Seems everywhere you turn there’s another negative story about the SW Florida real estate market. Our market certainly has its challenges, and we’ve been quick to point out that the 2007 market is nothing like the 2005 market and sellers better be prepared to price accordingly. Each month we present factual numbers on closings, pendings, inventory levels, showings, and other market conditions. Not all these facts are pretty, and some have been downright gloomy at times. We’ve also pointed out some positive things about our market. We’re free to report the good and the bad. We’re not tied to any outcome, as the market will be what the market will be. Our predictions have always been based on fact and experience, and we’re flexible in that we can change our opinions as the market changes.
Take two recent News-Press articles for example. More bad news for SW Florida on Sunday June 24, 2007 and today’s article Local housing sales bleak. Both experts cited a report released June 20 and featured in the News Press entitled Housing faces 2-year fall. If these three articles published by the News Press aren’t enough to depress you, I don’t know what is. And if I were a buyer reading these articles, I’d be too scared to buy anything around SW Florida for the next 2 years, and I wouldn’t be alone. Articles like this destroy buyers confidence, and Realtors and sellers alike wonder why so many are on the fence and unwilling to buy.
From Hovanian’s perspective, Fort Myers is probably the worst housing market in the country. Never mind the fact that First Home sold thousands of homes to speculators looking to do a qucik-flip, and priced out the very people that built the company into what it was in the first place. First Home started as a low-end builder catering to first time home buyers. They got away from what their original mission was when everyone involved saw green dollar signs. The owner, Pat Logue, reportedly sold the company for $900 Million dollars to Hovanian Enterprises. That’s a lot of dough, and Hovanian expects a return on investment. Instead they have serious problems from speculators who closed the first part of a construction loan but are having problems closing the back-end, which puts First Home in jeopardy because there are a lot of final draws sitting out there. Word on the street is there are about 1,600 First Home homes coming out of the ground that are in trouble, and that’s a lot of money. While this number cannot be verified, and certainly not all are in trouble, whatever the number is presents a huge problem for Hovanian. They paid too much for a company that was inflated, and inherited legal troubles and shaky speculators unwilling to close. Put all that together, and you can see why they think Fort Myers is the worst market in the country.
As to why the PMI article is being relied upon as fact is a surprise. We found the article to be based upon old information and doesn’t take into account that our market has already reacted and moved significantly in price, and uses factors that are not as relevant to our market.
Median income relative to median sale price is often quoted by these articles. We argue this isn’t as relevant here in SW Florida as we have many 2nd homes here, and some retirees. 2nd homeowners buy nice homes that impact median price, but their income is not factored in because they don’t live here. Secondly, retirees move to SW Florida to enjoy the good life, and we do have a high quality of life here in SW Florida. Retirees save their entire life, and often pay cash for their last or 2nd to last home in life. They often don’t have the income they had while they were working, but they have accumulated significant wealth and assets. They buy homes here in SW Florida, but don’t always contribute as much to median income like they once could have while they worked. This is precisely why the ratios studies like this use to prove whether a market is properly valued (median income/median price) simply isn’t as relevant to this kind of market. read entire Blog article on why we feel this study is useless.
Now for some facts that haven’t made the newspaper. Median home sale prices have been very stable to upward trending for the past 6 months. See SW Florida Real Estate Month Over Month Prices. You might also find interest in SW Florida Real Estate Prices 2005-2007 to see how prices are doing by month compared to last two years. Notice the stability in prices in 2007? Have you seen that reprted recently?
We would like to see transactions pick up the pace. See SW Florida Real Estate Homes Closed 2005-2007. Property tax reform could help in this area as the demand from this segment of the market has been taken out of the equation by the tax inequities of our property tax system. Some of that was fixed and awaiting Florida voters votes on January 29, 2008.
In the past week the Ellis Team has placed several listings under contract. Our buyer specialists have written several contracts and they’ve been accepted. We’ve noticed an up-tick in showing activity. Internet traffic to our real estate websites has increased significantly in recent weeks. We’ve sold homes to investors coming back into this market. Not speculators, but rather long-term investors who see real value now. When real investors start seeing value it is a sign that we’re on the last legs of this market correction.
Sales results are usually based upon your attitude. If you’re not doing well in your business, it tends to skew your attitude towards the market. Our attitude is the market is whatever it is, and we find ways to make things happen whatever the conditions are. We’re not afraid to tell it like it is. We’re not reporting good things because we need a sale, and we’re not reporting bad things because our business is down and it’s easier to blame the market than look at what we’re doing.
We just think it is time both sides get reported and that along with the bad news everybody is dreadfully aware of, there is also some good news and some positive things going on out there, and people shouldn’t lose confidence just because every other day there is bad news and quotes about how awful the SW Florida real estate market is and how bad they expect it to be for some time to come. There’s a herd mentality going on, and not all news is bad. We also think the News Press would benefit by changing their experts up from time to time, or at the very least adding moe experts to counter-balance the one-sided story being told.
The Ellis Team was the first to report the market was set to take-off early in the 2000’s when many didn’t see it coming. We were the first to burst the bubble on TV in 2005 when everyone else was saying this market is a run-away freight train and you can’t stop it. We were also the first to inject positive signs back into this market in 2006 and 2007. We have seen pockets of strength. Will we always be right, of course not. Do we have to be right, of course not. Do we mind presenting both sides? No, and we think this market could use just a little bit more of both sides, otherwise the doom and gloom can be a self-fulfilling prophecy.
We don’t always report positive facts. We do present both sides though, and if you’d like to continue to receive both sides, be sure to listen to our weekly radio show "The Future of Real Estate" or subscribe to this RSS feed.
Also, check out our recently updated website.