As you can see from the attached chart, the percentages of sales that are distressed are rising once again. This isn’t necessarily a bad thing as we believe banks should actively work with sellers to allow short sales rather than going through an arduous and costly foreclosure process that ties the home up for months or years. If the homeowner simply cannot afford to stay in the home and all other realistic options have been exhausted, banks should assist in allowing current homeowner to sell to someone who can afford and wants to be in the home, and everyone wins including the neighborhood.
Official sales numbers will be released after we write this article. Our internal market research suggests sales will fall in July compared to June by about 216 +/- homes and median prices will fall slightly as well. This may be a function that foreclosures made up a larger portion of the distressed sale pie than in previous months, signaling short sale percentages declined versus foreclosures.
Banks are beginning to release more foreclosures as they’ve turned a corner in the legal battle when they went back and cleaned up the process to file foreclosures. We all knew there would be some pent-up foreclosure supply, but nothing along the lines of 2008-2009 foreclosure filings.
Cape Coral saw almost a 5% increase in distressed sale percentages while Lehigh Acres was up about 3%. Overall sales were down in Lee County, but the breakdown of the sales was leaning more towards distressed sales. County wide distressed sales equaled 48.82% of all single family home sales in July, up from 44.57% in June.
Contrast this with listing inventory in Lee County and you would think there would be upward price pressure as inventory levels dwindle. It’s fascinating to watch the economic dynamics in play. A similar analogy might be predicting hurricane’s forecast trajectory plot and intensity. A storm can be influenced by dry air, low pressure, ridges anticipating forming at a certain time and point, and so forth.
Forecasting the SW Florida housing market has similar variables influencing the market. We have banks processing foreclosures as fast as they can, banks willingness to accept short sales, traditional sellers moving up, down, or not at all depending on how much they owe and their job security, and the overall job market. Are jobs moving into the area or out of? When will the economy improve? Interest rates and insurance costs also influence affordability and motivation for buyers.
Predicting the housing market would be so much easier if you could accurately predict each individual variable. Since we cannot, all we can do is monitor local and sometimes world events and report on how they are affecting the real estate market. In past articles we’ve talked about the effect of United States debt on interest rates. We’ve talked about the price of oil’s effect on the economy, and housing supply issues.
As we enter an election year, hopefully the focus will be on the economy and jobs, and if Washington gets out of the private sector’s way and allows it to grow, maybe, just maybe, we’ll see a positive influence on several variables that influence our local real estate market.