I’ve heard the politicians talk about everything for sniper fire, to denouncing what their pastor said, to drinking shots with the locals, and everything in between.  Does the public really care if you drink a beer or shots to make yourself appear like common folk, or how you disagree with your pastor?  Well, probably a few do or they wouldn’t stoop to such things, but I think there is one topic that should be at the top of this year’s election and I don’t hear anyone talking about it much.

The Southwest Florida real estate market, the SW Florida economy, and the US economy is basically on edge and is being held hostage.  We are being held hostage by gas prices which put pressure on inflation.  It’s to the point where our economy is being hurt and perhaps our national security too.  Senator McCain has proposed a gas tax holiday until the end of the year to help drivers, but I don’t think that will do any good.

The reason is we could wipe out all federal sales tax, and the producers of oil could just cutback on production a corresponding amount and prices would stay the same, and our government would be the only losers due to falling revenue and increasing profits to our suppliers.

The sad truth is our suppliers, like Venezuela, Saudi Arabia, and others are not our true friends.  They have their own vested interests, and America isn’t among it’s highest priorities. We really need to rely less heavily on outside suppliers to the extent we can.

I recently saw a Walmart ad that said just one energy saving light bulb can save an awesome amount of oil due to conservation.  I’m all for conservation.  However, I don’t believe we can conserve our way out of this completely.  Oil consumption is increasing in China and other developing countries, and even if we cut back oil is more sought after and we are in competition for it.  And even if we cut back 20%, OPEC can cut back production 20% and make just as much money, so why wouldn’t they?

I believe we need to do a number of things:

1.  Drill for oil in Alaska.  I’ve been told ANWAR is in a remote area and will not affect animals.  Even if it did somewhat, people are just as high on the food chain as animals and we need relief too.  No reason not to get this done

2.  We may need to consider drilling in Gulf of Mexico.  I know states like mine (Florida) and other gulf states oppose this, but we have our own oil and won’t drill for it.

3.  Nuclear.  We haven’t built a plant in decades.  Other countries want to build them, why not us?  If nuclear can save millions of barrels of oil each year, why not?  We use many now, why not add a few more?

4.  Refineries.  We haven’t built one of these in decades either.  We need to invest in our own infrastructure, and let’s do it soon.

5.  Grades of Gas.  Each area has its own standards, and makes gasoline expensive as the refineries have to shutdown to retool each season.  Let’s end this practice.

6. Ethanol.  What a joke.  It’s made corn and food more expensive, and it costs as much to haul the corn around as it does with the savings you achieve.  Now we have corn shortages and it’s done nothing for gas prices.  Nice idea, but may turn out to be more of a subsidy to farmers than savings to consumers.

7. Oil Reserves.  I’ve heard we’ve found major reserves in Montana, and Cuba has found big reserves in International waters off Cuba.  Wonder why Chavez has become such friends with Cuba.  Maybe it’s time to see what capitalism would do for Cuba instead of an Embargo.  How long has that embargo lasted.  Yes, we don’t get Cuban cigars, but it didn’t get rid of Castro.  Maybe a little capitalism and hope for the Cuban people would oust a bad leader quicker than oppression would.  I really don’t know, I just pose the question and let those smarter than me figure that one out.

Bottom line is nobody is policing the supplies, and we’re not doing anything to control our own security.  I understand why we go to Afghanistan or Iraq, to keep the terrorism over there before it could easily come over here.  But why do we let something much bigger control our own destiny?  Terrorists could shutoff oil supplies to US and shut us down much faster than any  single Trade Center bombing ever could.  Why aren’t our politicians talking about what they would do for gas prices, supply, and demand?  That makes more sense than who’s drinking a shot with the locals in PA, or who took more sniper fire.

 

This is the brand new 3 bedroom Belvedere Model from 1st Homes.

This beautiful Lehigh Acres, Forida home boasts many wonderful features including a spacious great room floor plan, a tech center or computer area centrally located near kitchen which is great for the kids or your home office area. The master suite offers his and hers closets and  two additional linen closets. There is a pantry in the kitchen and so much more.

This phenomenal value includes an attractive appliance package, security system, garage door opener and is warranted! At $110,000 this bank owned property will not last long.

Call the Ellis Team today to see this home or any of the many Lee County foreclosures, short sales and bank owned properties we have available.

The Ellis Team at RE/MAX Realty Group just released their monthly SW Florida Real Estate Current Market Index and once again the Index has strengthened.  We’ve been reporting for months now the local SW Florida real estate market is firming as the Current Market Index accurately predicts real estate activity into the future.  Because of these numbers, we look for some continued strengthening in closed sales numbers for March and April.  Official March 2008 numbers should be released around April 25, 2008.

We are seeing strength because many of the short sales that were clogging the system have converted to foreclosures and are now being sold by one lender able to make decisions.  A short sale often involves multiple lenders plus a seller, and all have to agree to the sale.  Lenders in second position often don’t agree because there is nothing in it for them to agree, and lenders in first position don’t like to agree to a loss unless the second is completely wiped out.  There are exceptions to this, but we are seeing only about 3% of the short sales actually closing, and just about all of the foreclosures closing in due time.

Median prices have actually been rising, but we’re not focusing on that right now as many of the foreclosures are occuring at the bottom of the market, which could skew the numbers down.  By skewing numbers down, some could interpret that the entire market is coming down further, and that may or may not be true.  Median price doesn’t tell the whole story.  We have pockets of weakness and pockets of strength, and all real estate is local all the way down to the street and neighborhood level.

The higher the CMI Index, the more supply we have relative to demand.  The lower the CMI Index, the better the market for sellers.  As you can see, buyers are losing some of their leverage now.

April 15,  2008 Active Pending CMI
Single Family 15,706 1,656 9.48
Condo 8,445 602 14.03

 

March 15,  2008 Active Pending CMI
Single Family 16,357 1,610 10.16
Condo 8,789 603 14.58

 

February 14,  2008 Active Pending CMI
Single Family 16,694 1,088 15.34
Condo 8,787 456 19.27

 

January 14,  2008 Active Pending CMI
Single Family 15,812 821 19.26
Condo 8,581 334 25.69

 

December  17, 2007 Active Pending CMI
Single Family 16,098 892 18.05
Condo 8,655 386 22.42

 

November 14, 2007 Active Pending CMI
Single Family 15,710 797 19.71
Condo 8,361 388 21.55

 

October 16, 2007 Active Pending CMI
Single Family 15,438 783 19.72
Condo 8,212 354 23.20

 

September 15, 2007 Active Pending CMI
Single Family 15,215 809 18.81
Condo 8,141 369 22.06

 

August 15, 2007 Active Pending CMI
Single Family 14,919 955 15.62
Condo 8,190 417 19.64

 

July 12, 2007 Active Pending CMI
Single Family 15,095 975 15.48
Condo 8,380 443 18.91

 

June 14, 2007 Active Pending CMI
Single Family 15,164 1,014 14.95
Condo 8,761 485 18.06

 

May 17, 2007 Active Pending CMI
Single Family 15,607 1,107 14.10
Condo 9,205 560 16.44

 

April 15, 2007 Active Pending CMI
Single Family 15,896 1,152 13.80
Condo 9,660 569 16.98

 

January 23, 2007 Active Pending CMI
Single Family 13,769 1,016 13.55
Condo 9,002 529 17.02

 

November 27, 2006 Active Pending CMI
Single Family 13,186 1,031 12.79
Condo 8,344 535

15.60

SW Florida bank foreclosure auctionLast week we attended a major bank auction in SW Florida.  Over 100 homes were auctioned off.  One investor in attendance said that of the over 100 properties, only 6 were absolute and the rest were subject to investor approval, which if true means most of these will come back on the market

Most of the properties didn’t fetch a very high price, so they may very well not be acceptable to the end investor.  We will attemot to verify this with the bank.  The buyer has to wait up to 15 days to see if the investor on the loan takes the offer from the auction.

The Ellis Team at RE/MAX Realty Group lists a lot of the properties for this bank, so we may end up listing a good percentage of these listings that do come back on the market.  We did notice a few properties where the buyer overpaid for the home.  These buyers were probably inexperienced and didn’t bring a broker with them  to the auction to advise them they could have bought similiar properties in the same neighborhood for less money.  However, most properties went so far under value that most of the investors may not accept the offers, so many of these winning bidders will be disappointed.

Since the auction the bank has told many buyers and agents to contact us to be first on the list when we get thee properties in.  We get orders for the properties before they go in MLS.  We are identified as the listing agents, but it takes the bank a few weeks to tell us what the price is and authorize us to place it in MLS.  If you’d like to be on the list, give our office a call.  We plan to setup a group list whereby we can notify everyone at once when we get these listings.  They tend to be some very good buys.  For instance, we just listed a newer home in Lehigh Acres for $75,900.  It is an excellent buy.

The Ellis Team at RE/MAX Realty Group is hosting another free SW Florida real estate short sale seminar on Monday, November 26, 2007 at 7 PM  We will teach buyers how to effectively purchase properties in Fort Myers, Cape Coral, and all of Southwest Florida at or below fair market value.

Registration is FREE, and you must call our office at 239-489-4042 as seating is limited.

SW Florida real estate market numbers released today by the Florida Association of Realtors show a continuing decline in the real estate market, which comes as no surprise as we posted our Ellis Team CMI Index numbers back on October 16 that suggested this would be the case.

Single family home sales fell to 327 in September, down from 520 in August, and 693 last September.  Single family home prices fell to $231,600 this September, and was down 7.7 percent from August’s $250,800 and down 11% from last September’s $261,400.

Single family home sales were the good news.  Condo sales fared worse, also predictable due to the CMI Index numbers released a few weeks ago.  Condo sales were 102 this September 2007, up from 96 in August, but down from 168 last year.  Prices for condos were up to $224,000, up from $218,800 in August, and down from $231,600.  The bad news for condos isn’t the prices or sales levels, it is the sales levels as compared to the level of inventory on the market.

Even with the poor numbers, they can partially be explained by seasonality, and partially by overall weakness.  See SW Florida single family home sales graph 2005-2007. To view sales prices , see SW Florida single family home price graph 2005-2007.

The Outlook going forward actually is brighter than the numbers indicate.  For the first time in a long while buyers are getting excited again, and are venturing out looking at homes.  For some, it is simply becuase home prices are back in their affordability range.  For others, it’s the sense that now may be the time to buy as prices have come down so much, and they’re feeling confident again going forward.

 

Not surprisingly, foreclosures in SW Florida are on the rise.  This can be caused for several reasons, most notably investors who should not have been in the market, marginal buyers who bought with an adjustable rate mortgage so they could qualify and the adjustments are adjusting right now and they can’t afford the new payment, rising insurance, and rising property taxes.

All combined have put pressure on the people who could least afford it.  Some agents have speculated that when the foreclosures happen, it will make for sweet deals for investors and home buyers.  I respectfully disagree, and I’ll explain why.

Many people bought with 100% or 95% financing at the top of the market.  The market has dropped around 20%, and the sellers are now upside down on their loan.  They don’t have the cash reequired at closing to offer the home at today’s market value, so they cannot sell.  No deal for a would be investor/buyer.  Many foreclosed homes are also in need of much repair, so you wouldn’t want to pay full market value on a property that needs money thrown at it.

Most people who buy foreclosures want a deal.  The deal just isn’t there from the seller.  You’ll get a better deal waiting for the bank to take it back.  Banks are no dummies, they get BPO’s (Broker Price Opinions) and appraisals.  They limit what they’ll lose by selling it for as much as they can get.  Some banks actually try to make a profit because it was insured with PMI (Private Mortgage Insurance) so the bank’s exposure is only 80% of the original market value.  Coincidently, that’s about how much it may have gone down, plus repair costs, attorneys fees for the foreclosure, and lost interest.

Boiling this all down, it’s usually better to purchase from a seller who has priced their home at today’s market value, not what they owe, what they paid for it last year, or what they think it was worth last year.  There are many sellers out there who are listening to the market, and pricing it at market.  Those sellers are selling.  The backlog of inventory is from sellers who either won’t listen to the current market, won’t listen to their Realtor, have the wrong agent who also doesn’t know, or have a property that’s really hard to judge what the real value is.

If the seller doesn’t know the real value, the buyer isn’t likely to gamble on it either unless it’s a unique to what a buyer is looking for, or is simply irrestible.

Bottom line is, there are good values out there, just don’t count on the foreclosure market to provide them.

Single family home sales in the Fort Myers Cape Coral real estate market dropped 36% from 2005 levels in September, down from 1,075 sales last year to 693 sales this year. SW Florida Real Estate Market Report shows median prices dropped 9% since last year from $288,700 down to $261,400

Sales actually increased since August 2006 from 691 to 693 sales.  Prices remained relatively steady since August 2006.  September prices came in at $261,400, down from $264,100 in August.

Single family home sales and prices in Lee County seem to have leveled off, and this could be a silver lining.  Many national experts predicted sales prices would fall in SW Florida about 18% from it’s all-time high.  We’ve already seen a 15-20% price drop, so then end may be near.  Inventory is still rising, and pending sales have dropped slightly, not encouraging news.

What is encouraging is the rate of homes coming on the market is dropping, and the decrease in pending activity is dropping as well, signaling a leveling off may occur sometime in the future.  Showings have also actually increased, which could lead to an increase in pending sales down the road.

Additionally, pending sales are picking up in other parts of the country, which may affect home buyers looking to purchase here.  We still have a lot of inventory, but there are some really great buys out there now awaiting home buyers, and we think now is the time for buyers to pounce.  We won’t know exactly when the market has hit bottom and starts to go back up.  What we can say is that there are definite signs a leveling off maybe close at hand.  Until that leveling off actually occurs and we start eating into existing inventory levels, we can’t officially say we’re at the bottom.  Stay tuned.

Condo sales in Lee County were off 52% from 126 sales in September 2005 to 61 in 2006.  Sales prices of condos in Lee County were down 3% from $314,800 in September 2005 to $305,600 in 2006

Collier County single family home sales were down 37% from 377 in September 2005 to 236 in September 2006.  Sale prices were down 8% from $487,500 last year to $446,900.  Naples condo sales were down 62% from 456 condo sales last year to 173 this year.  Sale prices were actually up 4% from $365,700 last year to $378,600

We think this is partly the reason sales in Naples are down because sellers haven’t reacted as quickly to changing prices as sellers have in Lee County.  We believe sales are much closer to leveling off in Lee County than they are in Collier County because of this fact.  Affordability and price are a much larger issue in today’s market.  It’s total cost of ownership, not just the price.  As homeowners insurance goes up, property taxes goes up, interest rates, gas, etc it eventually weighs down on buyers.  There is too much price disparity right now between Naples and Fort Myers.  Soon you will see another rush of buyers purchasing in Lee County because Collier County is just so expensive.

Naples is a beautiful place to live, as is Fort Myers,  The address won’t matter as much going forward as price will.  Collier County is poised to lose buyers to Lee County, just as Lee County will lose some buyers to Charlotte County for the same reasons.  Housing affordability.

Traditionally, past sold data has almost always been better than current and pending inventory.  Many times today the past sold data is outdated, predicated on a market we had last year.

In some subdivisions, there may be 80 homes on the market and 0 or 1 pending sales.  There may be 0 sales in the last 4 months, making it difficult to use past data.  And the new inventory may be priced less than the past sales, guaranteeing future sales will be at a lower price point.

Experienced agents must account for all of this and make a recommendation.  In the end, the free market will always determine the value.  Which buyers and sellers get there is another story.

The seller sets the price, and the market determines the value.  If the price is out of line with the value, nothing good can happen for the seller.  If it’s too high, it just sits there, perhaps going down in value as the market falls.  If it’s too low, the seller just gave all the equity away to the buyer.

Correctly setting the price takes skill.  No computer model has been able to do it.

For a computerized Valuation of your home, check out The Ellis Team Home Value Model.

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