SW Florida Listing Inventory Down

This week we’ll focus on the amount of single family home inventory in Lee County and
compare that with pending sales activity from a historical perspective so that we might be
able to draw some conclusions as to what’s happening today in the SW Florida real estate
market, and where the market may be headed.

Fort Myers and Cape Coral Real Estate Listing Inventory
Fort Myers and Cape Coral Real Estate Listing Inventory

As you can see from the chart which shows Fort Myers and Cape Coral single family
home inventory levels since December, 2004, inventory began rising in the 3rd Qtr of
2005, which was a precursor of what was to come.  The overall Lee County graph looks
similar, only larger numbers. Because new construction contracts were still in effect and
building was in its height at that time, the public really didn’t understand what was about
to happen.  Simultaneous to the rising inventory levels, you can see that pending sales
started to drop off as well.  Combine that with the flood of new construction homes that
continued to flood the market, and you can see very quickly what was about to happen. 
Having this information in real-time back in 2005 would have saved some investors some
money.

Fast forward to the 1st Qtr 2008.  As you can see, pending sales started to increase, and
listing inventory started to decrease. All the foreclosures entering market were quickly
absorbed, and then some.  2008 4th Qtr sales were close to an all-time record, and 1st Qtr
2009 was an all-time record.  In fact, we’re seeing more sales now than we saw at the
height of the Boom back in 2005.  So why isn’t everyone reporting this as the Boom?

2005 was filled with euphoria, rising prices, banks lending money like drunken sailors,
and just generally reckless abandon.  People just didn’t think it would end.  They ignored
the warning signs.  The market was not sustainable, but just try telling that at a cocktail
party with 6 of your closest friends who were flipping houses and making money. 
Nobody wanted it to end, and yet it could not continue.  It was phantom demand, and
over-supply. 

Today we have more sales than the Boom, but consumer confidence is low,
unemployment is high, oil is still high compared to 2005, and home sale prices are low. 
Homeowners are having a hard time making payments as incomes are down, and few
people feel great about their financial matters.  This is why nobody is calling 2009 a
Boom, and perhaps they should.  The opportunities for a buyer today are far greater than
they ever were in 2005.  2005 was a false market as nothing was what it appeared. 
Today’s market is real, and the bargains are there.  In fact, sale prices are so far below
replacement cost there is no building inventory entering the market in the foreseeable
future.

When the job market and the economy begin to recover, we may actually have difficulty
finding properties for buyers.  The builders have not been building, and many sellers
cannot afford to sell at today’s prices.  Banks have been forced to “short-sale” or
foreclose, and the foreclosures may start drying up by next year.  Some speculate there is
another wave coming due to resets in the ARM schedules in 2011; however we feel that
in SW Florida, most of those buyers have already walked because they were the
speculators who long ago realized they could never make a profit, so they chose not to
carry the costs.  If all this is true, we may have a period of diminishing inventory to sell
until the market sorts it out.

Many Realtors who study the market  were sounding the warning signs back in 2005, and
yet the public didn’t get the message.  Many of those same Realtors are recognizing that
2009 is a Boom, and yet not all of the public is getting that message either for reasons
outlined above.

Our goal is to provide you with meaningful data so that you can see what is really
happening in today’s market.  These first several weeks we’ll be providing a baseline of
where we’ve been and how that relates to where we’re headed.  We seek to provide
unbiased insight you might not have received anywhere else.  We seek to make sense of
what’s happening, and prove it with facts.  We can say that home sales have exploded
since 2008, and listing inventory is declining.  We’ll watch this market together, and
we’ll do our best to explain what’s happening.  We’re not tied to the outcome, as markets
go up and they go down.  Our job is to explain what it’s doing today, and offer our
insights as to where it may be going in the future, so you can make informed decisions. 
Remember, all real estate is local, even in SW Florida.  Just because we report something
is going on in the Cape or Fort Myers doesn’t necessarily mean the entire market is
affected the exact same way.

We are seeing a shift from Cape Coral, which has been on fire, over to Lehigh Acres, as
Lehigh is the affordable hot spot right now.  It’s the same shift we saw in the height when
prices in the Cape got carried away and buyers shifted to Lehigh.  Funny how life repeats
itself.  Stay tuned each week and we’ll present more insights.

Florida Lieutenant Governor Jeff Kottkamp is this week’s guest on the Future of Real Estate which is broadcast on Saturdays at 11:00 AM on WINK AM 1240 in Lee and Charlotte Counties and AM 1270 in Collier County.  You can listen to this special show Online Now   

We ask the Lieutenant Gov the following topics:

  • Update on Foreclosure Task Force (Hope Now)
  • SW Florida’s chances on landing another Major League Baseball Team
  • State Farm Insurance situation
  • Health Insurance-Obama’s plan and it’s effect on Florida
  • Cover Florida Insurance Plan
  • State Rights Vs US Rights
  • Private property rights
  • Space Florida
  • Cuba and Tourism
  • Attorney General Race
  • Drug Control
  • Port Security
  • Governor race-Crist Vs Rubio
  • Adoptions in Florida

It really is a great show and the Lieutenant Gov answered all questions.  Tune in now.

Last week we tested a social media experiment.  Our goal was to create a few Facebook Fan Pages for various parts of the SW Florida real estate market and see if we could drive 100 fans to each.  If we could do that, we could signup for Facebook unique URL’s.  We’re happy to report that not only did we hit our goal of 100 fans, we far surpassed it in only a week.  Currently we’re over 400 users on our Ellis Team site, and close to that on others.

The advantage of signing up on one of these pages is that we post timely news pertaining to each area, specific to that geographic location, or in the case of The Ellis Team site, about real estate marketing in general.  We provide discussion boards, Blog posts, nes paper articles, video updates, photos, and much more.

Our new goal is to hit 1,000 users by the end of the month.  Can we do it, who knows?  There’s no magic reason we picked this number, it just sounds fun.  We’ll post the web links here for Facebook users to follow us, and our Twitter addresses too for our Twitter users.

Facebook Pages

Ellis Team at RE/MAX Realty Group currently at 408 Fans

Cape Coral Real Estate                     currently at 244 Fans

SW Florida Real Estate                      currently at 342 Fans

Fort Myers Real Estate                      currently at 280 Fans

Future of Real Estate                        currently at 354 Fans

Twitter Followers can follow us at:

@swfltopagents   Ellis Team

@brettellis_swfl   Brett Ellis

We look forward to connecting with you on many levels.  We still do business the old fashioned way, and we still advertise in traditional methods like newspaper, TV, and radio.  We are however expanding our reach into the Social Media markets to better serve our customers, and we look forward to seeing you online.

We’re doing something new this week for the Future of Real Estate Radio Show here in SW Florida.  This week’s special guest is Lee County Property Appraiser Ken Wilkinson, and this week we video taped the show as it was being broadcast and we’ve decided to bring it to you in video format as a test.  We’ve separated the broadcast into 6 parts so you can watch any and all parts that interest you.

Ken Wilkinson Property Appraiser Lee County Florida
Ken Wilkinson Property Appraiser Lee County Florida

Future of Real Estate July 4, 2009 Part 1

  • Cape Coral water and sewer assessments effect on valuations
  • Mass appraisal system Vs. Fee appraisal system
  • Property Appraiser must assess 604,000 properties annually
  • Chinese Drywall and it’s effect on value
  • Mold and it’s effect on value
  • Functional Obsolesence
  • Economic Obsolesence
  • Cost to cure
  • Property Appraiser assessment Vs. Property Taxes

Future of Real Estate Part 2

  • Property Appraiser assessment Vs. Property Taxes Continued
  • 92 Taxing Authorities countywide
  • Property Appraiser’s office provides analysis of market January 1 to each taxing authority
  • Taxing authorities set their tax rates
  • Truth in Millage (Trim)
  • Rollback Millage
  • Gut feeling of what politicians will do with tax rates
  • Federal stimulous money effect on taxes
  • County budget’s being evaluated
  • Property appraiser’s office being defended by County Attorney’s office beginning July 1,2009 to save money

Future of Real Estate July 4, 2009 Pt 3

  • New Technology at Property Appraiser’s office
  • AVM-Automated Valuation Models
  • Multiple Regression Analysis
  • 2D 3D Line of Sight Model
  • View and Floor Height’s effect on value

Future of Real Estate Pt 4

  • Assessed Values down in 2008
  • Pockets of fluctuation
  • North Cape and Lehigh Acres went down fastest
  • Countywide average down over 25%
  • $27 Billion Less taxable value From $110 Billion to $83 Billion
  • Lehigh Acres Ground Zero
  • 80% of sales in some neighborhoods short sales or after foreclosures sales
  • 2009 taxes reflect 2008 sales
  • Weighted sales-4th quarter
  • Department of Revenue

Future of Real Estate Pt 5

  • Tax Referendum
  • Governor Crist
  • Property tax ammendments Nov 2010
  • Recapture
  • 3% or CPI, whichever is Less
  • 2008 recapture rate .1%

Future of Real Estate Pt 6

  • Bill signing Tallahassee Florida
  • Aerial Technology to substitute visiting each property (Desktop Review)
  • Electronic Permits
  • Lee County Lowest Cost per parcel in Florida

The Ellis Team SW Florida Real Estate Current Market Index for June 2009 shows another slight improvement, down from 3.99 to 3.92  Remember, the lower the Index number, the better for sellers, and if you’ve followed this index for any length of time you’ll discover that it’s been very accurate forecasting the foreward movement of the Fort Myers real estate market and the Cape Coral real estate market.

Ellis Team SW Florida Real Estate Current Market Index June 2009
Ellis Team SW Florida Real Estate Current Market Index June 2009

 

Inventory fell from 12,579 last month to under 12,000 for the first time in a long time.  Inventory levels have been falling for awhile and pending sales have remained relatively stable, helping to draw down inventory levels.  Cape Coral inventory levels are very low, but so is Lehigh Acres copared to the pending sales.  Lehigh Acres has traditionally followed Cape Coral, and as the Cape’s prices have gone up in the entry level home market, Lehigh Acres demand has increased, just like in the run-up of the roaring 2000’s.

The Ellis Team are Top agents at RE/MAX Realty Group in Fort Myers Florida and study the SW Florida real estate market in great detail.

We’re conducting a social media experiment.  We’re seeking to add 100 users to our Fan Pages in the next several days.  If you are a Facebook user, simply go to the following pages and select Become a Fan.  Once we’re at 100 users we’ll announce the Facebook URL assigned to us.

Fort Myers Real Estate   Click to Become a Fan

SW Florida Real Estate  Click to Become a Fan

The Future of Real Estate  Click to Become a Fan

 

We’ll repport back and let everyone know how long it took to reach this goal, and the effects of viral marketing online via Social Networking.  Thanks for particpating Facebook users.

SW Florida real estate sales in Fort Myers and Cape Coral Florida set new records again in May with single family home sales in Cape Coral and Fort Myers totalling 1,417 sales, eclipsing the May 2005 sales record of 1,309.  See SW Florida Real Estate Homes Closed 2005-2009 chart illustrating home sales by month since 2005.  Median sales prices for single family homes in Cape Coral and Fort Myers was up 3.51% from April median home prices, up to $88,500.  For a complete look at median single family home sale prices in Fort Myers Cape Coral since 2005, see the SW Florida Real Estate Sales Prices 2005-2009 graph.

Prices are still falling in the mid to upper levels of the SW Florida real estate market, while prices seemed to have stabilized in the entry level market.  First time home buyers are buying as fast as they can as they compete with investors for the best bargains.  Short sales are picking up as banks cut through the red tape of approving short sales, although time frames are still long.  Canadians are buying properties in SW Florida due to the favorable exchange rate, and the fact that Florida is on sale.

Fort Myers Cape Coral Real Estate Sales Soared

Condo sales for May in Cape Coral and Fort Myers were up 41% Vs. the State of Florida which was up 21%.  Median sales prices for condos in SW Florida were down 35% year over year, as opposed to the statewide average of down 38%.  See the Florida Sales Report May 2009 Existing Condos graph.

It looks like the 2nd Qtr is shaping up to be another record setting quarter for home sales.  The 1st Qtr home sales in Lee County Florida sure was.  We won’t know for another month when June sales are officially released.

Shortly we’ll be releasing the latest Current Market Index for Fort Myers and Cape Coral for June which should explain where our market is headed.

Be sure to tune in this week on AM 1240 in SW Florida, and AM 1270 in Collier County, The Future of Real Estate presented by The Ellis Team at RE/MAX Realty Group in Fort Myers, Florida.  The show is also re-broadcast on our Radio Show page

 

This week’s topics include:

  • Property Tax Lawsuit Against Lee County Property Appraiser Ken Wilkinson
  • State Farm Insurance Possibly Staying or Leaving Florida
  • Hot Properties
  • 4 Amendments on Florida’s 2010 Ballot
  • Florida’s Recently Released Housing Statistics
  • Buying Opportunities in Real Estate Due to Market Conditions
  • Interest Rate Update

Listen in, and if there is something you’d like discussed, leave us a comment.

Lee County single family home sales sold at a record pace for the 1st quarter of 2009, eclipsing the 1st Qtr of 2005.  This follows the 4th Qtr of 2008 which was the second highest quarter on record, taking a backseat to you guessed it, 2005.

Lee County Single Family Home Sales by Quarter
Lee County Single Family Home Sales by Quarter

For Larger Version, click here.

The bubble burst of years past has actually helped make homes affordable again, and combining that with a $8,000 first time home buyer tax credit in effect until Dec 1, 2009 and low interest rates, and median prices as low as 1997 prices, you’ve got a perfect storm again for dramatically increased home sales.  We believe 2nd Qtr home sales in Lee County will again be very strong, however home sales could slow later in 2009, but not for the reasons you might imagine.

Yes, interest rates have been climbing almost as fast as the price of oil, and both can negatively impact home sales.  The real reason home sales may decline in the 2nd half of 2009 may be that inventory is drying up.  In the coming weeks we’ll present some inventory graphs that will illustrate exactly what is happening with inventory. You would think that as inventory declines, prices would go up, and that is typical in a real estate cycle.  I think this cycle could be different.  For years, buyers have been conditioned that prices are going down and to wait for the bargains.  Buyers are just now getting the word that the bargains are disappearing and many are fighting with other home buyers to get the few bargains available.  Some buyers however, haven’t gotten the memo, and are still making offers at or below asking price, and they wonder why they’re missing out on house after house.  They’re not properly educated on what is actually happening in real time.

Jobs are not growing yet in SW Florida.  Right now we have investors coming in and scooping up the bargains and competing with home buyers because sales prices are so far below replacement cost builders can’t afford to build.  These prices are an anomaly and will not stay at these low prices forever.  This all leads me back to why I believe home sales could stagnate in the 2nd half if lenders don’t keep the foreclosure pipeline streaming.

There are two schools of thought on where prices are headed.  First is the old Supply Vs. Demand theory, that as inventory levels drop and buyers feverishly buy, prices automatically will go up.  In fact, we are seeing evidence of this occurring in certain segments, particularly waterfront and entry level Cape Coral homes.  Prices have bounced off the bottom and have been on their way up since last year.

The other school, and this theory is just my own and not economically tested, is that prices are so far below replacement cost, buyers have become conditioned to buy so long as it’s a bargain.  What happens when the bargains are gone and prices begin rising?  Will buyers buy in fear of prices tomorrow being higher than prices today?  Something tells me sellers will be staring down the buyers with a “gotcha” type mentality because sellers have taken it on the chin for so long.  Buyers may look at the sellers and say “You don’t have me, I’ll just sit back and do nothing now that it’s no longer a Deal.”  And hence the stare down begins, and the question becomes, who blinks and how long does it take?  We saw some evidence of this after Hurricane Andrew on the East coast.  Transactions slowed as buyers faced with diminished inventory couldn’t accept right away the new pricing the market brought to bear, and the stare down game began.

We do have some foreclosures backlogged in the system, and we’re going to need them to be released.  They all have to sell anyway, and the longer they sit vacant the more the properties deteriorate from lack of maintenance, storms, water damage, vandalism, etc. This leads to additional costs on repairing damages. Nothing good can happen with a vacant foreclosed home in a neighborhood, so the process of foreclosure and getting a new end user in actually helps the healing process of the market, and until we complete this process our market will not be healed.

Ultimately the wild cards are how many foreclosures will come to the market, and when will employment in SW Florida rise.  Pricing will most likely follow both events, and to some extent interest rates.  Interest rate increases cut into the buying power of buyers, and many first time home buyers are tight.  The other factor will probably be public perception of the overall economy and how people feel about their job and their overall financial situation.  The market’s ability to assess and discern what is truly happening in the real estate market, without all the fluff, will go a long way to determining when prices will start rising again and how quickly.

So the SW Florida real estate market is currently setting sales records.  In the coming weeks we’ll do our best to break down by segment exactly what is happening in our market and what it could mean going forward.

The Ellis Team is looking for  a person or persons with strong people skills and proficient in Internet lead management, e-mail, and database management.  This person will be a good listener and preferrably will be a licensed agent or willing to obtain license.  This candidate will have knowledge of the SW Florida Real Estate market, and is good on the phones.

If a job like this sounds interesting to you, send an e-mail with your resume to coordinator@topagent.com