Many homes and businesses were caught unaware of new zip codes in Lee County Florida.  33912, located in South Fort Myers, has approximately 13,500 residences that split off into two new zip codes, 33966 and 33967 last year.  The postal service will no longer accept the old 33912 on those residences, and mail may be returned as undeliverable.

Lehigh Acres received three new zip codes, 33973, 33974 or 33976.

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.

A recently released index put out by PMI Mortgage Insurance of Walnut Creek CA, which is a national Private Mortgage Insurance company, announced that Naples (Collier County) is the #1 overpriced market in the country, and Fort Myers/ Cape Coral (Lee County) is the #6 overpriced market and prices are the most likely to fall during the next two years.

LaVaughn Henry, director of economic analysis for PMI, said the forecast is based largely on how sharp past price swings have been in a particular market. “Florida’s had a high probability assigned to it because historically it’s had a high price volatility. What goes up will, at some point, come down.”

The issue we have with this faulty report is is the basis for their forecast.  First off, Florida traditionally has not had huge price swings, in fact quite the contrary.  Florida, and especially SW Florida real estate has been amazingly stable for decades.  We just did not see large price swings.  See Year end Price chart for SW Florida real estate prices.  While we saw wild price increases recently from 2003-2005, and some major price decreases since 2005, over time Florida has been one of the more stable markets in the country.  Florida only recently experienced the Flipping Frenzy.

Secondly, just because something goes up does not mean it Must come down.  The SW Florida real estate market was undervalued for many years, especially the Fort Myers and Cape Coral areas.  Waterfront properties in other areas of the state were selling for much more than our area, and without good reason.  SW Florida was discovered.  Eventually land prices will even out across the state, and there will not be large disparities in prices.  Obviously the weather in SW Florida is more tropical than in northern Florida and may warrant higher prices.  We agree that while we were undervalued for a long time, we became overvalued as well.

Thirdly, prices in SW Florida have already come down since 2005 significantly, and the median price has actually improved over 2006 levels.  In fact, the median price has risen 4 out of the last 5 months.  See SW Florida real estate prices 2005-2007 chart.  To say that prices must come down simply because they went up lacks scientific and statistical basis.  It does not take into consideration the undervaluation, or the underlying principles or dynamics of this market.

Was the study wrong?  Only time will tell.  If they are correct on prices it will be by shear luck.  We have many forces in play right now affecting prices.  We’ve discussed at length on our radio show "The Future of Real Estate" and in this blog what those forces are and the impacts they will have on the SW Florida real estate market.  We’ll mention a few of note here.

Property tax reform may go a long way to unlocking a frozen segment of demand.  Many Floridian’s have been shut-out from buying because they’ve been locked into staying in their current homes because of the Save Our Homes Ammendment tax Disadvantage.  If a property owner moved, and even bought a similiar priced property, their property taxes could triple or quadruple in some cases.  There wasn’t much incentive to ever move.  Voters will be asked to approve a new Super Exemption to help out Floridian’s trapped in their own homes by Save Our Homes.

We also have a lot of buyers on the sidelines due to low confidence.  Everytime they pick up the paper or turn on TV some Expert proclaims the market has to drop.  We agree that over-priced sellers need to lower their asking prices if they wish to sell.  What’s not widely reported is there have been a number of sellers who have been successful this year, and that’s because they priced their home At The Market.  The enitire market doesn’t need to fall, only the over-priced portion of the market.

Lenders may face a difficult time for the next two years.  Traditionally lenders are the slowest to move.  When the foreclosures hit the market, buyers get their best deals from sellers who have equity and can afford to sell because they are quicker decision makers.  Lenders react slowly and look at old appraisals.

Recently we’ve been showing properties, and in a certain price range it seems every home we showed was subject to a short-sale with the bank.  The listings agents have had to disclose that the bank will take 6-8 weeks to respond on these short-sales due to the varying departments an offer must go through before acceptance, counter-offer, or out-right rejection.

Lenders may be in for a rough two years as it takes awhile to foreclose on properties, and the legal issues of acquiring back homes partially under construction with liens on them, but the market is recovering and is much more healthy than the banking industry who lent money to investors when they should not have.

Lenders might be better off making predictions about the banking industry’s health, or at the very least, doing their homework before making predicitions about real estate markets across the country.  At least recognize what has already ocurred.  Had this company made this prediction as we did a few years ago, we could give it credence.  Making it now after the fact without sound basis or facts is reckless, but perhaps not as reckless as the lending practices that put some of these banks and PMI companies in the the predicament they are in now.

For buyers, there are some real buys out there.  This is the best time we’ve seen in decades to buy property as there is excellent selection, renewed affordability, and low interest rates.  Many homes are available below re-production cost.  Call us today before you read in 2-3 years from some Expert that you missed the market.

As you can see from the attached chart, the Current Market Index went backwards slightly from May levels.  Inventory levels are dropping, but pending sales levels dropped slightly too, sending the CMI Index higher.

I ran some further calculations to put this market in perspective.  Based upon April closed sales of 573 single family homes, and Condo closed sales of 223 in April, each month only 3.8% of the single family homes are selling, and only 2.5% of the condos are selling.  This means that 96.2% of the single family homes are not selling each month, and 97.5% of the condos are not selling.

There is a market for those wishing to sell, but sellers must price their home at today’s market.  Each seller is in line waiting to check out at the check-out counter, and only 3.8% are getting out each month.  Sellers really need to decide if they want to check out or remain in line.

The good news is if more sellers priced where the 3.8% are pricing, that number would rise as we believe there are more buyers on the sidelines waiting until housing either becomes affordable for them, or until they have confidence it is fairly valued at today’s standards.

The Ellis Team at RE/MAX Realty Group in Fort Myers Florida long ago developed a system that accurately gauges market activity relative to Supply levels, and we deemd this index the Current Market Index.  We developed this index because it helps tell the story of where we are today, not just where we’ve been with closed sales reports.  The higher the CMI Index, the more supply we have relative to demand.

June 14, 2007 Active Pending CMI
Single Family 15,164 1,014 14.95
Condo 8,761 485 18.06
May 17, 2007 Active Pending CMI
Single Family 15,607 1,107 14.10
Condo 9,205 560 16.44
April 15, 2007 Active Pending CMI
Single Family 15,896 1,152 13.80
Condo 9,660 569 16.98

January 23, 2007 Active Pending CMI
Single Family 13,769 1,016 13.55
Condo 9,002 529 17.02

November 27, 2006 Active Pending CMI
Single Family 13,186 1,031 12.79
Condo 8,344 535


As you can see from the charts, showing activity fell sharply from April 2007 levels.  While not surprising, this is the first time we’ve been able to track showing effects directly after season.  It seems the more listings we have doesn’t equate to more showings.  It would be interesting to see how many showings we had when we had few listings.  I’d venture to say many listings had many showings each day, not less than 1 per week as it is now.

Sellers as you could imagine are quite frustrated by low showing activity.  I’ve spoken with Realtors across the county who essentailly tell a similiar story.  With a limited number of buyers, and high inventory, showing activity is down per listing.

Approximately 4% of all homes on the market are selling each month, so sellers must be proactive in pricing their home.  The best priced homes in each market segment are getting the showing, and the offers.  It’s not rocket science.

May 2007 Statistics:

Total Number of Showings February 2007 760
Average Number of Showings Before Selling 6.5
Average number of Showings During 1st Week of Listing .2
2nd Week of Listing .4
3rd Week of Listing .4
4th Week of Listing .2
5th Week of Listing .3
6th Week of Listing .3


April 2007 Statistics:

Total Number of Showings February 2007 889
Average Number of Showings Before Selling 6.3
Average number of Showings During 1st Week of Listing .2
2nd Week of Listing .3
3rd Week of Listing .3
4th Week of Listing .4
5th Week of Listing .2
6th Week of Listing .2


March 2007 Statistics:

Total Number of Showings February 2007 938
Average Number of Showings Before Selling 6.7
Average number of Showings During 1st Week of Listing .6
2nd Week of Listing .4
3rd Week of Listing .3
4th Week of Listing .3
5th Week of Listing .3
6th Week of Listing .3


February 2007 Statistics:

Total Number of Showings February 2007 962
Average Number of Showings Before Selling 5.5
Average number of Showings During 1st Week of Listing .4
2nd Week of Listing .2
3rd Week of Listing .3
4th Week of Listing .3
5th Week of Listing .2
6th Week of Listing .2


January 2007 Statistics:

Total Number of Showings December 2006 945
Average Number of Showings Before Selling 6.0
Average number of Showings During 1st Week of Listing .3
2nd Week of Listing .4
3rd Week of Listing .5
4th Week of Listing .3
5th Week of Listing .3
6th Week of Listing .5

Under a new plan to be unveiled during the June 12 session, Florida taxpayers will save $31.6 billion over the next 5 years.  This is the largest property tax cut in Florida history by far.  There are two parts to the tax relief, statutory and a constitutional amendment.

We have the details now.  First is a detailed letter from Ken Pruitt, President of the Senate and Marco Rubio, Speaker of the House of Representatives to the Florida Legislature.

Lee County looks to have a 7% statutory cut, while Collier County should receive a 9% cut, and Charlotte County will receive a 9.0% cut by statute.  See Goverment Tax Rollback Calculations.  The counties with the highest tax increases per capita over the last 5 years will be forced to cut the most.

We’ve even included the city government tax rollback calculations, and it’s no surprise that Naples and Cape Coral will be forced to cut taxes by 9%.  The cities with the highest per capita tax levies changes over the previous 5 years will be forced to cut the most.  Marco Island and Fort Myers will be forced to cut 7%, and Bonita Springs will be forced to cut 3%  Punta Gorda will face cuts of 5%.

A second part of the cut is that in addition to rolling back property taxes to 2006-2007 levels, special taxing districts and fiscally limited cities and counties will be required to make additional cuts of 3% .  And, there will be a cap on future property tax revenues based on the rate of personal income growth, and new construction to ensure that government cannot grow faster than personal income.

We’ve also included the Florida School Districts future rate cuts.  We’ve been told that even though schools will face a reduction in future property tax revenue, schools should not worry that their funding will be cut.  We presume that the State will fund any loss in tax revenues at the state level.  The plan specifically states that the state will hold schools harmless from these cuts.

Perhaps most importantly will be the $16 Billion tax relief protion of the package which will unlock the prison doors for many Florida homeowners who felt they could not afford to sell because their property taxes woul be too great once they replaced their home in Florida at the new rates not protected by Save our Homes.  “Save our Homes” is replaced with a new “Super Exemption”.  An estimated 73% of homesteaded properties will receive greater benefit under this new exemption.  The average savings of $1,300 in 2008-2009 will be an average 44% reduction.  The program works like this:

Level 1.  Homesteaded property will receive an exemption of 75% of the first $200,000 in value of a home, with a minimum exemption of $50,000 per homestead.

Level 2.  In addition to Level 1, homesteaded properties will obtain another 15% exemption for the next $300,000 in value.

For the minority of property owners who have greater benefits under the current “Save Our Homes” plan, the tax savings and assessment cap will be grandfathered in.

All other existing constitutional exemptions based on special circumstances, including those to disabled veterans, low income seniors, and agricultural lands will preserve their exemptions.

The Ellis Team at RE/MAX Reallty Group, SW Florida’s leading home sellers, announce today that their weekend open houses are now online.  The benefit is now consumers can find locations of our weekend open houses days before they hit the newspaper or radio show, and find out all pertinent details about the home and neighborhood online.

You can view photos, neighborhood demographics, school information, and much more on each of our open houses.  This week we’ve scheduled one open house in Cape Coral on Saturday.

Florida homeowners may be getting closer to receiving real property tax reform this year, as lawmakers have been steadily working on a deal to present during the June 12 special legislative session.  This would be welcome news to all Florida homeowners, and could help bring back the real estate market making affordability an option.

It would also open up many home sales by current Florida residents who feel trapped in their existing homes and financially unable to move because the simple move would tax them out of the opprotunity to improve their home needs.

Lee County Florida Sherrif Mike Scott requested a 16.5% budget increase, citing a dramatic increase in demand at the Lee County Jail and Justice Center, both of which have facility expansions set to open this year.

The county would expect to give him most or all of the request given the additional facility requirements, however the county is in limbo because of property tax reform in Tallahassee by the state legislature.  Counties accross the state are awaiting tax reform which could significantly restrict their budgets.