It’s been a few months since we’ve reported numbers for the Current Market Index, so here is the update. The Fort Myers-Cape Coral area index now stands at 4.02, up slightly from 3.86 in September and 3.81 in August. The lower the index numbers the better the market for sellers.
This is a result of slightly rising inventory numbers, but very much in line with inventory numbers back in August. We’ve seen continuous dips in inventory for quite a few months leading up to October, and this is the first month we’ve seen a slight increase. Pending sales are down ever so slightly as well, however nothing that is statistically significant.
Existing sales are holding up nicely and still showing healthy gains over last year. Buyer interest from around the country is strong. In fact, our team has so many buyer leads coming in that we need to hire 4 more buyer agents to keep up with the activity. We think season this year is going to be very strong. Temperatures up north have been unseasonably cold this fall and it’s looking like they could have a long and cold winter. Traditionally this is always good for the Florida market as snow-birds look for a tropical escape and potential property purchase.
The snow-birds we’ve talked to are already motivated to purchase. They witnessed first hand that some properties are up about 20% in price over last year as the pickings are getting slim in certain segments. They realize this season may be the last season to pickup many of these bargain basement priced properties.
We’re seeing waterfront properties in the Cape for example bouncing off their bottom last year for entry level direct access properties. We’ve also seen a bottom in Cape Coral for entry level homes, especially pool homes. This has fueled an increase in sales in the Fort Myers and Lehigh Acres market. Fort Myers home sales in September increased by 6 sales. Cape Coral lost 35 sales versus the previous month. Lehigh Acres gained 7 sales versus September.
As sales potentially shift from the Cape over to Fort Myers and Lehigh Acres, we could see a bottoming in prices there as well. You’ve heard the term that water seeks it’s own level. As prices get too high in a given area, buyers shift their focus to other more affordable areas. Many have preferred to live in Cape Coral over Lehigh Acres, but in the run-up back in the early 2000’s, prices in the Cape got so far ahead of Lehigh Acres that buyers shifted to Lehigh for the value, and thus a boom began in Lehigh. As foreclosures hit hard, many buyers scooped back into the Cape for the bargains and preferred the Cape over Lehigh all else being equal. Because we’ve sold many of the Cape foreclosures, the bargains are not there like they used to be, so we’re seeing this shift to wherever the bargains are.
We’re still in a bargain market for the time being, but that could change. Northerners are starting to fear that the bargains are drying up and they don’t want to miss out, so this season could get very exciting. It’ll be interesting to watch where the money goes, and what happens when the foreclosure well starts to run dry. How will that affect the overall market?
Speaking of foreclosures, it appears banks are cranking up the process on a whole new batch of foreclosures. Some have speculated that banks purposely waited until the end of 4th qtr which ended Sept 30 to file these new lawsuits so their books would look better. Wall Street has a history of doing this for earnings and results. A friend of mine has even speculated banks are keeping losses off their books this year to pad their earnings so they can collect bigger bonuses. There may be some truth to that.
Last year we saw a spike in Lis Pendens filings for precisely the same theory. We’ll have to watch the November and December filings to get a feeling if this is another Wall St accounting trick of holding back what they can, and thus the October spike, or if this is a long-term trend. If this is a long-term trend, then it will stall increase in prices. If this is merely a short-term blip like last year, we could see fewer bargains and more actions from northerners fearful for missing out on one of the best buying opportunities in awhile.
Just like back in 2005, you cannot calculate the absolute top of the market until it’s in your rear view mirror. Timing the bottom of the market is much the same way, and in fact we’ve seen a bottom already in certain segments. The entire market doesn’t always move in unison.
Our advice to buyers is simple. Regardless of whether this is the absolute bottom, we’ve already seen the bottom, or we have a little bit more to go, prices are bargains right now. You may not want to miss this general time period, because one day soon we may look in the rear view mirror and kick ourselves for missing the buying opportunity of a lifetime. All the bank’s misery and misfortune can now become your gain. Somebody is going to capitalize on this misfortune. Why not you?