SW Florida Real Estate Current Market Index April 2009
SW Florida Real Estate Current Market Index April 2009

 

The Ellis Team at RE/MAX Realty Group released the April 2009 SW Florida Real Estate Current market Index which accurately predicts the local real estate market’s future direction, and once again the index improved. Fort Myers and Cape Coral recorded their lowest numbers since October 2005.  In October 2005 the number stood at 3.44, and the index today stands at 3.72  The lowest on record was July 2005 when the index stood at 1.07.  The lower the number the better the market is for sellers and the higher the number the better the market is for buyers.  The lower numbers are a result of higher transaction volume combined with declining inventory levels.

 

Lee County Florida index numbers for single family homes stands at 4.26, down from 5.07 in March.  We’re seeing tremendous sales numbers for a variety of reasons. Not only do we have home affordability back in the market, but also the perception that we’ve seen drastic price cuts and the end in price declines may be near.  Buyers do not want to miss out on the possible buying opportunity of a lifetime.   Along with attractive pricing is record low interest rates, declining property taxes, and a decent but dwindling supply of homes to choose from.  Lastly, the government passed a 1st time home buyer tax credit that gives buyers up to $8,000 tax credit to buy a home and if the home is kept for three years does not have to be repaid to the government.

 

Rarely do all the stars align for a perfect buying opportunity, but that’s just exactly what we have right now.  The SW Florida real estate market has been heating up for some time, and in 2009 we’re seeing some dramatic results on the transaction volume side.  Pricing is a lagging indicator and will follow once inventory is depleted further.  We’ve already seen a 2.74% rise in prices in March over February 2009 numbers.  Total single family home inventory in Lee County fell to 12,356 in April, down from 13,019 in March.

 

Cape Coral is again leading the way as the CMI index numbers for the Cape stands at 2.88.  Fort Myers CMI numbers stand at 7.26 Inventory is dropping in both Fort Myers and Cape Coral, and pending sales are increasing.  We believe when official sales numbers are released later this month we’ll see record sales for March, and sales activity going forward for April and May looks to be very strong.  Current home prices are so far below replacement cost that builders are not even attempting to build yet.  Once this inventory is depleted prices may begin to rise on a gradual path towards replacement cost, and when that occurs builders will again start building.  We believe we are still some time off from that point; however we are amazed at how quickly homes are selling and how the SW Florida real estate market has heated up.  Once the overall economy improves and businesses start hiring again in force, we believe prices could rise at a quicker pace and approach replacement prices.  Until then, home sales will be great as long as the price is attractive, and we may enter No-Man’s land once we deplete existing inventory and the market absorbs what to do once the bargains are all gone.  The economy and employment will eventually drive home sale prices, and home sales may help drive the economy back to health.

 

Stay tuned as the market is definitely heating up, and the Current market Index points to more good times ahead.

Here is an information sheet we found on the First Time Honme Buyer Tax Credit for home buyers in 2009.  Buyers in Cape Coral and Fort Myers have been buying real estate in March at a record rate, and many will be helped by this tax credit.  For some, the government will essentially be kicking in 10% of the purchase price.  Read below for details.  Always call the Ellis Team at RE/MAX Realty Group with your questions, or visit our website Topagent.com

 First-Time Home Buyer Tax Credit

Frequently Asked Questions About the Home Buyer Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to for

qualified first-time home buyers purchasing a principal residence on or after january 1. 2009 and before

December 1. 2009.

The following questions and answers provide basic information about the tax credit. If you have more

specific questions. we strongly encourage you to consult a qualified tax advisor or

about your unique situation.

1.     Who is eligible to claim the tax credit?

First~time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To

qualify for the tax credit, more about which you can find if you look here, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner with the help of property conveyancing services. 

2.     What is the definition of a first-time home buyer?

The law defines “first~time home buyer” as a buyer who has not owned a principal residence during the

three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first~time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first~time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a

buyer as a first-time home buyer.

1                     How is the amount of the tax credit determined? The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

2                     Are there any income limits for claiming the tax credit? Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGis between these amounts.

3                     What is “modified adjusted gross income”? Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine

 

“adjusted gross income” or AGio AGI is total income for a year minus certain deductions (known as

“adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or

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personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI

includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign

income, foreign~housing deductions, student~loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit? Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000.

The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this

amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0,

the result ;s 0.5. To determine the amount of the partial first-time home buyer tax credit that is available

to this couple, mUltiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of

$88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might

be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? The most significant difference is that this tax credit does not have to be repaid. Because it had to be

repaid, the previous “credit” was essentially an interest~free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face

recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax

return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount,

and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre~approval is necessary. However, you will want to be sure that you qualify for

the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit

on Form 5405 for an intended purchase for some future date; it must be a completed purchase.

10. What types of homes will qualify for the tax credit? Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of prinCipal residence is identical to the one used to determine whether you may qualify for the $250,000 I $500,000 capital gain tax exclusion for principal residences.

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11. I read that the tax credit is “refundable.” What does that mean? The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government

sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax

liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead? Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should

consult with a tax advisor to ensure you file this return properly.

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit? Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the

home owner is treated by the tax code as having been “purchased” on the date the owner first occupies

the house. In this situation, the date offirst occupancy must be on or after January 1, 2009 and before

December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is

determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program? Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB

program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit? No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit? Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

17. Is a tax credit the same as a tax deduction? No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume

the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an

$8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or

lowered from $8,000 to $6,800.

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18. I bought a home in 2008. Do I qualify for this credit? No, bullf you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit

19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return? Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their Income lax withholding. Reducing tax withholding (up to Ihe amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied 10 the down payment.

 

Buyers should adjust their withholding amount on their W-4 via their employer or through Iheir quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note Ihat if income tax withholding Is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of

income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the

tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance

agencies, such as the Missouri Housing Development Commission, have introduced programs that provide shortRterm credit acceleration loans that may be used to fund a downpayment. Prospective

home buyers should inquire with their state housing finance agency to determine the availability of such

a program in their community_

The National Council of State Housing Agencies (NCSHA) has compiled list of such programs, which can be found here.

20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return? Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim It on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult

with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest? Yes, If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

This week’s SW Florida real estate video update presented by The Ellis Team at RE/MAX Realty Group focuses on SE Fort Myers Florida.  SE Fort Myers consists of zip codes 33912, 33913, 33966, and 33967 and covers Gateway, Fort Myers South around the Daniel’s Parkway Corridor over to US 41 down tthrough San Carlos Park.

SE Fort Myers Florida Real Estate Video Update

View this week’s SE Fort Myers Florida Real Estate Video Update  Average prices were down about 22% in SE Fort Myers, however sales were up significantly.

Current Market Index-SW Florida Real Estate-March 2009
Current Market Index-SW Florida Real Estate-March 2009

The March 2009 Ellis Team SW Florida real estate Current Market Index covering Fort Myers, Cape Coral, Bonita Springs, Estero, Ft Myers Beach, Sanibel and Captiva Islands, and Lehigh Acres Florida improved again as sales activity has really taken off in the past 6 months.  The Index now stands at 4.41 for Cape Coral and Fort Myers, and stands at 5.07 for the entire Lee County Florida.

Inventory levels countywide hade dropped to just slightly over 13,000 while pending sales have shot up to 2,567, and increase of 22.53% since last month.  The market is absorbing new inventory.  This 2009 season has been as good as predicted.  remember, the Current Market Index is a forward looking indicator, and home sales have been bearing that out each and every month as we’ve been reporting.

Cape Coral again leads the way.  The CMI numbers for Cape Coral are 3.45, the best in SW Florida.  Condo numbers were down to 10.90, down from 13.08 in February, another positive sign.  We do see some serious trouble on the horizon for the condo market in SW Florida we’ll be reporting on later.

Follow The Ellis Team on Twitter, so you can keep up to date on Fort Myers and Cape Coral real estate news and information, including information on the entire Southwest Florida real estate market.  Our latest post on Twitter includes our Cape Coral real estate video update.  Check our our Ellis team SW Florida Top Agents page on Twitter.

This week’s SW Florida real estate video update presented by The Ellis Team at RE/MAX Realty Group focuses on cape Coral Florida.  Cape Coral is leading sales transactions in Lee County due to the number of foreclosures and short sales bringing affordability back into the SW Florida real estate market.

Cape Coral Real Estate Video Update

View This Week’s Cape Coral Video Update.

Check out the entire SW Florida real estate State of the Market Report

The Ellis Team at RE/MAX Realty Group in Fort Myers released the Annual SW Florida State of the Market Report in February.  Local TV stations covered the release and here are some of the stories.

WINK News 6PM Coverage of State of the Market Report 

WINK News 10 PM Coverage-Home Prices Back to 1999 Prices

WINK News 11 PM-Housing Prices and New Construction

FOX 4 News Coverage of State of market Report Release

Download the State of the Market Report  In this report we detail the Fort Myers real estate market, along with updates on the Cape Coral real estate market, Lehigh Acres home sales, Bonita Springs and Estero real estate updates, Sanibel and Captiva, Fort Myers Beach, Pine Island, and all of Lee County Florida.

We also detailed bank foreclosure information, and short sales statistics, distressed property information, and we talked about the CDPE (Certified Distressed Property Expert) designation to help owners keep their homes or sell their homes to protect their credit

We’ll be uploading more video in the coming days, so stay tuned.

Brett Ellis from the Ellis Team at RE/MAX Realty Group specializes in selling homes in Cape Coral Florida, Fort Myers, Lehigh Acres, onita Springs, and all of SW Florida.  Brett created another weekly video update and tells a little about what he presented last week at the Annual State of the Market Report presentation at the SW Florida Real Estate Investors Asociation meeting.

Yesterday Brett Ellis of the Ellis TEAM at RE/MAX delivered the SW Florida State of the Market Report to the public.  The report is 77 pages and includes data on Lee County Florida home sales, including Cape Coral real estate sales numbers, Fort Myers real estate sales numbers and pricing trends, Bonita Spring real estate updates, Estero, Lehigh Acres, Fort Myers Beach, Sanibel and Captiva, Pine Island, and all of Lee Couny.

The report shows single family home inventory in Lee County Florida declined 15.61%, and months supply of inventory in Lee County declined 42.66% due to decreasing inventory and increasing sales.

Cape Coral is the hot spot for sales activity, with 4,633 sales and less than a 1 yr supply of inventory.  Lee County overall inventory level stands at 17.53 months, down from 30.57 last year.  Median single family home sale prices were down 37.89%.  Two areas actually saw a rise in mean average sales prices in 2008; Bonita Spring-Estero and Central Fort Myers.

The report provides insightful data at the county level, and at the neighborhood level, as well as foreclosure data.  The sub-markets we analyzed were Cape Coral North, Cape Coral Central, Cape Coral South, North Fort Myers, Central Fort Myers, SE Fort Myers, SW Fort Myers, Lehigh Acres, East Fort Myers including Alva, Bonita-Estero, Pine Island, Fort Myers Beach, and Sanibel and Captiva Islands.  We provide data such as monthly pricing graphs for 2008, monthly sales charts, List price to sales price ratios, months supply of inventory levels, total list and sales volume,Minimum listing, maximum listing, lowest sold listing, highest sold listing, median price, average price, and total sales.

It is our most detailed report yet.  We scrutinized the data from multiple MLS boards and eliminated duplicates.  This one of a kind database is more thorough and accurate than services such as MLS Alliance because some boards pull their data out of the Alliance.  Additionally, we scrubbed the data for known errors.  We allowed duplicates when there were actually multiple sales on the same property for the same year.

73% of foreclosures in SW Florida were non-homestaeded property, meaning investors walked from their investments when the value fell below what they owed.  Most investors were planning to flip for a profit when they purchased.  SW Florida bank foreclosures were absorbed and sold, and inventory fell as the market heated up, even if prices have not.

We’ll add video of news stories from the report in coming days.

The 2009 Ellis Team annual SW Florida State of the Market Report will be released February 18, 2009 at the general meeting of the Southwest Florida Investment Association.  It is located at Island Park Bridge Club – 16520 S Tamiami Trl # 16 Fort Myers, FL 33908

The format has changed from last year’s format. This year we’ll address the following topics:

  • Sales Trends by Area
  • Pricing Trends by Area
  • Lee County Pricing Trends by Month
  • Lee County Sales Trends by Month
  • Median Prices Vs. Avg Prices
  • $ Volume of Sales by Area
  • Find Out Which Areas are Selling
  • Identify Where the Deals Are
  • How Will Recent Lending Changes Affect Investors
  • How Will Recent Guidelines Affect Condo Sales
  • Don’t Follow the Herd-Be the First to Know How This Market is Changing and Capitalize
  • Get the Facts-Don’t believe Everything You Read
  • Find out How the Stimulus Package Could Affect Our Market
  • What Does the Latest Current market Index Predict for our Market
  • Should you be Positive or Negative in 2009
  • Ask Questions-Only Even of it’s Kind Where You can ask the Experts Questions

Compare areas such as Fort Myers, Cape Coral, Estero, Bonita Springs, Lehigh Acres, Sanibel-Captiva, Pine Island and see how your area is doing.

This year we’ve compiled two independent sets of data.  The first is the most exhaustive set ever compiled.  We tool MLS data from multiple sources, compared for duplicates, and deleted, and scrubbed the data for known errors.  We used this data to compile a comprehensive database.  Secondly, Jeff Tumbarello has compiled the area’s finest foreclosure database.  This year we have analysed both sets of data and we’ll be able to compare and contrast the two independent empirical sets.  Foreclosures have affected the real estate market, and by analysing the two together we’ll be better able to illustrate past trends, future trends, and show how the cause and effect is influencing the other.  We look forward to demonstrating the lagging and leading indicators in this market, and how you can plan to take advantage of this knowledge.

Click here for more information on attending the SW Florida Real Estate Investors Association meeting and viewing the Annual State of the market Report.