We’ve been talking quite a bit the past several weeks about HAFA (Home Affordable Foreclosure Alternatives) program and other programs designed to make selling a short sale easier.  Going forward, these programs should provide some much needed relief for many sellers, and open up the market for more buyers.

We’ve noticed a trend this past year developing in the Lee County SW Florida real estate market.  As we’ve reported, sales numbers hit record levels in 2009, and prices look like they may have stabilized.  We’ve noticed that total distressed sales are down significantly since last May.  Our definition of a distressed sale in either a bank foreclosure where the banks sells the property on the open market after they’ve foreclosed, or a short sale by a seller hoping to avoid foreclosure and protect their credit.

Short Sales and Foreclosure Sales in SW Florida
Distressed Sales in SW Florida

Fort Myers is showing the most strength with only 47.83% of sales being distressed in March 2010.  Compare that to Cape Coral at 62.0% and Lehigh Acres at 74.19% Lehigh Acres is down from the whopping 88.5% set last June, even though they have leveled off about 75% the past 4 months.

Cape Coral has also declined, down from 78% last May to 62% now.  This chart explains why prices have stabilized in Fort Myers and Cape Coral, and why Lehigh Acres is a little shakier at the moment.

Inventory levels are down in all three segments, and sales are up significantly over February in Fort Myers and Cape Coral, and up moderately in Lehigh Acres.  Officially sales numbers have not been released at the time this article was written, and we believe going forward we’ll see some median price increases in Lee County, and especially in Fort Myers and Cape Coral.

We’re studying preliminary numbers, and we’re seeing an approximate 28% jump in sales over February numbers for single family homes.  There was an increase in distressed sales, but the majority of the increase was regular non-distressed sales, and this is encouraging going forward in 2010.

We’ll be keeping our eye on the market after the home buyer tax credits expire on sales after April 30, and on interest rates which are creeping higher.  Nationally consumer confidence is rising, and eventually that should trickle into job growth.  SW Florida has been hit hard with high unemployment, and we really want to study these numbers as ultimately employment will be the engine that fuels SW Florida real estate prices in the future.

Always consult a CDPE (Certified Distressed Property Expert).

It’s a fact that 7 out of 10 distressed home sellers go into foreclosure without visible intervention to improve their situation.  We speculate that sellers do not realize there is help available, and that doing something about their situation is better than just walking away. 

Many sellers we talk to are embarrassed about their situation, while others are simply depressed and don’t wish to speak about it, hoping their financial situation will improve in time to change things.  The sad reality is once a homeowner falls behind; it’s very difficult to ever catch back up, even if their job situation improves. 

We’ve been reporting about the new government HAFA (Home Affordable Foreclosure Alternatives) program announced on April 5 designed to improve short sales.  We’ve also told you that 2010 will be the year of the Transaction, either a short sale or foreclosure as loan modifications have not worked. 

This past week we’ve met several large banks who have all committed to diligently approving short sales in a quick fashion.  Many agents and buyers have been reluctant to offer on Short Sales because the truth was they were really Long Sales.  This has changed and may now be a viable alternative for sellers and buyers alike.  If your loan is with Bank of America, Wachovia, or Wells Fargo, it may now be possible to streamline your short sale.  Other banks are following suit depending on who the end investor is on each loan. 

We’ve provided a chart for sellers to illustrate the financial advantages of considering a short sale VS.  foreclosure.  Some of the details may affect you well into the future.  You may wish to discuss this with your attorney as well, especially if you’re considering bankruptcy. 

Short Sale Vs Foreclosure Benefit Chart
Why a Short Sale May be better Financially Than a Foreclsoure

The good news is the short sale process has just improved dramatically, and while still very complicated, can provide relief for struggling homeowners and help them restore their credit so they can move on with their lives much sooner.  This economy will improve one day, and it will be nice when current distressed homeowners can look back and not be held down by circumstances of the past.  The short sale is one such tool to accomplish this.

This past week we sat in on a meeting with the founder of RE/MAX, Laurie Magiano with the US Department of Treasury, Matt Vernon who heads the Bank of America Foreclosure and short sale department, and the president of Equator, the online transaction management platform for 7 of the 10 largest banks for foreclosures and short sales. The topic was HAFA, the government’s new initiative which stands for Home Affordable Foreclosure Alternatives Program. 

Fort Myers Cape Coral Florida REO foreclosures short sales graph
SW Florida Foreclosure Versus Short Sale Graph

The government’s new plan is voluntary for lenders, and it does not include Fannie Mae and Freddie Mac owned or guaranteed mortgages as they are working on their own solutions to assisting and speeding up the process.  The government’s new plan allows for homeowners to receive $3,000 for moving expenses if the seller agrees to a short sale or deed in lieu of foreclosure.  A short sale or deed in lieu of foreclosure is better on the sellers credit than a full blown foreclosure and will allow the seller to purchase a home much sooner than a foreclosure. 

The plan also stipulates that the seller will not receive a deficiency judgment, so the seller won’t be bogged down with debt payments in the future resulting from the sale of the property.  This is big as it’s been a stumbling block for many sellers in accepting a short sale.  The seller’s housing expense ratio should exceed 31% or lender will believe seller can afford payment, and lenders will be particularly mindful of strategic defaults where seller has money saved but chooses to walk away anyway, especially on the higher loans. 

The new regulations, if the lenders agree, stipulates that the 2nd mortgage holder will receive 6 cents on the dollar, which is far more than a foreclosure where they won’t receive anything, and much more than the 2-3 cents banks sell debt for on open market.  The 2nd lien holders have held up many short sales, and now that the government has set guidelines, it should make it easier having a roadmap to negotiations. 

The new guidelines also call for lenders to make decisions within 10 business days as to the viability of doing a short sale, and banks such as Bank of America are committing resources so that agents will now receive communications within 2 days, so the days of asking questions and not hearing anything for weeks or months may be over.  Bank of America has put systems in place whereby an agent can contact a negotiator’s supervisor if the agent has not heard a response within 2 days, and the Treasury department has given us an e-mail address to escalate all inquiries no matter who the lender is so they can step in and help. 

Everyone in the room agreed that short sale transactions could one day outnumber foreclosures, and that would be a good thing as sellers credit is better preserved, and lenders generally lose less money on a short sale versus a bank foreclosure, and 2nd lien holders get paid something.  The property tends to remain maintained and require less fix up than an abandoned or vandalized property, which further upholds values in the neighborhood. 

There is one other advantage few people think about to a quick process.  Many short sales are priced too low and will never sell, but they subliminally drive values down in the market as some view the unsalable short sales as the new market value when in fact they’re artificial and won’t be approved.  By speeding up the process, or issuing pre-approved pricing, this should help alleviate this phenomenon and improve the market almost immediately. 

Stay tuned as these are lofty ideals, and we’ll report back on how well they actually work.  Of course, this will depend on how many of the lenders and investors participate in the voluntary program.  See our Future of Real Estate Show discussing new HAFA program on short sales.

This is the age old question everyone asks.  How is the market doing?  Have we bottomed?  When will prices go back up?  When will my home be worth what I owe?  How long until we get back to 2005 prices?  Should I sell or rent? 

Actually we get more questions than this, like should I pay my mortgage, should I pay my homeowners association fees, etc.  We’ll stick with the value questions for this article. 

We’ve included a graph illustrating median prices since 2008.  Median prices don’t tell the whole story, but they do tell a story.  The definition of median price is half the sales are over and half under a certain price.  As you can see, prices have fallen sharply since January 2008, and even more dating back to 2005.  Ironically, home sales are up and setting records precisely because home prices have fallen.  We’ve explained this in depth in past articles. 

Lee County florida Single Family Median Home Sale Prices
SW Florida Real Estate Prices Graph

Average sales prices were approximately $365,000 back in January 2008 vs the median price of $225,000.  We have been watching how the average and median price are related, and we have a chart in our annual State of the Market Report on Pg 4 that shows the relation over time between the two.  This report can be found at www.Topagent.com 

The average price gives us a little more depth to the market and helps us understand the overall breath of the market.  As we’ve been saying for quite some time, we expect higher priced foreclosures and short sales to actually pull the median price up, and we believe this will occur.  This past week official numbers were released, both statewide and nationwide.  Prices actually fell 3.3% vs. last month, and were down 9.74% from last year. 

Some might ask if we do all this research, when will our predictions come true.  Our best estimates have been we could see year over year price increases as soon as March or April data.  March data won’t be released until next month, but keep in mind these are only predictions about the future and nobody knows for certain.  We are fairly confident this will occur; the question is more of when. 

We have been looking at both median and mean average sales price data and it appears that prices for both dropped since December 2009 as official data would indicate, however were are seeing some price increases in March data that would indicate this trend has reversed, at least temporarily.  Keep in mind we have many more closings that occur at the end of a month that could skew the data, but the trend looks good. 

We would also expect sales this time of year to be higher as our Northern visitors are here and buying property as well, and many of these sales are in the higher than median price range.  Many of these sales will occur past March into April and May, and many will come back and buy in the summer. 

Ultimately prices will be determined by jobs and the economy.  As more people get back to work, it should slow the foreclosures, and bring more people to the area.  When will this occur?  I think it’s so much easier to forecast prices in the short term than predict the overall economy.  Congress has been focused on health care and the climate more than the economy, so it’s really hard to predict what’s coming out of Washington and how it will affect us and the economy, especially since we’ve largely been kept in the dark until something passes. 

We would encourage our government to turn its attention to actually helping the economy, or get out of the way so small business can begin creating jobs and getting us back on our feet.  Once the economy starts looking up, Main Street can begin to recover and prices can begin to rise.  Our prices are artificially low, and they won’t stay that way forever.  Prices are well below replacement cost, so builders are on the sidelines now as they don’t wish to build at a loss.  Our market will increase in value perhaps 40-50% before this occurs, and this is why buyers today have a chance at building substantial equity quickly. 

Once the dust settles and our market reaches price equilibrium, builders will be building again, bringing more jobs to the area and sustainable price appreciation.  Good times await those who buy now and ride the coaster on up to equilibrium.

Be sure to check our latest video on the Flood Insurance Crisis affecting home sales.

Search all SW Florida Single Family Home Bank Foreclosures

A few weeks ago we wrote about attending a recent bank foreclosure and short sale conference.  We told you that banks and the US Treasury department have learned that home retention and loan modifications are not working, and that 2010 will be a year of “The Transaction” either by short sale or foreclosure.  More banks are actually pursuing both simultaneously. 

We’ve been illustrating graphs showing the percent of distressed sale activity in Fort Myers, Cape Coral, and Lehigh Acres for months now, and this week we decided to update Short Sale activity.  While analyzing MLS data this week we noticed foreclosure sales have dropped in January and February to about 579 per month, down from approximately 700 or so the previous 5 months.  This can be attributed to a backlog of foreclosures in process and a moratorium in place early in 2009. 

Closed Short Sales in SW Florida

We also noticed a stabilization and recent up tick in short sales, reversing a decline in December 2009.  Will these trends continue?  Let’s start with the foreclosures.  We believe foreclosure sales will increase in 2010 as the backlog comes to the market. In fact, we’ve received a large volume of foreclosure listings we’re working to bring to market.  It typically takes time to secure the property, assess the condition, the value, workup a Broker Price Opinion, compare that against the bank’s new appraisal, and meet with the investor to develop a marketing strategy on each property.  All of this is done through the use of a bank asset manager, either an employee of the bank or 3rd part asset manager.  Either way, asset managers specialize in disposing of REO (Real Estate Owned) bank foreclosures. 

Once the value and strategy is determined, the property goes from a pre-listing to an actual listing complete with instructions.  The agent then lists the property in MLS and solicits offers.  Many times the property elicits multiple offers, and the agent presents all offers that match the bank’s criteria.  For instance, we are not allowed to present any offers where we have not personally verified cash funds to close on all cash deals, nor are we allowed to present any subject to financing offers without pre-qualification from that bank’s in-house loan officers.  Banks do not want to take properties off the market simply because a buyer presents a pre-qualification letter from an unknown or out of town bank or mortgage broker.  Speaking from experience, banks and agents have had bad experience with pre-qualification letters.  They are easy to get, and are rarely worth the paper they’re written on, so it is quite natural the bank wants their own people to look at the qualifications of the buyer if they are getting a mortgage.  The borrower doesn’t have to use that bank, but the bank will not look at the offer unless they are offered their pre-qualification letter with the offer. 

So we know 2010 will offer more foreclosure properties that have been initiated in 2009.  What about short sales?  Banks are not offering loan modifications as much as they have proven that they do not work long term.  Politicians still promote the idea as it sounds politically correct, but it further exacerbates the problem.  We are seeing large banks making a push to go online.  Bank of America for example now negotiates their short sales online through a system called Equator.  We have been using Equator to handle Bank of America foreclosures for years.  We hear that banks such as Wells Fargo and perhaps others are in the process of adding their short sales to Equator.

This online venue will allow greater efficiency and allow more people to touch the file, reducing the time it takes to approve a short sale.  The short sale is still a complex transaction and homeowners should not attempt it alone.  In fact, your bank will refer you to use an agent who is familiar with the process.  Short sales are not for every agent and should only be tackled by agents who are committed to learning and operating in a very rigid and complex process.  Buyer agents regularly interview listing agents to make sure the listing agent knows what they’re doing, because if they don’t, the process will fail. 

Look for 2010 to see rising foreclosure sales throughout the year, and perhaps rising short sale numbers as well.  The banks are committing resources to it. We’ll keep reporting the numbers we track, so check back often.

Printed in the News Press, News Press Online, and Ellis Team Blog.

This is the time of year agents are busy selling properties.  If you look at the last two years, historically you will see that sales begin to build each month heading into summer.  The last two years are fairly typical as to how our local market works.  April and May closed sales are results of deals put together in March.  There is typically about a one month lag from contract to closing.  Some closings occur in the same month, and some take longer, especially short sales. 

We think everyone who possibly can buy is attempting to right now for several reasons.  Interest rates are headed higher.  The Treasury Department’s phase-out of buying mortgage backed securities on FNMA and Freddie Mac expires this month.  The last time this happened rates shot up about ¾% in a week or so, so we’re keeping our eye on rates in April and what if anything the government does when they shoot back up. 

We also have the Home Buyer tax credit in place for sales through April 30.  Buyers have a few months after that to actually close these sales, but essentially it allows first time home buyers a credit of up to $8,000 and repeat home buyers a credit up to $6,500.  This is real money, and buyers are acting to receive this money. 

Single Family Home Sales by Month Lee County Florida
Single Family Home Sales by Month Lee County Florida

Additionally, inventory in certain price ranges is drying up, and prices are low.  Buyers from near and far and reaching to scoop up these bargains.  Because these homes are so far below replacement cost, these prices won’t last once the economy improves and builders start building again.  Many of these homes are 40-50% below cost, so there’s a built-in profit for buyers willing to buy now and hold until market improves. 

We know why the market is Hot, but let’s go behind the scenes and explain some things that are affecting the market many people might not know about.   The first major obstacle is appraisals.  Appraisals have been coming up short up to 30% of the time as appraisers not familiar with the neighborhoods are using comparables that are not the best for the subject property.  They are not taking the time to discern if the two neighborhoods are similar, or if the comparables condition is similar.  We’ve seen appraisers use comparables from other neighborhoods that just don’t measure up while ignoring a good comp 2 doors down that closed last week.  We’ve also seen appraisers only use the foreclosures, but they don’t tell the whole picture.  The foreclosures can need lots of work and be in poor condition, and if the appraiser wants to use them as a comp, they need to research its actual condition when property sold. 

The next big issue is we often have multiple offers on each property, and buyers are bidding against each other.  Cash is king, and buyers wishing to finance have a hard time competing with cash buyers.  The seller doesn’t have to worry whether the buyer will get financing when a cash buyer is involved, nor worry about a bad appraisal.  Many of these properties are selling well over asking price, and many buyers are frustrated no matter what they do they can’t land a property.

We also have out of town buyers who believe they can bargain down these homes, and wonder why they lose home after home when the sellers accept someone else’s offer.  Many buyers have said they don’t pay full sticker price, and yet they’re downright frustrated when the seller accepts another buyer’s offer.  Agents I speak with say they are educating buyers right upfront about our market, but buyers often times have to try for themselves.  A buyer can find out the hard way and miss out on their first 6 choices or take their agent’s advice and have a chance at getting choices 1-3.  Even if you offer $10,000 over asking price all cash, there’s no guarantee you’ll get the home, but at least your chances are better.  It pays to study each submarket and determine how each home fits in that puzzle. 

Lastly, title can be an issue.  If you’re buying a foreclosed home, it’s not uncommon for a title issue to creep up and extend the closing out.  Banks don’t always complete the full title process until a contract is secured, and that’s when it could be discovered some outstanding liens, or homeowner associations trying to collect more than the law allows to issue an estoppel letter.  We’ve even experienced a home that needed to be re-foreclosed as it wasn’t done properly the first time. 

If our market wasn’t so challenging, we’d see even higher sales reported.  This market is more complex than ever, but at least it keeps people on their toes and moving.  That’s often little solace to those caught up in a deal when things are going wrong, but I guess it beats having a dead market.  There’s nothing dead about the SW Florida real estate market.

Recently we attended a class with the Five Star Institute which is the premiere resource for educating bank asset managers and real estate agents on effectively handling bank foreclosure transactions.  The class we attended was the REO/Short Sale Summit which focused on bank foreclosures and the short sale process.  The Five Star Institute brought in asset managers for us to talk to, appraisers, banks, and 3rd party asset management companies so we could gain a thorough understanding on how to best deal with foreclosures and short sales, and insight into the back-end servicing agreements that control what the banks can and cannot do on behalf of the investor when approving a short sale or placing a foreclosure.

Short Sales and Bank Foreclosures in Cape Coral, Fort Myers, Lehigh Acres
Short Sales and Bank Foreclosures in Cape Coral, Fort Myers, Lehigh Acres

 

We learned that the Treasury Dept has agreed that mortgage modifications are not working, and most loan modifications and workouts still end in default.  It was further agreed that 2009 was a year of home retention intended to keep people in their properties, and 2010 will be a year banks collect money, either through a short sale or a foreclosure and re-sale. 

Nationwide it is estimated there is 33 months of foreclosed inventory that has not been released.  Dave Liniger, founder of RE/MAX International told a group of banks a few weeks ago to release the inventory as holding it back is only harming the markets.  In the most distressed markets like Las Vegas, Phoenix, and SW Florida, there is actually a shortage of properties and holding back inventory only prolongs the recovery time of the market. 

A lawyer who handles nationwide short sales and REO properties addressed the audience and said that in many markets such as Florida, it takes over 1 year to get them through the foreclosure process, and 2010 will see many begin this process if short sales don’t succeed.  All agreed that politicians’ running for office like to tell voters they’ll keep them in their homes, but this is actually harming the system instead of helping.  Most blamed president Obama’s initiatives as short sided and designed to score points with voters, but largely ineffective contributing to the problem.  The entire panel feared that politicians running for office this year may further try to prolong the inevitable in hopes of scoring points with voters, but that would further exacerbate the problems today. 

In the last few months we’ve been able to help sellers sell through the short sale process, and from what we’ve heard we may see more of that in 2010 as banks pursue a simultaneous sale; short sale and foreclosure process.  Banks are stepping up their efforts by hiring more people, and moving their platforms online so agents, appraisers, banks, investors, attorneys, etc. can all work on the file together and streamline the process. 

We expect to see more short sales in 2010, and more foreclosures in 2011, depending on how successful the 2010 short sales are.  Agents increasingly are becoming better trained, either from getting their CDPE (Certified Distressed Property Expert) designation or their Five Star designation to handle foreclosures for the banks.  The process has become very complicated.  Even an agent that never wants to list a short sale or do all the required work an REO agent does to sell a property would benefit by taking these courses as it educates agents on what is truly involved in the sale, and it will help them represent their buyers better by helping their buyers structure their offer better so the bank is more likely to accept.  Of course, sellers should select someone strong in this arena, as success with the bank is determined by the seller meeting certain criteria, and the agent properly presenting that criterion. 

Only about 25% of all short sales actually sell, and yet this number can be increased substantially with education.  We are all for the industry getting better educated and increasing this closing ratio, which will help more sellers, help more buyers, and relieve frustrations by all.  The short sale process isn’t for everyone, but for those willing to be patient and properly work the system, the rewards are there.  And we’re for the banks improving their processes to make communication better.  We would actually be for loan modifications and home retention if they actually worked, but unless the banks and government will consider loan reductions instead of short term rate and term modification, we think this is a waste of time and is further harming everyone involved.

Last week we focused on the overall State of the Lee County real estate market, and this week we’ll continue with that theme, but zero in a little bit on how certain price ranges are doing. 

Much of our inventory has decreased in the last year as buyers have been scooping up properties faster than the system can bring them to the market. This is the reason inventory levels in certain price ranges have shifted to a seller’s market.  Last year at this time inventory level in the 0-$100k range was 20.26 months.  Today that number is down to 4.23 months.  Last year we talked about market equilibrium being somewhere in the neighborhood of 6-9 months.  6 Months seems about right to us.  As you can see, this price range has fallen from nearly 2 years to less than 6 months illustrating it has swung from a buyer’s market to a seller’s market. 

 

Home Inventory by Price Range 2009
Home Inventory by Price Range 2009

Buyers many times read national headlines and don’t realize they’re competing with other buyers for the best properties, and most of these properties are on the market only a few short days.  Practically any property in the 0-$100k range will have multiple offers and sell at or above asking price.  In fact, last year 8,051 single family homes sold at or above asking price.  That’s simply an amazing statistic. 

The next hot price range is of course $100-200k. Last year we had 12.06 months supply of inventory.  This was the hottest price range last year, and it’s still hot this year.  Today it stands at 6.23 months, almost half of last year.  As you can see, the 0-$200k range is on fire.  Last year we had a lot of Canadians coming down and buying properties in SW Florida.  In the 2nd half of 2009 we noticed more interest from Americans from up north, and this season we’re already seeing many baby boomers arriving and seeking out their piece of paradise.  Combining that with the brutal winter our northern friends are experiencing and we think this season stands a chance to eat into the $200k+ price ranges going forward. 

Last year the $200-300k range stood at 15.33 months, and this year it’s down to 10.03 months.  The $300-400k range last year stood at 18.05 and this year it’s at 15.65, so its better, but the changes aren’t improving as much the higher we go.  The $400-500k range improved by 3 months, down from 24.17 last year to 21.3 this year. 

What’s interesting to look at in this hot market is the $500-1 Million price range, and the $1million+ range.  Inventory levels actually went up in both ranges, and up dramatically in the $1 million price range.  This suggests to us a few things.  Sellers in the higher ends of the market have held out longer than most as the affluent have had the means to ride out a poor economy longer.  However, the drag on the economy may be catching up even to the highest of income earners.  Secondly, there are fewer buyers in the higher ranges, with lots of inventory to choose from. 

To put this in perspective, in the 0-$100k range, there are 3,530 active listings on the market, but there were 10,021 sales last year in that range.  In the $1 Million+ range there are 697 active listings, but only 124 sales all last year. 

Top end sellers may “Need” more out of their home, but as we’ve seen with the foreclosure crisis, what a seller needs is irrelevant to what buyers will pay.  Higher end sellers may not qualify for a short sale because they have other assets, so they may not be motivated to take losses and are testing the market.  Oh, they surely may wish to sell, but not motivated to sell where the buyers are.  Affluent sellers may have the ability to wait the market out longer, even if a property is draining them financially. 

So, $500k+ buyers are in the driver’s seat and can buy the best value properties, and buyers in the lower price ranges are competing against each other to snap up today’s lower prices.  Prices across the county have begun to rise, and buyers are responding by studying the market and moving off the fence.  2010 should be an exciting year to watch.  Download the entire 2010 State of the Market Report free at http://www.topagent.com/

How would you like to view videos complete with graphs and analysis breaking down the overall Lee County Florida housing market, as well as many of the sub-markets throughout SW Florida?  Now you can.  The Ellis Team at RE/MAX Realty Group in Fort Myers Florida recently released its annual State of the Market Report, and this year they’ve produced videos explaining in detail what it all means for the future of the local housing market.

State of the Market Video 1 This video gives an overview of how the Lee County real estate market fared in 2009 vs. 2008 and provides many graphs and analysis on what foreces are influencing the market

State of the Market Video 2 Continued discussion of the overall SW Florida real estate market

State of Market Video 3 Analysis of submarkets Fort Myers Beach, Lehigh Acres, East Ft Myers, North Fort Myers, Sanibel Island

State of the Market Video 4 Analysis of  submarkets SE Fort Myers, SW Fort Myers, Central Ft Myers, Bonita Springs, and Estero Florida markets

State of the Market Video 5 Analysis of Cape Coral submarket, broken down into 3 areas, Cape Coral North, Cape Coral Central, Cape Coral South

Feel free to share this report and videos with your friends who may have interest in the SW Florida housing market

It’s that time of year again.  Final sales numbers are in, and we can accurately reflect on where we’ve been and where the market may be headed in 2010.  Each year we release the most comprehensive statistical report on SW Florida residential real estate, and this year’s report uncovers some interesting observations. 

Single Family Home Sale Prices in SW FLorida 2008-2009
Single Family Home Sale Prices in SW FLorida 2008-2009

Last year we said we really need jobs and employment to fix housing and that is partially true.  A bottom seemed to form even without jobs and housing as investors came in and competed with first time home buyers for the best bargains.  Never before have sale prices been so low as compared to rents as to cash flow for investors like we’re seeing now.  This investor boom is much healthier now than back in 2005 as investors are helping to clear the foreclosure inventory, clean up the neighborhoods, and provide stability and capital until employment returns to the local economy.  The underlying investment makes sense at today’s numbers, and in fact still has some room for price gains going forward as well.

 We also talked about the true test of a bottom last year.  “Sales volume increases, inventory levels stabilize, and prices stabilize.”  2008 saw 2 out of 3 so we speculated that 2009 might bring all 3 into alignment, and this is what occurred.  2009 saw all 3 factors come together and in fact median home prices really firmed up the 2nd half of 2009. 

Sales in 2010 were up 92.11%, month’s supply of inventory fell from 17.53 months last year to 7.11 months this year, and both the median price and mean average sale price for single family homes rose in the 2nd half of 2009.  All 3 signs point to a bottom that was reached in 2009. 

Is every bottom firm?  Just look around and you’ll see the answer is no, but we think the real estate bottom should be, as investors seem to have set the floor by scooping up everything they can because it makes financial sense.  The phrase financial sense is a far cry from the speculators we saw in 2005.

 So let’s give out some interesting facts from this year’s data: Last year we reported 9,207 sales.  This year we report 10,021 sales that sold at $100,000 or less alone, and 4,651 sold from $100-$200k.

 8,051 homes sold at or above full price last year.  That’s almost as many homes as sold in all of 2008.   Anyone who bought or tried to buy real estate in SW Florida last year knows this, as offers on properties were fast and furious.  That equates to over 45% of the homes selling at full price or better.

 So how did the county do on prices?  We’re down in price, but most of those declines were 1st half of the year vs. 1st half of 2008 numbers.  Much of the declines were year over year, and we believe prices could start showing gains year over year in 2010.  Countywide we’re reporting median prices down 38.82% and average price down 40.23%  This won’t make sellers happy, or government that relies on taxes to pay for services, but government better get ready for less very soon, because when the Lee County property appraiser comes out with their numbers later this year, it won’t be a gain.

 So which area of the county fared the best?  Our data shows Sanibel/Captiva fared the best, with a 18.51% price drop in media price and 19.45% drop in average price.  Sales were up 28.97% last year in Sanibel/Captiva. 

The headlines will read market is down close to 40% in price, but that’s not the real story here.  That was year over year data, and is primarily affected by 1st half sales.  2nd half of the year sales firmed up in price, and going forward there’s an excellent chance we’ll see some price gains year over year.  It really depends on future foreclosure activity, jobs, and the economy.  So don’t get hung up on the -40%.  Look at the trend of prices for all of 2009 and we think the data speaks for itself.  We’ll post a price graph from the report illustrating 2008-2009. 

Download your free copy of the State of the Market Report. You can look up all parts of the county, as we know, all real estate is local.  This is just a snippet of data contained in the report.