Well, we’ve just concluded another year and it’s that time of year when people spell out their new years resolutions. You know, the typical things like the gym memberships, lose weight, quit smoking, reduce debt, go back to church, read more, travel more, eat out less, eat out more, spend more time with family, etc.

New Years Resolutions for SW Florida Real Estate Market
SW Florida New Years Resolutions

While most lay out their personal resolutions, each year we spell out resolutions we think would be great for our local SW Florida real estate market. Some may be a repeat of last year’s resolutions.

1. Agents and lenders become more familiar with FHA financing- As prices rise, less investors may be competing against first time buyers as flipping margins are reduced. Banks have stiffened up on lending so bad that FHA has become the predominate form of lending in recent years. It will pay for agents and lenders alike to become more familiar with FHA guidelines unless lending rules change dramatically

2. Lee County would attract outside business to relocate to SW Florida-We know the county and Chamber is working hard on this.

3. Parking garage at Fort Myers Beach becomes a reality-Fort Myers Beach is one of the staples of local tourism. We now have a great park and view to enjoy as visitors come over the bridge. Adding parking to the equation would serve as a hub for business and tourists to enjoy our area

4. Banks roll out plans to refinance homes under new guidelines allowing underwater borrowers to stay in their homes

5. Economy-Jobs are what ultimately will drive our real estate market and we’re not seeing growth in the job market other than seasonal jobs nationwide. A pro-growth government could help lift the business climate and the real estate market

6. Election-November can’t get here soon enough. Later this year we’ll know who our new president will be and what direction Congress will take. Voters sent a strong message last election, but Congress is still too evenly divided for politicians to get that people want real change.

7. US Government needs to spend less- We cannot end up like many countries in Europe. We must act now to reduce spending before it’s too late

8. Congress needs an English Lesson-Since when are tax cuts considered spending? Taxes are revenue, not spending. Congress and the President need to cut spending and stop treating taxes as spending. Tax cuts spur business to invest and hire. These 2 month extensions are too short term for businesses to decided what direction economy is going in

9. Red Sox stadium worth the Investment-Lee County paid a lot of money to build new stadium. Let’s hope new stadium brings new energy, new visitors, and lots of money back to local economy

10. Certainty in Oil Market-Uncertainty leads to rising oil prices which leads to loss of disposable income. I think all Americans could use a little more disposable income, and a better energy policy would help. A little luck with agitators like Iran would as well.

11. Places like banks, airlines, and cell phone companies will stop adding add-on fees simply to increase bottom line- We are in a price sensitive market. When will these companies learn? Someone in these companies marketing departments should warn the CEOs that these fees are unpopular and go over about as well as an occupy movement in the middle of a city.

12. Speaking of Occupy Movements-Maybe this will be the year they actually come up with a message, or decide to get back to work. There’s nothing worse than watching interviews with attendees who don’t know why they’re camping out all night or what they realistically would like, other than a free handout.

13. If It’s to Be, It’s Up to Me-America needs to get back to personal responsibility. It’s obvious we cannot give to everyone and pay our nation’s debts. One day the world will stop lending to us. What happened to “Ask not what your country can do for you, but rather what you can do for your country?”

They may not all come true, but wouldn’t it be nice. We’d love to hear your new years resolutions.

 

As we’ve been reporting in our weekly article, we expected sales to be down as pending sales have been declining.  We also expected prices to be higher and in fact official SW Florida single family home median sales prices released this past week were up 4.11% over October’s prices and up 20.11% over last November’s price.

Median Sale Prices 2011 SW Florida
SW Florida Median Single Family Sale Prices

Everyone wants to know what kind of year 2012 will be, and what kind of season it will be.  Nobody can predict the future with absolute certainty, so we have to look at clues as to what will drive the market going forward.

Homes Closed in SW Florida 2009-2011

There are opposing forces in play affecting our market, and each one can have an influence,  The question will always be how much influence will each force play and to what degree?

  1. Overall economy-It is weak and this is an election year.  In previous election years activity slowed as people weren’t sure of the outcome and its effect on tax strategies and the government’s effect on the economy.  The housing market likes a pro growth government.
  2. Employment-More jobs eventually equals more disposable income in our local economy, which spurs home sales.  Unemployment is still high in the area, so we’d like to see jobs.  One such employer might be a casino, or perhaps a company that may relocate to our area.
  3. World Markets-People wonder what the trickle effect would be to the US economy and value of money should Europe’s debt crisis spill over.  Europe is working on their debt crisis and the US is helping, but we can’t seem to get our own debt crisis in order, so I wonder what influence we have to help them when we can’t help ourselves.
  4. US Credit Ratings-Could we be in for more downgrades?  Some think so, and it could raise the cost of borrowing
  5. Interest Rates and Availability of Credit- For now they are low, so anyone that can afford to buy now should.  Prices are rising and rates are at all-time lows.  Banks have also tightened standards, perhaps too much, which affects sales in the mid and upper ranges.
  6. Inventory-Inventory has been rising the past 4 months but ever so slightly.  It’s been rumored the banks have more inventory to unload in 2012, so we’ll be watching to what degree and how this affects the market
  7. Volume- Sales have been falling as prices have risen.  We set all-time records in 2009 as prices were at rock bottom.  Our market has definitely moved off the bottom, especially at the first time home buyer end.  Many properties still make sense on a cash flow basis; however fewer investors are buying because the rock bottom deals are gone.
  8. Correctly Priced Inventory- We have less distressed sales on the market, which is good.  However, inventory is rising because not every home is priced where buyers are willing to buy, so they sit on the market.  This is nothing new.  It just illustrates we are still in a price sensitive market.  If you overprice a home, it will sit.  If you price it at market, it will sell.
  9. Season Begun Early- We saw our Northern friends start their search earlier this year.  The beaches and roads are packed.  The weather up North is cold.  Baby boomers aren’t getting younger.  Many like the deals they’re seeing and many are saying this is the year they’re going to pull the trigger and buy.  Florida has been on sale for a few years now and buyers see the rising prices, giving them confidence the worst is over.
  10. Greed-Greed isn’t always a bad thing.  It’s emotional feeling people use to guide them to buy or sell.  It’s the reason sellers overprice, and it’s also the reason buyers buy.  A transaction won’t happen if both buyer and seller are operating from the same emotion.  The answer to this emotion is facts, data, and logic.  If a seller prices appropriately, buyers will buy because they fear prices will be higher in the future, and they don’t want to miss the boat.  They will not overpay though unless they’re convinced prices for home will be higher.  Greed is one emotion fueling buyers to buy today.  If a property is priced at market, they are motivated to purchase.  If a property is overpriced, it forces the buyer right back on the fence.

 

All 10 factors are in play.  Only the future knows how each factor will affect the market.   There are probably a few wild cards we haven’t mentioned as well.  All we can do is watch together.  Enjoy 2012.  We think it could be a good year.

 

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Because we are writing this article this week before official numbers are released, we decided to go inside the numbers and focus on listing inventory and sales data.  According to preliminary numbers researched by the Ellis Team, listing inventory rose again for the 3rd consecutive month.

Single Family Home Listing Inventory in SW Florida
SW Florida December 2011 Listing Inventory

Lehigh Acres has been holding fairly steady while Cape Coral is seeing the largest gains in inventory.  Fort Myers is inching higher ever so slightly.

What’s interesting is the distressed sales market.  We track a variety of graphs.  One graph not shown here because it’s a little tangled and hard to read in newspaper format shows large drops in distressed sales in Lehigh Acres, Fort Myers, and Lee County overall.  Cape Coral has held steady at 50.45% of all single family sales being distressed.  Lee County stands at 48% distressed rate in November.

SW Florida Distressed Sales Chart December 2011
Foreclosures Vs Short Sales December 2011

We have included a Foreclosures Vs Short Sales graph that is a bit easier to read.  It fairly well shows the history of the foreclosure and short sale market in SW Florida.  As you can see, the height of foreclosure sales was in June 2009, while the height of the short sale market was March 2011.

 

Banks revved up their short sale departments to handle an increased load.  It can be said that potentially each of these successful short sales may have saved a corresponding amount of foreclosures, so it was in the banks and the markets best interests to sell these homes as short sales rather than as foreclosures.

Going into 2012 we’re going to continue to watch the listing inventory and the mix of inventory.  Traditional sales are on the rise as a percentage of all sales, although many homeowners are not selling at today’s bargain basement prices.

Speaking of bargain prices, many buyers are calling wanting to buy homes for investment and expecting 2009 prices.  It seems like sellers are always the last to recognize when prices are dropping and buyers are the last to recognize when prices are rising.  Why is that?  Could it be selective hearing or denial?

We can definitively say that investment homes in Cape Coral and Lehigh acres bottomed in 2009 and have risen since.  Buyers today can no longer pick up a home for $35,000 in Lehigh unless it has major problems.  $70,000 is more common place for the low end now, so essentially prices in the low end have doubled.

Sales are flat in December versus November; however we are expecting sales to pickup in season again.  We’ve had no trouble selling homes.  The biggest challenges we’ve faced are closing these homes.  Lately we’ve been encountering title issues, mortgage re-disclosure issues due to any delays, and buyers not waiting patiently for the short sale approval.  We’re getting short sales approved within 60 days in many cases, but buyers are impatient.  Going forward the industry will have to do a better job educating buyers as to what the realistic expectations are for approval and closing time frames on short sales.

We’ll also watch foreclosure inventory as we are expecting a few more in the 1st and 2nd quarters of 2012.

We’ll keep our eye on the SW Florida real estate market for you, and whether you’re a buyer or seller, we hope Santa is better to you this year than he was last year.  The market is looking up, and we hope your holiday spirits are too.

 

From time to time we get calls asking about the best time share deals in Florida.  According to Wikipedia, “A timeshare is a form of ownership or right to the use of a property, or the term used to describe such properties. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each sharer is allotted a period of time (typically one week, and almost always the same time every year) in which they may use the property.”

Time Shares in Florida Cypress Pointe resort in Orlando Florida
Cypress Pointe Resort Time Share in Orlando Florida

The Ellis Team doesn’t handle time shares in Florida as they are kind of their own specialty, although there are a few timeshare places at Fort Myers Beach.  What we do see more of in SW Florida are rental companies that will assist a homeowner and rent out a condo or home by the week while the owner retains full ownership of all 52 weeks of the year.

We have several condo projects and cottages in SW Florida that rent very well by the week.  A Buyer can purchase a home or unit and place it in the rental pool and produce very good income while allowing someone else to manage the property and rent out the unit.  The owner can even use the property so many days per year per the IRS and still claim it as an investment property.  We encourage you to speak with your tax advisor on those regulations as they pertain to you.

Unlike a property owner who owns all 52 weeks, a timeshare owner is only concerned with one week.  One advantage of a timeshare is its ability to be traded for other like kind properties all over the world.  We’ve talked to several people who own a timeshare say in Orlando and love visiting there, but they also enjoy the ability to trade it for weeks in Hawaii, Bahamas, Cayman Islands, Costa Rica, and all over the world.

Once you own a timeshare you simply pay the weekly maintenance fee each year and then you’re free to use the unit on your selected week, exchange it for a different week within your association if permitted, rent it out, or join an exchange service like RCI or VRI to exchange it for nice place elsewhere.  While you pay a yearly maintenance fee on your timeshare, there can be significant cost savings when exchanging your unit. Perhaps you own a 3 bedroom unit.  You may be able to exchange for a week of a 2 bedroom unit and another week’s use of a 1 bedroom unit, or both during the same week.

You can even exchange credits on your time share towards use on a cruise.  Depending on how nice your unit is, where it is located, and which week you have will determine how much credit you get towards exchange to another timeshare or cruise.

Timeshares can be great for those that like to travel.  Years ago timeshares were selling upwards of $30,000 in the Orlando area.  With the economy being down it seems prices have come down and now you can own them for much less.

In fact, we’re aware of an owner of a 3 bedroom unit at Cypress Pointe Resort at Lake Buena Vista in Orlando willing to sell their unit for $2,000 plus closing costs.  It is a 3 bedroom unit week 43 rated as Emerald and is close to Disney.  It can be exchanged for a 2 bedroom + a 1 bedroom unit or used as a 3 bedroom unit.  Cypress Pointe Resort offers lots of amenities for kids.  While we do not list or sell timeshares, simply call our office 239-489-4042 if you’re interested and we’ll put you in touch with the owner and you can deal directly.

If you’re looking for a condo on Sanibel, Captiva, or Fort Myers Beach and would like info on investing and what it would take to purchase and how much income you could derive from it, we can help.  Simply give us a call.

 

Traditionally buyers and sellers tend to think of value for a home in a few ways.  Some think of replacement cost, which is the value of the land combined with the cost to rebuild the home including permits, ground preparation, etc.  Replacement cost is usually the upper limit of value, and certainly today there are some homes on the market priced far below what it would cost to build.

Captiva Florida Home
6 Bedroom 4 Bath Home on Captiva Island, Florida

Other methods include comparing what like kind homes are selling for and making adjustments for things such as lot value, location, size, age, desirability of the floor plan, and more.  Certain neighborhoods tend to sell for more than other nearby competing neighborhoods perhaps due to amenities, age, upkeep, etc.  Of course every home is different, even if it’s the same floor plan.  Each home sits on its own lot, has its own view, and has its own set of upgrades.  Some homes require some adjustments on the market analysis or appraisal, and some require very few if any adjustments.

There is another method used to value homes and it’s called the income approach. Duplexes are often valued this way as is certain commercial property.  In tourist areas where a home can be rented out on a regular basis, a home may have a different replacement value than it’s actual value because the home has income potential.  Envision a cottage on Ft Myers beach.  The cost to rebuild it might be minimal; however it provides excellent income, which in turn might affect its land value.  In this case, the highest and best value for the property might very well be its income potential.

Sanibel Island limits owners to renting homes out by the month or longer, but Captiva on the other hand allows weekly rentals.  This attracts more visitors, both from the US and abroad. It’s no wonder people from all over the world come to SW Florida to spend a week with their family in paradise.

The home pictured here is a home on Captiva and is a rare bank foreclosure.  It has a view of the bay and is a 3 story home.  2 of the floors have their own kitchen, living room, and bedrooms, so two families can easily share the home on vacation.  Quite often families travel together and look for a place to rent together.

This home is priced at $1,651,400 Other similar homes on the market now are priced $2.3 million to $2.995 million.  We studied the MLS sheets which showed these homes rental history for 2010 ranged from $120,000 to $150,000.  The home shown here features a pool, 6 bedrooms, 6 ½ baths and is walking distance to the beach, bay, shopping, restaurants, and gorgeous sunsets.  The previous owner did take most of the fixtures in the home, so new owner is free to pick out and furnish the home to their own tastes.  Former owner was a builder and built this home to his exacting standards.

If you’re looking for a vacation home with income potential, or strictly an investment property you might eventually retire to on Captiva, Sanibel Island, or Fort Myers Beach, give our office a call.  While the home featured here is our listing, we have access to all listed homes and can sit down with you and discuss your needs.

Good luck, and happy house hunting.

Be sure to watch our December 2011 SW Florida State of the Market Report

We sincerely hope everyone had a wonderful Thanksgiving as we all have so much to be thankful for, even if times seem tough for many across SW Florida.  For those eager shoppers we hope Black Friday was a day to score wonderful bargains.

We were trying to come up with a name for the day after Black Friday this year and we decided on Grey Saturday, because official sales numbers were released for the Florida real estate and market and SW Florida scored mixed results, earning it the Grey Area status.

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

Last month we reported a change in direction in listing inventory and said we wanted to keep an eye on those numbers going forward.  For the 2nd straight month, listing inventory rose.  The numbers aren’t staggering as we’re talking about a difference of 231 homes, but it is a recent trend nonetheless.

Fort Myers, Cape Coral Florida Home Prices
Greater Fort Myers- Cape Coral Home Prices

Single family home prices were up 15% over last year, but they are down 7.69% from last month.  We are in a volatile market because agents can’t count on which closings will actually close in a given month.  Transactions are becoming trickier to count on as governmental regulations are holding up closings, causing delays, and wreaking havoc on the market.  It’s not uncommon for buyers to receive approval on their short sale and then walk from the deal because of the length of time, or because they became impatient and went for another deal more likely to close.

Banks have told us the foreclosure backlog was coming and we are starting to see more assignments in the 4th quarter.  Another large bank has told us to watch out for 1st quarter 2012 for even more.  These bank foreclosures may be just what the doctor ordered for our market though because in certain submarkets there is a feeding frenzy to buy.  We have short sales, and some traditional sales of which not all are priced at market value, which is typical in any market, up, down, or sideways.  We’ve had a lack of foreclosure properties as banks were stymied with the legal debacle of the robo-signing issue that caused them to go back and evaluate if they had legal standing to foreclose and the paperwork to prove it.

We’re starting to see rising inventory and it’s not because of foreclosures.  We are entering season which is a time when properties are gobbled up like a Thanksgiving turkey, so we’d expect to see inventory decline in the next few months even if the banks do release more foreclosure inventory.  SW Florida’s appetite when it comes to a bargain is insatiable, much like a Black Friday sale.

Last month we had Trick or Treat Day, so we’d like to see a solid direction in the market.  The past few months have brought ups and downs in median prices.  Combining the recent up and down price swings, rising inventory, predicted rising foreclosure activity, and tempering that with the upcoming season means we have a market to keep our eyes on.

We really believe we’re going to have a good season.  What good is a bargain basement sale to a shopper in an empty store?  Shoppers want inventory, and this year may be one of the last good years to get the bargain.  Even after a downward price drop of 7.69%, prices are still up 15% over last year’s prices.  The absolute statistical bottom of the market may have been last year, and we may look back on 2011 in years to come as a time when buyers say to themselves, “I wish I would have hung in there and bought that bargain.”

When the economy improves and lending standards get back to normal, we’ll all look back at 2010 and 2011 and say “I wish I would have bought more.”

Good luck and good hunting!

 

Don’t let the headline fool you, we’re a big fan of appraisals.  The key word is accurate, competent appraisals.  So many times sellers want us to overprice a home and sell it to a northern or foreign buyer assuming they don’t really know our market.  What sellers fail to realize is buyers usually look at several developments, several homes, and study the market more than sellers do.  If you overprice a home, it will sit.  This is a price sensitive market, and when you price a home at or very near its value, activity heats up and properties move.  We often tell sellers even if we were to dupe an unsuspecting buyer into overpaying for a home; the bank is still going to order an appraisal before they lend money.  Not only do buyers tend to research the market but they have a backup with bank appraisal.  Some sellers say, “Well, let’s find a foreign cash buyer.”  Sellers don’t realize cash buyers research the market perhaps more vigorously than financed buyers do, so they’re really grasping at straws trying to sell an overpriced property into a price sensitive market.

Value is in the Eye of the Beholder
Your Home as Seen By Buyer, Seller, Tax Assessor, Appraiser

Just as some sellers need to research the market better, so do some appraisers.  In the past week I’ve heard several complaints from Realtors who’ve said a bad appraisal nixed their closing.  Sometimes banks use appraisal management companies who utilize appraisers from different markets who aren’t as familiar with the local market as local appraisers. We’ve had past clients ask us to market homes in other cities as far away as Pensacola Fl and we declined simply because we’re not experts in that market.  Out of town appraisers are at a big disadvantage and couldn’t possibly know everything they should about our market.

For instance, some waterfront canal property in Cape Coral brings more value than others.  Nearby neighborhoods in SW Florida may not be good comparables even though they are located right next to each other.  Computer models and unsuspecting appraisers wouldn’t always know this.

Many times when the bank is considering a short sale or pricing a foreclosure, they utilize a BPO (Broker Price Opinion) and/or an appraisal.  If either comes back too high, the short sale is rejected or the foreclosure is priced too high.  Recently we had an asset manager contact us because our BPO came in at one figure and the bank’s appraiser came in much higher.  After studying comparable sales used by the appraiser we discovered he used gulf access homes as comps even though the subject property was not waterfront.  He also used a deed in lieu of foreclosure sale which wasn’t really a sale at all; it was simply a homeowner giving the property back to the bank for the loan amount.  We submitted documentation to have the appraisal overturned so the bank can sell the home.

Bad appraisals can cost a sale at both ends.  If the short sale appraisal is too high, the price the seller’s bank accepts may be higher than the buyer’s bank who is lending money appraisal reveals, so the deal dies unless adjustments are made, which isn’t always easy or possible with new rules placed by the government.  These new regulations, designed to protect lending and real estate values are doing the opposite.  Rarely when government gets involved does anything improve, it just takes more time, more aggravation, and blown deals, which doesn’t stabilize the market.

If the lending appraiser comes in too low, the buyer’s lender won’t loan the money at the contract price, potentially scuttling an otherwise good transaction that should have closed.  There are lots of good appraisals out there which do blow some deals, which furthers our comment to sellers that it’s not wise to purposely overprice a property.  Keep in mind, value is in the eyes of the market, not any one buyer nor any one seller.  Values are subjective, and some properties are difficult to evaluate.  Not all sales are cookie cutter sales with multiple active and sold comparables.

It pays to study the market, and if you doubt the value, ask questions.  Sellers sometimes produce appraisals that are too high and the market won’t accept, and bank ordered appraisals are sometimes too low and not at actual market value.  Do your homework and question their work.  Request a copy of the appraisal.  You paid for it.  Some banks will let you see it.  And remember, keep an objective mind.  Everyone in the transaction has their own idea of what the value is, or should be.  Make sure that idea is supported by facts, data and logic and not ignorance of the market or motivations.

Banks are contacting customers who are past due or in financial trouble and offering owners or tenants up to $20,000 in relocation assistance to move out of home and hire an experienced agent to sell the home as a short sale with a short term loan option.  Banks are also offering owners money to agree to a deed in lieu foreclosure in some instances as well.

Benefits of Short Sale Versus Foreclosure Chart
Alternatives to Foreclosure Chart

There are several advantages for taking the bank up on their offer.  If you let the property go to foreclosure, you’ll be evicted without relocation assistance.  Additionally your credit will suffer more in a foreclosure than a short sale or deed in lieu.  The owner is more in control when actively pursuing a sale through an experienced agent than giving up all control to the bank and the legal system.

A short sale is a commonly used alternative to foreclosure. Generally, when putting your home on the market, the goal is to market and sell your house for an amount greater than any and all outstanding liens against the property. Liens include all mortgages, escrows and fees on the property.

If you can no longer afford to make your mortgage payments and your house is worth less than you owe, a short sale allows you to sell your house at the current fair market value. You then have an option to move to a more affordable situation. In a short sale, the investor or owner of your loan must approve the sale because they are entitled to repayment of the loan and will be receiving less than the amount owed.

If you have additional liens on your property with other lenders, such as a home equity loan, all investors must come to an agreement in order to complete the short sale. This process takes time, and an experienced agent is required to navigate and negotiate through these challenges.

Another alternative is a deed in lieu of foreclosure. With a deed in lieu, you voluntarily transfer ownership of the property to your investor to satisfy the amount due on your first mortgage. In some cases, you may be eligible for a deed in lieu without first attempting a short sale of your home. A deed in lieu generally takes about 90 days, depending on your situation.

In either a short sale or deed in lieu you may be responsible for paying a deficiency.  There are many factors that determine this, such as if the home was your primary residence, what state you live in, your financial situation, etc.  Sometimes this can be negotiated with your lender.

In any event, most lenders agree it is much better on your credit report and they are likely to lend you money in the future faster if you agree to a short sale or deed in lieu instead of a full blown foreclosure.

If you’ve been contacted by your lender, it may be at least worth considering your options.  Don’t throw away documents sent to you by your lender.  If they make you an offer call your attorney for legal advice or an experienced real estate agent for advice on the program and assistance selling your home.

The banks really don’t want your home back.  They’d prefer that owners pay their mortgage payments.  When that’s not possible, it may be less expensive to offer the occupant relocation assistance and get on with the process of selling the home before it gets to the costly foreclosure process.  Once the home gets into foreclosure, the costs mount, the credit suffers, and owners lose options.

If we can help, call us at 239-489-4042.  Each situation is unique and it takes time to look into each program.  The good news is we have past experience with many of these programs.

 

Last week we reported we expected sales to be roughly even if not slightly behind 2010 levels when official numbers were reported.  Well, its official and we were wrong.  Sales actually increased by 25 sales over last year.  Single family home sales were reported as 1127 sales versus 1102 last year.

Fort Myers - Cape Coral SW Florida Homes Closed
SW Florida Homes Closed

We also reported listing inventory actually went up slightly by 43 units which was another change in direction.  It turns out the sales weren’t a change in direction, but it doesn’t matter.  Whether they were up or down 25 units statistically it’s not a big difference.  What was interesting was the first change in direction, and something we wanted to monitor going forward.  While we’re usually correct with our predictions, this time we were off on the sales numbers.

Home Sale Prices in Cape Coral - Fort Myers Florida
SW Florida Real Estate Home Sale Prices

There was another bit of good news in the official numbers.  Not only were sales up, but prices rose 17.6% over last year and 7.17% from the previous month.  This could be because home affordability is at an all-time high and buyers today can afford more home due to lower prices and lower interest rates than ever before, or it could be because there was less distressed this past month.  In fact, in September 50.77% of all single family home sales were distressed, down from 54.26% in August.  Those numbers were as low as 44.57% in June of 2011.  Banks have not brought significant foreclosed inventory to the market since the robo-signing fiasco, although we’re being told this may change in January as several of the large banks are able to bring more as they’ve worked through legal issues pertaining to those questionable foreclosures.

Pending sales were down last week, so we’ll have to see how this affects sales going forward, however they are typically down this time of year and start picking back up again going forward.  There is some seasonality in these numbers we like to account for, and this year is no exception.

We have noticed our roads are getting busier and our northern friends, sometimes referred to as snowbirds, have begun their trek to SW Florida, and judging by our phone calls and Internet leads, many are in search of their piece of paradise.  This could bode well for another strong season in the SW Florida real estate market.

Two new programs were just announced that will greatly benefit distressed homeowners.  One program allows underwater sellers to refinance their home no matter how much is owed if it is a FNMA or Freddie Mac insured loan as long as they’ve been current on their mortgage in the last 6 months, and another program that offers sellers up to $20,000-$30,000 in financial assistance to move and sell their home for less than what is owed.

We’ll bring more information to you about these two new programs in the coming weeks.  If you’re a homeowner and struggling to make your payments, you might be interested in either of these programs.  Simple give us a call at 239-489-4042 or email me at Brett@topagent.com feel free to visit our website www.Topagent.com for other timely information and links to our videos.

 

We like to include charts to illustrate latest trends in the SW Florida real estate market.  For years we’ve tracked numbers and reported the upside and the downward trends in the market.  For the past year or more all market trends have been to the upside.  Preliminary numbers gathered by the Ellis Team indicate single family home listing inventory in Lee County went up for the first time since January 2011.  Granted, back in January single family home inventory was 34.54% higher than it is today, but this past month is the first time we’ve seen inventory rise in months.

SW Florida Single Family Home Sales
SW Florida Single Family Home Sales

Listing inventory only rose 43 units which accounts for about .5%, so it’s not an alarming trend, just a slight change in direction we’ll keep our eye on.  Due to space constraints we didn’t include that chart; however we’d like to draw your attention to the SW Florida Sales Chart and the Pending Sales Chart.  Both these charts support findings in the inventory levels.

Sales in SW Florida have been falling since March which isn’t out of the ordinary the past several years.  What’s interesting is that September 2011 sales are slightly behind 2010 levels, but not by much.  Again, it’s the direction of the change, not the actual numbers we’re looking at.

Pending home sales Fort Myers Cape Coral Lee County Floirda
SW Florida Pending Home Sales

Pending sales have also fallen since March.  This confirms that pending sales are an accurate indicator of future closings.  While it makes perfect sense, sometimes in life what appears to make sense doesn’t always match reality, but in this case it does match. For months inventory levels have gone down and many have speculated that’s the cause of decreased sales.  We think there is a lot of truth in that.

Listing inventory just went up this past month, so does that mean sales will go up?  When official numbers are released next week we don’t think so.  We think they’ll mirror what we’ve been reporting and will be down slightly from the previous month.  So if inventory has been a legitimate reason sales have fallen, why wouldn’t the increase signify increasing sales going forward?

The answer is it could, but there are other factors.  We must look at the mix of inventory as well as other factors.  The mix refers to traditional sales versus foreclosed homes and short sales.  Not all short sales close, and their timing is anything but predictable.  Foreclosure inventory looks to rise some in the 4th qtr of this year and more in the 1st qtr of next year.  If this bears out, sales will almost assuredly be influenced by the exact number hitting the market as there is a large appetite for foreclosed bargains.

Other wild cards influencing the market are the availability of credit. Banks are requiring buyers to jump through more hoops and regulations than ever. The new Dodd Frank Act is making it more difficult to close even approved loans.  Regulations have become burdensome and making it impossible to meet certain deadlines.  We always say time is of the essence in our contracts, but that’s not the case as Congress has changed so many regulations for the worse.

There are waiting periods for HUD closings statements to be approved, so if there is any little change, all prorations of fees may need to be re-approved. If a buyer selects a different rate or program, the bank must re-disclose everything and a new waiting period begins.  This makes it difficult to meet certain deadlines in short sales, and many times that property is foreclosed instead of a successful sale because Congress saw fit to add additional layers and slow everything down.

Congress always has good intentions, but they don’t use their head.  Loans take hours to underwrite now and certain loans banks don’t even want to mess with because of the new regulations.  This hurts certain segments of the market.  I hear almost everyday complaints from loan officers on how tough their industry is.  Of course, lending affects our industry, and real estate affects the economy.  Sometimes I wish Washington DC would listen to people in business and get out of the way.  We’d all be better off if they regulated less and let business do business.  That’s the way to create tax revenues.

While we can’t control Washington, we can keep our eye on Main Street.  Main Street is ok in SW Florida, and we’ll continue to monitor.  One month doesn’t make a trend.  We’re simply reporting a slight change in direction, and we’ll watch the trends going forward to see what sticks.  If we can help you with your real estate needs, don’t hesitate to call 239-489-4042 or visit our website www.Topagent.com