For the first time in years distressed sales were less than normal or traditional sales, down to 45.26% of all sales in April 2011.

March 2011 saw 901 distressed sales while April produced 683 distressed sales resulting in a decline of 24.2% We had 51 fewer short sales and 167 fewer foreclosure sales in April versus the previous month. Overall we had 163 fewer transactions. Traditional sales actually rose from 765 in March to 826 in April, so the lower distressed sales are helping the overall market.

Foreclosure and short sales in SW Florida
SW Florida Distressed Sales Breakdown

Perhaps this is why official prices have risen over 15% since January. Next week official numbers will be released and we’ll of course be tracking prices. We can say that pending sales are down 9.97% from March numbers, and this can be attributable to seasonality of home sales and falling inventory levels.

March 2010 was the first month in years with inventory of single family homes below 10,000. March numbers stood at 9,785 and current April numbers stand at 8,718. That’s a drop of over 1,000 units in just one month. We’ve been seeing inventory levels drop since February at a rate of about 500 per month, but April’s drop was the sharpest we’ve seen in awhile. To put these numbers in comparison, we tracked 12,669 active listings back in October 2006.

The Ellis Team SW Florida current market Index now stands at 3.14, which is the lowest since September 2005 when it stood at 2.11. It rose to 3.44 the very next month and was a sure sign of what was to come. This Index accurately predicts the future direction of the real estate market. Back in 2005 it began rising which told us the market was in change. Later on the public and media began to see what the numbers were telling us.

Fast forward to 2011 and we’re seeing similar numbers, but they’ve been heading steadily down, which means the market has been shifting from a buyer’s market to a seller’s market. Now don’t get too confident if you’re a seller as the overall economy is still limiting price increases, but this is good news for a market that bled for years.

SW Florida was long known as the epicenter for the housing crisis along with Phoenix, Las Vegas, and California. Today Fort Myers and Cape Coral is actually faring better than many parts of the country, although better is a relative term as unemployment is still high and many people are struggling.

Our market has been in the healing process, and while there is still more healing to do, it’s nice to report a little positive news after years of misery. In fact, people from all over the world have been contacting us recently asking about our market as they’re beginning to read that SW Florida has bottomed and it may be time to get in on the good deals. Our real estate is certainly affordable, and probably about as inexpensive as it’s ever going to be, so people want in on the deals.

It still strikes me as odd though as people from all over come here to buy and they still offer ridiculously low offers when they know full well we’re experiencing a shortage of certain homes in certain prices, and they’ve read that prices are going up. You just have to wonder what makes them think they can low ball in a rising market.

I think the answer is greed, and unfortunately it is this same emotion that got us into this mess years ago, and it is this same emotion that will prevent certain people from buying in this market as they’ll always be in search of the deal from last year, ignoring what is occurring in today’s market.

I’ve always said, if you wanted to sell in 2005, you had to price it right and actually sell it in 2005, not 2006, 2007, or 2008. And if you want to buy today, you have to step up and get a great deal in 2011. You missed 2010 pricing, and if you’re not careful, you’ll miss 2011 pricing. Today’s pricing is still far below replacement cost and is artificially too low, however it looks like we’ve bottomed and are moving up, and it’s a little late to go for blood when the wound was bandaged months ago.

Last week we reported some preliminary findings on the local SW Florida real estate market pending release of official numbers this week.  Well, it’s official as the numbers are out.

The foreclosure moratorium has taken its effect on closings and prices.  Single family home sales were down 28.10% from last October’s figures, and down 7.8% from last month’s figures.  Median home sales prices were down 1.75% from last October, and down 4.66% from last month’s figure.  Median sale price for October 2010 stands at $90,000, essentially where they were back in 1996.

SW Florida Real Estate Single Family Home Prices Chart
SW Florida Single Family Home sale Prices

The shame of it all is that the temporary freeze isn’t going to cause more delinquent owners to stay in their properties.  If they don’t pay they won’t stay.  We are all in agreement that banks need to follow rules when foreclosing, and especially when evicting people.  As a practical matter prolonging the time a home sits before a bank can sell it hurts the neighborhood, the real estate market, and the economy.

The LA Times recently did a study on the effects of foreclosures on the market, and they compared California and Florida as sister states with closely aligned foreclosure statistics.  The California market is up in price about 20% from the bottom in April of 2009 versus Florida where prices are struggling to find a bottom in many parts.

The study concludes that California is more efficient and less complicated making it easier for banks to seize and resell homes when homeowners don’t pay.  Florida is one of 22 states that require repossessions to be approved by a judge, which adds time and tasks to the foreclosure process.  By extending the process, they’re extending the rebound time.

The LA Times article also looks at the Standard & Poor’s/Case-Shiller index which also shows prices up in many cities in California while down in the major cities of Florida.

We can’t change Florida’s law, so we’re stuck with the process of slowly bringing foreclosures to the market over time.  What we’re not in favor of is arbitrarily adding to that time.  We were especially critical of Obama’s foreclosure moratorium which slowed the recovery process back in 2009 by slowing down the process even further.

The government’s intention was to somehow provide retention for struggling homeowners, and while it was a noble cause it was a flawed scheme that wasn’t well thought out and did more harm than good.  If a homeowner lost their job, tacking on extra interest and increasing payments later on wasn’t going to make the home more affordable if the homeowner already couldn’t afford it.  Raising the payment later wasn’t going to help any struggling homeowner who was in trouble, and it certainly wasn’t going to help the market.

Real estate is 32% of GDP (Gross Domestic Product) which means it would ultimately hurt the economy as well.  The government finally got the message and laid off on the popular with voters but largely ineffective moratorium on foreclosures, and along came the bank issue failing to properly follow procedures on some foreclosures in those 22 states.

We are seeing the effects of that now which is prolonging the recovery.  Last week we predicted sales would be off 8.45% from last month’s numbers and official numbers indicate they were down 7.8%, so we were pretty close.  We do see some pent-up demand and an increase in pending sales activity which could bode well going forward.

We are going to keep a close eye on inventory levels, both distressed sales and non-distressed sales and pending sales.  We’ll track these against actual closings and monitor for any changes in the market.  So far since the moratoriums began Oct 1 for occupied properties, we’ve seen an impact, but there are signs this will be made up in coming months.  With season upon us we’d hate to miss any sales opportunities as buyers are buying sooner this year.  The sooner we get these properties to the market and sold, the sooner our real estate market can heal like California is doing and the sooner our economy can improve, which I think everyone can agree on would make for better times in SW Florida and across our nation.

The good news is the signs are there.  All we need now is time, action, and results, and with a little luck we’ll be on our way and 2005-2010 will be in our rear-view mirror.

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.

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

The November 2008 Ellis Team SW Florida Real Estate Current Market Index showed continued improvement again in November.  We expect sales numbers to be quite positive when they are released in a few days, even if sale prices are down as has been the trend in 2008.  The index fell to 6.89 for the Fort Myers and Cape Coral real estate market which is the lowest we’ve seen in years since December of 2005.

Cape Coral’s inventory declined slightly while pending sales increased again, and the CMI Index number for Cape Coral is down to 5.40  Fort Myers rose slightly to 14.56.  Lee County numbers overall fee to 8.64 from 9.16 in October.  Most of these numbers bode well for future sales activity as this index accurately predicts future closed sales and overall market health.

Condo sales in SW Florida are another story with the CMI Index currently at 22.64, up from 21.86 in October.  With season approaching we’ll see if those numbers improve in the 1st Qtr of 2009.