The National Association of Realtors created a Pending Home Sales nNdex which tracks pending sales.  This is an indicator of sales scheduled to close and accurately predicts the market in the next 30-60 days.

NAR’s index slipped 1.1% to a level of 109.1 in September.  The index is measured against pending sales back in 2001, and anything over 100 is greater than the pending sales back in 2001, the start of the real estate boom nationwide.

The south weighs in at 125, which is actually down 9 compared to September 2005, a record year.  National economists predict theis index to remain fairly stable the rest of the year, signalling a bottom in the real estate market.

Pending sales in SW Florida real estate remain steady as well.

RE/MAX Realty Group II has opened in Pine Island servicng Bokeelia and St. James City as well as Matlacha real estate.  RE/MAX is the #1 company both locally in SW Florida real estate and wordlwide.  RE/MAX offers top quality service to its clients by attracting top producing agents to work at RE/MAX.  If you’re interested in buying or selling real estate in Pine Island, call 239-283-5610

Search MLS for Pine Island real estate.

FEMA is updating the flood maps for Lee County and SW Florida.  These proposed changes will affect flood insurance rates.  Some people’s rates will go up while others may go down.  Some people previously not in a flood zone will now be, and their mortgage company will require them to obtain flood insurance.

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

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

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

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

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

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

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

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

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

As you can see from the charts below, the SW Florida real estate market continues adding inventory, and pending sales are falling each month.  This has led to sellers lowering asking prices to attract buyers.

Lee County Florida Current Market Statistics.

October 18,2006 Active Pending Months Supply of Inventory
Single Family 12,669 1,128 16.80*
Condo 7,834 543 29.90*

*We project there will be approximately 9,048 single family closings reported in Lee County MLS, and approximately 3,144 condo sales reported.  Months supply of inventory are based upon these projections. 

August 23,2006 Active Pending Months Supply of Inventory
Single Family 12,168 1,261 13.10
Condo 7,391 557 14.18

 

 

July 25,2006 Active Pending Months Supply of Inventory
Single Family 12,053 1,343 12.97
Condo 7,387 591 14.17

 

 

May 27, 2006 Active Pending Months Supply of Inventory
Single Family 11,838 1,426 12.74
Condo 7,414 644 14.22

Many experts believe the SW Florida real estate market has bottomed.  We cannot say this is true for sure, however we can say that showing activity has picked up slightly in the past few weeks which may be a good sign going forward.  In addition, the rate of increase of new listings to the market has steadied.  Once we see an increase in pending sales, we can begin to identify that the market has bottomed.  We haven’t seen that yet.

We believe based on current levels it will be approximately 18-24 months before we work off the excess inventory.  2008 could be a very good year, and we may see signs of recovery in SW Florida in 2007.

The Ellis Team at RE/MAX Realty Group, top real estate agents in SW Florida offer a moving truck for free to customers who buy and sell with them.  The truck is also available to charities and such.  The Fort Myers High School band uses the truck for their road games, saving them lots of money and allowing them to spend it on band trips to London and other worthwhile costs.

Customers love free use of the truck, which is also available to them beyond the move.  Maybe they’re just out furniture shopping, picking up appliances or other large items, or moving things to their storage unit. The truck is available long after the sale, and customers rave about their experience.  One such customer was recently featured in a newspaper article.

The Ellis Team also loaded up the truck after Hurricane Charley and delivered supplies to needy recipients who didn’t fare so well during the hurricane.  It’s our way of giving back to SW Florida and making a difference not only in real estate, but as citizens.

They Ellis Team is also large contributors each year to Habitat for Humanity and Childrens Miracle Network, as well as Lee County Schools through scholarships offered through their Ellis Team Bear program.

Real Estate Blogs.

Lee County’s real estate market stabilized for the 2nd straight month, further confirming that 2006 will be much more like 2002/2003 levels than 2005 levels. 

As this chart illustrates, sales in August 2006 closely mirror 2002 levels.  We are back to a normal market, and this is a healthy and encouraging sign.  This is an end-user market, which is what it should have been all along until the investors found us and capitalized.

It may not feel like a normal market to some because of all the excess inventory on the market because of the investors who bought property with no end user in sight.  Because of this fact in SW Florida, the investors caused the market to over supply.  Investors sped up the supply 3-4 years ahead of what the market could absorb.

We probably have 3-4 years of over supply, and this market may feel a pinch for about 2 years until we eat into some of this over supply.

Fort Myers Cape Coral Single family home sales fell 29% in August 2006 from August 2005 levels, down from 968 homes sold to 691 homes sold.  Prices fell 7% from $283,600 to $264,100 in 2006.

Fort Myers Cape Coral Condo sales fell 64% from August 2005 to August 2006 from 280 last year to 100 this year.  Sale prices fell 15% from $278,100 to $237,500.

The good news is single family home sales have stabilized to about 690 or so sales per month, and median home prices have stabilized to about $264,000.  We now know the monthly targets.  It’s much easier to analyze the market once it hits a standard, and we think 2002 will be the benchmark.

Real estate has always been a profession that on the surface seems easy and lucrative.  It isn’t until one get’s into the business that they see how hard it is, how much work is involved, and that lucrative profits aren’t what they thought.  They don’t realize the tremendous expenses involved with selling real estate.  They also fail to realize how much training is involved, and how much time it takes to really learn the market, and to learn how to read people.  Only a small percentage of agents make it in this business.

For years we’ve known there are way too many agents in the business.  There is always room for good people who are sharp and dedicated but by and large many are not cut out for real estate.  We’ve shown that sales numbers are down to below 2003 levels, and very close to 2002 levels.  See Chart

We can assume there were too many agents in the business back in 2002 because there always is.  Lets look at the history of agent numbers:

Year # Agents
July 1998 1,178
July 1999 1,734
July 2000 1,870
July 2001 2,002
July 2002 2,257
July 2003 2,735
July 2004 3,623
July 2005 4,660
July 2006 5,884

These numbers were provided by the Realtor Association of Greater Fort Myers and the Beach, Inc.  They do not reflect all agents in various boards as agents can select a primary board and belong to other boards as a secondary member to gain MLS privilidges.  These numbers were primary board totals only.  Cape Coral, Sanibel, Bonita/Estero and Naples would show similiar increases in numbers over the years as well.

We know that sales are down to about halfway between 2002 and 2003 levels, so we can look at the number of agents today compared to the level back in 2002 and 2003.  When we do this we see that if we average the two, we should have about 2,496 agents.  Based on this, there are approximately 57.58% too many agents in the market wondering why they have no business.

The truth is, they have no business because they simply aren’t needed.  Most agents don’t have the experience, education, skills, or commitment to make it in today’s market.  What happens when the market turns is the good get stronger and the weak die off.  It sounds cruel, but it’s what the public demands.

Keep in mind we probably have 70-80% too many agents, we’re just talking about the 58% or so compared to the over supply of agents we had back in 2002-2003.

When the market is good, some sellers want the least expensive agent or company because they’re not convinced of the value the agent brings to the table, and they’d be right much of the time because they weren’t always selecting the highest quality agents.  If the agent screwed up the deal, there were 5 other buyers in line waiting to buy the property.  This isn’t true today.

Now we call it a "Flight to Quality."  Sellers want the best and most experienced agents.  They want someone with a track record of selling in both up, down and sideways markets.  They want aggressive marketing, possibly including Internet, TV, radio, direct mail, and newspaper advertising.  They know that there is an over supply of homes on the market.  Here’s a startling fact.  Only 1 in 19 homes on the market is selling each month.  This means that if a subdivision has 19 homes on the market, statistically only 1 will sell.

All sellers want to be that 1 sale, and yet that means 18 others won’t be.  This is why sellers are picky now about who they chose to work with.

Buyers should be equally picky.  There are great buys out there now, and it’s a good time to buy with excellent selection and low rates.  However, you don’t want to overpay when you don’t have to.  Buyers want an expert negotiator who also knows the market.  This only comes from knowledge and market experience, combined with life and people skills.

You’ll never know who the good negotiators are, so ask lot’s of questions.  Make sure the agent you’re working with will be around when you really need them.  If they’re part-time or working another job to make ends meet, you’re probably not interviewing an agent who’s successfully worked in all kinds of markets.  The great agents are successful in any market, so look for an agent that is busy.

We’ll take a look this time next year and see how many agents are out of the business.

We hate to say we told you so.  In an NBC interview in October 2005 we predicted sales would fall to 2002 levels.  In July we crossed that threshold.  We were at 2004 levels in May, however we fell below 2004 levels in June and below 2003 levels in July.

The chart clearly illustrates what’s happening with our sales numbers here in SW Florida.  All this is occurring while inventory levels are going up, which gives us an indication it will take awhile to sell off all the excess inventory.  In fact, until sales head back up again, inventory levels are likely to increase further in SW Florida, as more homes are coming on the market than actually selling.

There is some good news though.  2002-2005 were each record years in the SW Florida real estate industry.  Once our market moderates and we work through some of the inventory, a stable market awaits us all.  We have fairly steady demand, so that’s not the issue as more people move to Florida everyday.  All we have to do is work off the extra supply and our market will be healthy and vibrant again.

The SW Florida real estate market is on a diet right now, and once the extra pounds have come off, we’ll be a lean mean fighting machine.  Nobody likes a diet, and they are hard work.  Many agents have only been in the business a few years and have only seen the Boom times.  Agents are dropping like flies, and that’s a good thing.

In a future article, we’ll examine how many agents there are in the SW Florida real estate market today compared to year’s past, and we’ll evlaluate how many there should be based upon the volume of today’s business.