real estate is local, and just because you hear nationally or a particular state is a little slow doesn’t mean everywhere is.  In fact, our market was getting crushed when the rest of the country was still prospering.  While our market isn’t fully healed, we are seeing price increases when much of the rest of the country has just been going into a slump, which is further evidence that all real estate is local.

Over the July 4th weekend we had several showings and several offers come in on our properties, which is encouraging for the balance of the summer.  Again, these past few years have been anything but traditional, but it’s nice to know that local temperatures aren’t the only thing that’s hot right now.  Buyers are here.  What’s lacking has been property to sell, and inventory will probably tell the story going forward for the balance of the year.  We’ll keep watching, and keep reporting.

 

Declaration of the United States of America
Declaration of Independence

The Unanimous Declaration of the United States of America

(Adopted by Congress on July 4, 1776)

The Unanimous Declaration
of the Thirteen United States of America
When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness. Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security. –Such has been the patient sufferance of these colonies; and such is now the necessity which constrains them to alter their former systems of government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute tyranny over these states. To prove this, let facts be submitted to a candid world.

He has refused his assent to laws, the most wholesome and necessary for the public good.

He has forbidden his governors to pass laws of immediate and pressing importance, unless suspended in their operation till his assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other laws for the accommodation of large districts of people, unless those people would relinquish the right of representation in the legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved representative houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the legislative powers, incapable of annihilation, have returned to the people at large for their exercise; the state remaining in the meantime exposed to all the dangers of invasion from without, and convulsions within.

He has endeavored to prevent the population of these states; for that purpose obstructing the laws for naturalization of foreigners; refusing to pass others to encourage their migration hither, and raising the conditions of new appropriations of lands.

He has obstructed the administration of justice, by refusing his assent to laws for establishing judiciary powers.

He has made judges dependent on his will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance.

He has kept among us, in times of peace, standing armies without the consent of our legislature.

He has affected to render the military independent of and superior to civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his assent to their acts of pretended legislation:

For quartering large bodies of armed troops among us:

For protecting them, by mock trial, from punishment for any murders which they should commit on the inhabitants of these states:

For cutting off our trade with all parts of the world:

For imposing taxes on us without our consent:

For depriving us in many cases, of the benefits of trial by jury:

For transporting us beyond seas to be tried for pretended offenses:

For abolishing the free system of English laws in a neighboring province, establishing therein an arbitrary government, and enlarging its boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule in these colonies:

For taking away our charters, abolishing our most valuable laws, and altering fundamentally the forms of our governments:

For suspending our own legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated government here, by declaring us out of his protection and waging war against us.

He has plundered our seas, ravaged our coasts, burned our towns, and destroyed the lives of our people.

He is at this time transporting large armies of foreign mercenaries to complete the works of death, desolation and tyranny, already begun with circumstances of cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the head of a civilized nation.

He has constrained our fellow citizens taken captive on the high seas to bear arms against their country, to become the executioners of their friends and brethren, or to fall themselves by their hands.

He has excited domestic insurrections amongst us, and has endeavored to bring on the inhabitants of our frontiers, the merciless Indian savages, whose known rule of warfare, is undistinguished destruction of all ages, sexes and conditions.

In every stage of these oppressions we have petitioned for redress in the most humble terms: our repeated petitions have been answered only by repeated injury. A prince, whose character is thus marked by every act which may define a tyrant, is unfit to be the ruler of a free people.

Nor have we been wanting in attention to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our separation, and hold them, as we hold the rest of mankind, enemies in war, in peace friends.

We, therefore, the representatives of the United States of America, in General Congress, assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the name, and by the authority of the good people of these colonies, solemnly publish and declare, that these united colonies are, and of right ought to be free and independent states; that they are absolved from all allegiance to the British Crown, and that all political connection between them and the state of Great Britain, is and ought to be totally dissolved; and that as free and independent states, they have full power to levy war, conclude peace, contract alliances, establish commerce, and to do all other acts and things which independent states may of right do. And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

 

SW Florida home sale prices in Lee County single family home sales shot up another 16.68% over the previous month and were up 17.14% over last April’s figures as reported by the Florida Association of Realtors. Year to date home prices are up 34.35% bucking the national trend.

SW Florida Home Sale Prices
SW Florida Real Estate Sale Prices 2009-2011

Buyers are astonished to see prices rising like this and inventory is shrinking. It should not come as a big surprise though to readers as we’ve been explaining for months why this would occur. It is simple supply and demand. Demand is still high for affordable homes both from prospective homeowners and investors who can actually cash flow properties right now based upon today’s prices and interest rates.

Typically in the housing cycle buyers try to wait until they perceive bottom and then scoop in and buy. Unfortunately you never really know when you’ve seen the bottom until you see it in the rear view mirror. I’m always amazed at the buyers in a hurry after they feel they’ve missed the bottom who low ball properties with one last try to make up for every last penny they were trying to save on the buy.

This makes about as much sense as the seller who over-prices his home by 20% just after the market has turned and headed down. Sellers never want to get caught chasing the market down, and buyers don’t want to get caught chasing the market up.

Unfortunately we’re seeing buyers chasing the market up and low balling offers only to lose out to another buyer and starting the process all over again. Buyers need to realize they’re not in competition with the seller, they actually in competition with all the other buyers out there. Supply of inventory has shrunk so there is less available property to go around for all the buyers out there. If sales go down later this year it won’t be due to lack of buyers, but rather lack of inventory.

We are expecting more foreclosure listings in the future although we’re not expecting a mass dumping of properties here in SW Florida because we believe we’ve seen the lion’s share of the investor properties that flooded the market the past several years. Instead, we believe we’ll see an influx of foreclosures on “Average Joes” who have lost their job or become underemployed due to the poor economy.

If our view is correct, and if we don’t see any major wildcards affecting the housing market, prices could maintain a slow pace upward until we see more inventory. Sellers have no competition from builders because there is little building activity at these price points. That will change once prices go higher, but the question is how long will it take to get to that point?

The outlook for sellers looks brighter unless you’re looking for a return to 2005 prices which isn’t happening anytime soon. Buyers need to decide if they’re serious and look to buy their 1st choice or their 5th choice. You can educate yourself by reading articles like this or speaking with your Realtor about what’s REALLY going on in your market. If you decide to take this advice, you might just have a chance at that 1st choice. If you’re the type that likes the do-it-yourself home study course, you might be looking down the barrel of your 5th choice. Either way, the market controls your direction and you control when and where you arrive.

The Ellis Team has just released it’s Fort Myers Cape Coral Florida Real Estate Update Video May 2011 covering the Fort Myers Florida and Cape Coral Florida areas. Prices are up over 15%, inventory is down, pending sales are up, and distressed sales are down. The video includes charts and analysis to bring you up to date on exactly what is happening today in the SW Florida real estate market.

 

On April 17 rates are going up. How do we know the date? We know because that’s the date fees change under guidelines designed to attract private money into the lending system and reduce or eliminate FNMA, GNMA, and Freddie Mac, the three quasi-governmental agencies that insure mortgages and bundle them for securitization. They’re not really governmental, but they might as well be as the government has funded them until now. They are private companies that pay investors profit, but tax payer funded when they lose money, so something had to change.

Big Changes Coming in Mortgage Market

Big Changes Coming in Mortgage Market
Interest Rates Will Rise in April

So what is changing? First off, rates are going up. This will increase yields, which will attract banks, hedge funds, and other large sources of capital into the market. Large companies will actually compete to make more of this money. A lot of money has been bottled up sitting on the sidelines and this may be the conduit to free up that money.

When rates go up, home prices usually go down. Not so fast! In this case, prices could eventually rise. Many ask how this could be. The answer is complicated, but noteworthy, so we’ll do our best to explain.

Under the new guidelines to get the best priced loans, borrowers will have to put more down. The old 20% down will now be 30% down. However, credit scores will also be lowered for qualifying. Imagine many of those people that sold via short sale being told they wouldn’t qualify by FNMA for 5 years. It turns out they may be eligible after just 12 months under certain conditions.

While rates may go from 4 7/8% today to possibly 6.5% in April, more people will qualify. We still have FHA for low down payment options. Some people are predicting another real estate boom coming sooner than later nationwide as pent-up demand for housing intensifies, and more borrowers being eligible to purchase.

Imagine having a 540 credit score and being able to purchase a home. Those days may be coming again, if you can scrape together a down payment. Home prices are artificially too low in SW Florida and are in fact below replacement cost. This has caused multiple bidding situations for prestigious properties in short supply even in the upper price ranges in certain parts. Naples and Bonita have experienced a resurgence in prices, and many feel this is bleeding north up into Estero and Fort Myers. We are currently being driven by 2nd home buyers looking for deals.

As prices get closer to replacement cost, building will begin to pickup, which will bring jobs. As the SW Florida economy grows, the real estate market could gain traction very quickly, especially with Snow Birds and existing residents qualifying sooner than expected for their next mortgage.

Keep in mind 7,000-10,000 people are retiring or entering the social security income stream everyday. Florida stands to gain from the Baby Boom generation relocating or buying 2nd homes.

Many on Wall Street are anxious to cash in on the looming change to the capital markets coming in April. In fact, Wall St is waiting like a tiger to pounce. Some are predicting a feeding frenzy for housing and rapid price gains.

Some people believe the change to FNMA and Freddie Mac will damage the markets by increasing borrowing costs and raising down payment requirements. Others believe borrowing was next to impossible anyway the last few years and banks only lent to those who really didn’t need it. I don’t know who is right, but I will say if we open the door for more people to buy, the market could recover quicker than most expect.

2011 could really be a year to watch and keep an eye on the financing markets. If Wall Street gets greedy like last time, it could be a boom for real estate. The difference is, FNMA and Freddie Mac, and the US taxpayer won’t bail out bad loans, only systemic losses due to financial meltdowns. Hopefully we’ll enjoy the next boom with no meltdown, and higher down payments will help with that. If our markets stabilize like we think they will, even low down payments won’t affect the market because the market won’t be in freefall, and we’ll be adding jobs to the economy versus losing 8 million like we’ve done the past 3 years.

Bottom line, keep an eye out for sunny days ahead in the real estate market and we just might see them sooner rather than later. And mark your calendars for April 17. This will be the beginning of something. Time will judge the ending.

No, we’re not talking about Santa’s bag here.  We thought this week we’d do a mailbag of topics, and invite questions for future articles.  If you have a question or topic you’d like covered, simply e-mail me at Brett@Topagent.com and we’ll do our best.

Interest Rates

Yes, they’ve been on the move, and the move has been upward.  Rates have risen about .625% in the past 1-2 weeks.  For every 1% rise in rates, it takes away about 9% of a purchasers buying power, so buyers have just lost about 5% buying power in the past 2 weeks.  This is why the media and Wall St. talk about rates so much and where they are today versus historically.  Now, they are still historically low, but they have been moving up.  With prices this low, and rates still fairly low, buying power is still great even though it may not be what it was 2 weeks ago.

SW Florida Real Estate Market Update
It's in the Bag

Foreclosure Listings

Foreclosure listings for single family homes active on the market in Lee County stood at 768 in November Versus 1,107 today.  That’s a 32.42% increase in just one month, and we can attribute this to banks placing properties on the market after the foreclosure moratorium because of the robo-signing issues.  Most banks feel confident going forward, especially for their non-occupied properties.  We see this as a good sign.  The quicker we get all inventory out and to the market the faster the market can heal and move forward.

Pending Sales

Pending sales rose again in November which indicates buyers are ready, willing, and able to buy and they’re making every attempt.  This is another reason we’d like to see all available inventory on the market as the buyers are definitely biting.  All areas of Lee County are seeing a rise in pending sales.  Cape Coral saw a rise of 60 pending sales over last month, Fort Myers saw a rise of 69 sales and Lehigh Acres experienced a rise of 32 pending sales.  Season is upon us and we’ve notice an uptick in buying activity from buyers up North sooner than we did last year, which could mean we’ll be in for another good season this year.

Current Market Index

Each month the Ellis Team produces a current market index which accurately predicts forward activity in the SW Florida real estate market.  This month the index dropped to 4.22, down from 4.62 last month.  The lower the number the hotter the real estate market is.  A higher number indicates a buyers market. We wouldn’t say it’s a buyers market.  We’d characterize it as a sellers market if the property is priced correctly.  Buyers are competing against each other with multiple offers on properties that are priced correctly, and bypassing over-priced listings.  The market speaks.  Sometimes it’s as easy as slowing down and listening to what it’s saying, and if a property isn’t receiving offers, then there’s a good chance it’s the price.  The market is hot, but it’s not forgiving.

Closed Sales Flat

November closed sales were relatively flat Versus October.  In fact, our research shows they’re down slightly, but official numbers won’t be released until next week.  Last November sales rose, so when official numbers come out we could see a transaction drop from last year.

This is the last article before Christmas believe it or not, so next week we’ll either answer your questions or provide updated analysis once official numbers are released.  We hope Santa is good to you and brings you good tides and good cheer, and no matter how big the bag is this year, always look for opportunities to lift somebody else’s spirits this Holiday season and into the new year.