Florida Sales Report 2nd Quarter

ORLANDO, Fla., August 15, 2006In second quarter 2006, Florida’s housing sector followed the national trend, showing signs of a market adjusting to a better balance between buyers and sellers. Statewide sales of single-family existing homes totaled 53,161 during the three-month period, a decrease of 27 percent compared to 72,870 homes sold during the same time a year ago, according to the Florida Association of Realtors® (FAR).

“Sales of existing single-family homes in Florida behaved like much of the U.S. in the 2006 second quarter, with the declining strength of the domestic economy continuing to act like a stiff wind in the face of the existing real estate market,” says Dr. David Scott, executive director of the Dr. Phillips Institute for the Study of American Business Activity and professor of finance at the University of Central Florida (UCF).

The statewide existing-home median sales price rose 9 percent to reach $254,800 in the second quarter; a year ago, it was $234,500. In 2001, the second-quarter statewide median sales price was $127,400, which is an increase of about 100 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.

This environment is likely to endure across the remaining months of 2006 owing to several factors, Scott says, including the declining rate of growth in the real gross domestic product (GPD); a tepid increase in the number of jobs being created over the past three months; rising conventional mortgage rates; and a rising inventory of homes for sale. He notes that the rising costs of gasoline and energy are starting to strain many household budgets while wages are just barely keeping up with the recent price inflation of about 3.6 percent a year.

Looking to Florida’s existing condominium market, sales of existing condos also decreased during the quarter, with a total of 16,522 condos sold statewide compared to 24,599 in second quarter 2005 for a 33 percent decline, according to FAR. The statewide median sales price for condos rose 1 percent to $219,100 for the three-month period; a year ago, it was $217,900.

The latest economy outlook from the National Association of Realtors® (NAR) notes that the housing market is in the process of stabilizing with little change in overall sales volume expected over the balance of the year. Analysts report that the level of activity remains high historically — 2006 is expected to be the third best year for existing home sales. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.60 percent in first quarter 2006; last year, it was 6.24 percent.

Among the state’s larger markets, the Orlando metropolitan statistical area (MSA) reported 8,189 existing homes sold for the quarter, a decrease of 23 percent compared to the 10,585 homes sold a year ago. The market’s existing-home median sales price increased 18 percent to $265,500; a year ago, it was $224,500. A total of 1,456 existing condos sold in the market over the three-month period, up 24 percent from a year ago, while the existing-condo median price rose 1 percent to $163,500.

The Gainesville MSA, one of the smaller markets in the state, reported that 992 homes changed hands in the second quarter, down 24 percent compared to 1,297 homes sold a year ago. Over the same period, the market’s existing-home median home price rose 21 percent to $214,300; a year ago, it was $176,400. A total of 426 existing condos sold in the market during the second quarter, up 37 percent from a year ago, while the existing-condo median price rose 16 percent to $146,600.

The student population is a strong stabilizing factor for our condo market, and with prices rising, condos are a good product for many first-time buyers,” says Deborah Minck, president of the Gainesville-Alachua County Association of Realtors and broker-vice president of Tioga Realty Inc. in Gainesville. “Conditions now are more balanced for buyers and sellers, and the key is working with someone who knows the local housing market. That’s why it is so important for buyers and sellers to work with a Realtor — someone who knows the ins and outs of the local real estate market and can help them with all of the complex details involved in buying or selling a home.”

The Fort Myers/Cape Coral MSA reported single family home sales off 28% Vs. 2nd quarter sales a year ago.  Single family home prices were up 2% to $278,800 Vs. $273,500 a year ago.  Condominum sales were off 61% in the 2nd quarter of 2006 Vs. 2005, although prices were up 11% to $306,200 from $275,600 from a year ago.  According to Brett Ellis of RE/MAX Realty Group, the weakness is an example of over supply due to investor purchases the past several years.  “they really just over supplied our market, which hurt us in two ways.  Number one, we have more homes for sale than actual buyers who will live in the properties.  Number two, investors helped drive up the market such that they influenced how sellers value their properties.  Sellers became convinced that each and every one of their homes was worth the Top of the market, regardless of whether there are actually buyers today willing to pay that price.  The fact that one day in the past a buyer was willing to pay a certain price doesn’t mean that is the price for ever more.  Values go up and they come down, and today they are down from the highs.  Some sellers are stuck in yesteryear and refuse to believe what is happening, which further prevents them from selling.”

Two charts showing statistics for Florida and its MSAs are attached. One chart compares the volume of existing, single-family home sales and median sales prices in the second quarter of 2006 to the second quarter of 2005, based on Realtor-closed transactions from local Realtor boards/associations within the MSAs. The second chart compares the volume of existing condo sales and median sales prices in second quarter 2006 to second quarter 2005, based on Realtor-closed transactions from local Realtor boards/associations within the MSAs.

Danforth Lakes Market Update

Currently there are 19 homes on the market with an average list price of $405,684  Of the 19 homes on the market, 1 is pending with a list price of $329,800

6 Listings have closed since January 1, 2006.  Average Sale Price was $367,150  2 of the 6 listings were Ellis Team at RE/MAX Listings, giving the Ellis Team a 33% market share of the sold listings this year.

The Ellis Team listed and sold 100% of their listings in Danforth Lakes.  This is primarily due to market knowledge, product knowledge of Danforth Lakes homes, and superior marketing.

2006 State of the Market Report

The real estate market is much like a finely tuned jet airplane. To fly at optimal speed and efficiency, the pilot sets the course at optimal altitude, which provides for greatest speed and least resistance. The SW Florida real estate market flew at high altitude from 2001-2003. In 2004, the jet airplane transformed itself into a space shuttle and left the earth’s atmosphere. For two years the shuttle flew at super sonic speed, at altitudes never experienced before.2005 was a year where nothing could stop the shuttle. It was flying faster than the engineers said it could, and seemed unstoppable; until the oxygen sprung a leak. Suddenly, the shuttle was forced to return to earth as there wasn’t enough oxygen to sustain this altitude. Like all re-entries, it can be bumpy and chaotic. The 4th Quarter of 2005 wasn’t bumpy or chaotic. It was as if the world had stopped, and we were flying in slow motion. Speed and altitude dropped quickly. Once the shuttle emerged on radar, it didn’t fly like a loud and confident jet airplane. It felt more like a hot air balloon, drifting slowly, silent and quiet, awaiting word on its future course from the tower. The tower didn’t answer. The flight became choppy in the 1st Quarter of 2006 when everyone realized we were back to flying at earthly speeds and altitude. Sellers began to grasp the gravity of the situation, and made adjustments.

The final altitude has not been set. Once our market finds its optimal altitude, it will once again be in balance. Once our market reaches balance, it will again rise, fly at great speeds and take us all to new heights. No one can say for certain what the correct altitude for this market is, or exactly when we will reach it. One thing we can say with certainty is that the market is balancing itself right before our eyes, and quickly. We are starting to see activity pick up again, either from pent-up demand or price corrections, or both. Once the plane levels we believe we’ll be in for another long and smooth ride. This plane will never land.

Download the full State of the Market Report

 

If you purchased a home in Florida in 2005, you’ll want to file for the Florida Homestead Exemption. Not only will you save approximately $400/yr in taxes, you’ll also cap the amount your taxes can go up each year. If you do not file, there is no cap.To be eligible you must have purchased the home by December 31, 2005 and use the home as your primamry residence. Lee County Florida has a Homestead Exemption Form you can download. Florida is very strict about the property being your primary residence, and they will prosecute you if you cheat. Lee County hires investigators who search for rental listings on the Internet, etc. They even invite the public to tell if they suspect a neighbor is cheating on the exemption, so you only want to fill out this form if you really qualify.

If you purchased in 2006, you’ll have to wait until next year to file. If you purchased prior to 2005 and have not filed yet, you still can. If you qulaify, it’s a wise decision to file. Do not wait as it can cost you much more than the $400/yr because you won’t get the cap.

Florida has two bills pending in the legislature regarding Homestead Exemption Portability. We’ll cover what these bills mean to you in a future post.

 

The Ellis Team and NBC-2 broke a story of concern regarding reported housing statistics reported by the Florida Association of Realtors. These numbers have been unintentionally inflated due to multple MLS boards reporting sales on the same home, because the listing agent listed the property into more than one MLS.

Real Estate Numbers May Be Inflated By Duplication

When the Realtor closes out the sale in MLS, each MLS reports a sale up to FAR (Florida Association of Realtors). FAR compiles the data and releases a report and chart for the entire state. The report each MLS sends to FAR is raw data, a compilation of summary totals. There is currently no way for FAR to realize the duplicate reportings, so the end report contains inflated data.

This is important for a few reasons:

#1. Billions of dollars worth of decisions are made in the SWFL real estate market, and these numbers are one of the benchmarks builders, developers, investors, businesses, and the buying and selling public use to make decisions about building shopping centers, businesses, homes, communities, and what product mix and at what price points.

#2. Once the duplication problem is rectified, 2006 may appear to be a much worse market because it won’t appear to stack up against 2005, even though 2005 was artificially higher than it really was.

#3. The general public reads that homes appreciated at a certain pace, so they believe their home is worth a certain amount. All real estate is local, so because the overall market was believed to be at a certain appreciation rate, it never was fair to expect every home appreciated at the exact same rate anyway. However, the entire market may have been accidently exagerated, so sellers shouldn’t draw conclusions about today’s market based upon inaccurate data.

If you’re considering buying or selling in today’s market, it pays to consult a professional. Making a mistake in today’s market can cost you in untold ways. We’ll discuss how in a later article posted on this Blog.

 

State of the Market-Mini Update

Here is a look at Inventory levels from random past dates and today. Active represents Active listings by date, and Pending represents properties that were under contract for sale at the time. CMI represents our Current Market Index, which accurately predicts where the market is heading. See Below for Commentary.

 

Fort Myers Geo Areas

ACTIVE
PENDING
CMI
6/20/2003 819 378 2.17
8/7/2003 768 337 2.28
10/15/2003 825 303 2.72
12/14/2004 494 295 1.67
4/1/2005 435 428 1.02
7/25/2005 398 350 1.14
9/29/2005 490 267 1.84
10/25/2005 626 200 3.13
1/24/2006 1338 210 6.37
dddd

Cape Coral Geo Areas

ACTIVE
PENDING
CMI
6/20/2003 1575 805 1.95
8/7/2003 1463 733 2
10/15/2003 1593 651 2.45
12/14/2004 886 581 1.52
4/1/2005 1006 894 1.13
7/25/2005 1020 971 1.05
9/29/2005 1653 751 2.2
10/25/2005 2141 605 3.64
1/24/2006 3926 537 7.31

 

 

As you can see, inventory is rising quickly, and the market has swung from a Hot sellers market to a buyers market. The CMI index in October predicted the market would slow, and as you can see, Active listings have swelled while Pending sales have dropped.

We are seeing about a 5 to 1 ratio of new listings entering the market each day to number of homes that go pending, which has lead to a dramatic increase in inventory. How much will this build-up affect prices? Stay tuned and we’ll post more Mini-updates on what is happening in SW Florida Real Estate.

Note, we selected certain geographic areas inside our MLS system for same sales comparisons. The Fort Myers and Cape Coral Geo areas do not encompass the Entire Lee County market, there are actually many more listings than what is shown here. We do feel, however, this is an accuratae representation of what is happening all over SW FLorida, regardless of which Geo area homes are located in.

 

To search for homes for sale, feel free to shop at www.LeeCountyonline.com

The National Association of Homebuilders (NAHB) is meeting this week in Orlando Flrida. They are concerned about markets such as Las Vegas, Phoenix, Orlando, Miami and San Diego where investors accounted for more than 25% of the total sales in those markets. Nationwide, investors accounted for 20% of all sales. Home Builders Predict Housing Slowdown.Particulary troubling could be upscale home and condominuims, according to NAHB. Investors started pulling back in the 4th quarter of 2005.

The fear is investors will choose to sell properties or pull-out of existing contracts, which could lead to over supply and put pressure on prices. Investors have left the real estate market and gone back into other things, like the stock market and commodities.

We’ll be sure to keep you posted on what changes if any are in stor for Lee County and the Southwest Florida real estate market.

HUD has introduced enhancements to the streamlined 203(k)
program to facilitate the purchase of property that needs only
minor rehab work, including raising the ceiling for repair costs
to $35,000.

Loan program Allows you to Build in Repair Costs

This allows a buyer or investor to purchase a property that needs repair and build in the anticipated costs to the loan. It’s a good way to purchase a property, improve it, and have equity or sell it. Everyone wins as long as you purchase the property up-front at a fair price. The buyer makes some equity, and the neighborhood is improved as the property is improved.

Feel free to call us at 239-489-4042 to take advantage of this program in Lee County, Southwest Florida. Visit our website Topagent.com 

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The annual Cyber Star Summit is being held this week in San Antonio Texas. The Cyber Stars are the Top 200 agents nationwide out of more than 1.5 million Realtors. The Cyber Stars are discussing the latest trends in technology, improving communications with buyers and sellers, and evaluating the latests products to better serve the Real Estate community.Brett Ellis is is a Cyber Star and was asked to speak at this years Summit. Not only was it a pleasure speaking to such a powerful group, I also enjoyed learning from some of the brightest minds in the business today. We look forward to bringing some of the latest trends to the Fort Myers, Southwest real estate market. Technology, along with real estate is developing at lightning speed, and those that adapt and change with it will become more efficient and prosper.