Low housing inventory levels in SW Florida are driving prices upward. Buyers struggle to find available homes in their price range and it is happening across the board.

Typically, only a few price ranges get hot when the market moves.  Later, more price ranges may catch fire, or the market may run out of steam before all price ranges are affected.  What we are witnessing here in Florida is an all-out assault on inventory levels, and it is affecting pricing.

Low Housing Inventory Levels Driving Prices Upward

Low Housing Inventory Levels Driving Prices Upward

If a contract falls out for some reason it may be sad for the seller, but in many cases, we put property back on the market and raise the price and it sells again.  In the time the home was tied up and off the market it still appreciated.

Some buyers get scared and begin to doubt their decision after they were the winning bidder.  Perhaps they question if they paid too much, or they have unrealistic expectations about the home inspection.  Others get nervous about HOA costs or insurance costs and find reason to talk themselves out of buying. For whatever reason, they panic and walk.  Buyers need a reassuring hand to tell them it is OK to buy.

What these buyers do not realize is when they walk there are dozens of other buyers right there to scoop it up.  Buyers from last year are kicking themselves they did not purchase and are amazed at what has happened.  Their agent probably told them we had a great market.  Inventory levels were going down before the pandemic hit.

Record Low Supply

Back in October 2020 our months supply stood at 2.15 months.  We had never seen it that low, and yet we knew it could go lower.  Today it stands at 1.77 months.   Today everything below $600,000 is below 2 months supply.  Back in October it was everything below $300,000.  Buyers are being forced to go higher or not get a home at all.

Interest rates are expected to stay low through 2023.  There is still room left for more appreciation.  Sellers should be cautious though, because holding out for higher prices on the selling end may cost you on the buying end.  If what you are selling today is going up in value, what you plan to purchase tomorrow may also be rising.

Florida is sitting in a good spot.  Not only do we have sunshine and a great economy, we also have low taxes and freedom.  Businesses are not shut down.  The vaccine is out and relief to people’s health is on the way.  What can never be fixed are all the business that shut down and closed forever.  Many businesses up north are shutting down and opening down here before they are bankrupt forever.  Florida is gaining residents from northern states, and it is adding to demand with little supply.

We see the Florida real estate market poised for another great run in 2021.  More sellers may decide to list and take profits, and that would be a good thing.

If you are a seller, we have some resources for you.  We have neighborhood market reports that will show you all the properties active, pending, and sold along with price, $/Sq Ft, and photos.  Yes, photos of the sold homes too, so you can see how your home compares.

Instant Price Analysis

You can also check out www.SWFLhomevalues.com It is a fast and Free way to get your home’s value.  While it is fairly accurate, we like to validate it in this fast-changing market.  Sometimes even the computers cannot keep up with the market. Low housing inventory levels might mean your home is worth more than you think.

If you are looking to buy, www.LeeCountyOnline.com is your best bet.  It has all the homes listed, and it is updated in real-time.  That is important in a fast-moving market like this.  You want to beat out other buyers to hot new listings, or listings that suddenly come back on the market.

Always call Sande or Brett Ellis 239-489-4042 Ext 4 for selling advice.  We’d love to help you.  We have a team of buyer specialists if you are looking to buy who can help guide you.

Good luck and Happy Holidays!

See last week’s article “Confusing Statements Lenders Make to Buyers and Agents

The other day I received a call from a lender saying “Good news, the loan is approved.  We are now ordering the appraisal.”  If they left the same message for the borrower, they might think the loan was a done deal.  The truth is, the loan has only begun, and it is confusing. Let’s talk about confusing statements lenders make to buyers.

Confusing Statements Lenders Make to Buyers and Agents

Confusing Statements Lenders Make

Just recently a buyer quit her job because the lender told her she was approved for the mortgage.  On the day of closing the lender reverified employment and found out she left her job 3 weeks ago.  Her family lost the house and has no place to live and the seller must put their home back on the market and find a new buyer.

These are true stories, and they happen more often than you think.  Real estate agents can tell you stories about deals they’ve lost because the buyer did something after pre-approval to cause their loan to be denied.

When you hear the words loan approved, or clear to close, the deal is not closed.  Many lenders have a final compliance department that catches new credit items, or employment issues up until closing.  I even saw a loan pulled after closing.  The buyers had clear to close and closing instructions were sent to the tile company.  The wire never arrived from the lender because they found something right after signing.

10 Helpful Tips

  1. Do not buy a new or used car until your home loan is closed
  2. Do not purchase furniture for the new home or home improvement items on credit card prior to closing on your new home
  3. Never co-sign a loan if you plan to buy in the next few years, and certainly do not do so while you are purchasing a home
  4. Keep credit card balances low through the closing
  5. Do not cancel credit cards unless the lender asks you to. Believe it or not, established available credit can help you
  6. Always pay your credit on time. If there is a 15-day grace period, that is not considered on time.  Pay your bills by the due date, not by the penalty date
  7. Be careful with forbearance. Even if politicians say using it will not hurt your credit, be cautious, and only use that if you really cannot pay your mortgage
  8. Do not buy items on impulse simply because the store will finance it for you. If you cannot afford to buy it now, do you really need it? The item you buy today may block the big things you need in the future
  9. Do not switch jobs just before purchasing a home, or during the process
  10. Do not purchase a home while going through a divorce unless your attorney says it is ok

Loan Is Not Done Until Funded

By no means is this a complete list.  For some reason lenders terminology has changed over the years.  Loan approvals have so many conditions they are not really approvals until all the conditions have been removed.

We mention these 10 items because we have seen loans denied or deals fail from all 10 of these items.  Agents assume all buyers know these things, and the truth is they do not.  Some inexperienced agents do not know these things.  How could they?  You only learn through experience.

Remember, there is no substitute for experience.  Always hire the most experienced Loan officer and the most experienced Realtor you can find.  Experience can help you avoid costly mistakes on both the buying and selling end.  If you think hiring a professional is expensive, wait until you hire inexperienced people.  That gets expensive.

To search the MLS like a pro, check out www.LeeCountyOnline.com It’s better than the national sites and has all the listings in real-time.  Or call the Ellis Team at Keller Williams Realty 239-489-4042.  Our team will be glad to help.

Many properties listed today in SW Florida are receiving multiple offers.  How would a seller know which offer to take?  Today we offer our selecting best multiple offer tips for sellers.

Selecting Best Multiple Offer Tips From a Real Estate Pro

Selecting Best Multiple Offer

It is logical to assume the highest price would be the best offer, but that may not always be the case.  Of course, a seller wants to maximize how much they can get out of the home.  Of equal if not greater importance is the likelihood the buyer can perform.  It does no good to accept a higher offer that is unlikely to close.

It is important that the listing agents knows all facts about the home.  For instance, some homes may not qualify for an FHA or VA loan.  There could be some insurance uses, or property condition issues imposed by the lender.  Some buyers may not be able to cure deficiencies placed by their lender, and it has nothing to do with the buyer.

Purposely Bidding Up Home to Win Negotiation

Some buyers purposely drive up the price with their offer banking on the fact the lender will knock it back down with the appraisal.  If you are selecting best multiple offer based solely on price, you might be surprised later if the home does not appraise.  A buyer may have the option of buying the home above appraised value provided they are putting down enough to cover the difference for the loan they have applied for.

For instance, let’s say a buyer is putting 50% down.  Chances are they are going for a conventional loan needing only 20 or 25% down.  Because they are putting more than that down, they already have the difference if the home does not appraise by a little bit.  Now if the home only appraises at 50% of purchase price you would have a problem because the buyer would not have anything down.  Banks base their loan to value ratio off the value, not the purchase price.

Obviously, an all-cash buyer does not have appraisal worries, unless they add an appraisal contingency.  In that case, the home must appraise for purchase price or buyer is not obligated to complete the purchase.

Remove Appraisal Contingency

Back in the foreclosure crisis buyers were bidding up foreclosure deals and getting financing for the new purchase.  The seller (foreclosure bank) wised up and started adding language that if home did not appraise the buyer would be responsible for the difference.  This basically stopped buyers from outbidding each other just to score the deal.  Most of those buyers could not pay the purchase price because the new bank would not lend on it.  The seller would have been better off taking a lower bid with a buyer that could actually complete the sale versus buyers that could not.

The condition of the home may influence which buyer’s offer to take.  Knowing that a certain type of loan may not accept certain property conditions may save you from going down the road with the wrong type of loan.  All of this takes knowledge and experience, and therefore it pays to hire the best Realtor you can find.  Hiring the wrong Realtor can cost you thousands of dollars, even in a hot market.

Full-time agents that have thousands of deals for experience have seen a thing or two, and therefore know how to deal with issues before they become problems.  And when problems do arise, and they inevitably will, possessing that knowledge and experience pays off in solving the problem.

Bottom Line

The bottom line is an experience agent is more likely to get you top dollar and keep your deal together than an inexperienced agent, no matter how much determination they have.  There is just no substitute for experience.  This is not the market to experiment with an inexperienced agent.

If you have a home to sell, call Brett or Sande Ellis 239-489-4042 Ext 4.  Brett and Sande have sold over 5,000 homes, and we know a thing or two.  If you are looking at purchasing, our team of buyer agents work directly with Sande and Brett.  Our knowledge helps you structure the best offer.  Buyers can search the MLS at www.LeeCountyOnline.com   Sellers can visit www.SWFLhomevaules.com to get your home’s value online instantly.  Let us know if how we can help you!

It is no surprise to anyone buying or selling in SW Florida that October real estate sales prices were up nearly 20% year over year.  We have written a great length each week about the factors influencing the market.  Let’s look beyond the headlines and unpack what is really going on and see if we can get a gauge into the future.

October real estate sales prices up nearly 20%

Median October real estate sales prices were up 18.8% while average prices were up 22.6%.  That is phenomenal growth. I would be a bit skeptical if just the average price was higher as a few high dollar sales can skew that statistic.  The other thing I look at is there a trend.  This was not a one-month phenomenon.

This is the 3rd straight month we have seen 20% gains in average price.  It is also the 3rd straight month median price has risen 16.5% or more.  That is telling us this pricing pressure is real and demand is truly outpacing supply.  This is not a joke.

New listings were down 2.5% in October compared to last year while new pending sales were up 38.8%.  This is putting a further drain on available inventory and making it harder for buyers.  Buyers are coming to town and finding few choices in their desired search for ranch properties for sale. In many cases buyers are having to settle just to score a home.  It does beat being homeless and someday down the road they will be able to trade for a home they like better.  The goal today is to find a home that at least suits their basic needs.

Pending inventory was up 61.9% in October.  This is an indicator that closed sales in November and December will be high.  Even though sales were down 14.1% in April and 39% in May, sales are up 8.3% for the year.  If we have monster sales in November and December, we could be in for some record numbers.

Perhaps next week we will dive into inventory by price range.  Suffice it to say that all price ranges today have less inventory than last year.  Every single range.  Let that sink in.  This market rally is across the board and not limited to hot spots.

The Ellis Team has done an excellent job counseling buyers what it takes to win a bid for a home.  Buyers do not want to pay more than they must, but they also do not want to keep missing out on homes either.  Getting their 4th or 5th choice is not as much fun as getting their first choice.  The sad thing is because all the buyers are clustered around the best listings, when one goes, they all move to the next best listing.  The irony is, sometimes buyers end up paying more for #2 than they would have for #1, because now there is one less choice once #1 goes off the table.

Working with experienced agents like the Ellis Team at Keller Williams Realty not only can help guide you into scoring the best home for you, but we can save you money as well.  We have access to zero lender fee loans that may save you thousands of dollars cash at closing.  These savings require less money at closing, or they allow you to buy more home because the cash outlay is less.

Talk to a friendly buyer specialist on the Ellis Team and ask about savings we can pass along to the buyer. To search the MLS like a pro, visit www.LeeCountyOnline.com  It has all the listings, and it is updated instantly so you will always have the latest listings.  In a market like this, speed and accuracy wins.

Sellers, we have good news for you.  Brett and Sande Ellis are experts at marketing your home to local and out of state buyers.  This creates more demand for your home and in turn gets you a better price.  If you would like to talk to us about selling a home, call Brett or Sande Ellis 239-489-4042 Ext 4. Or visit www.SWFLhomevalues.com

Always Call the Ellis Team at Keller Williams Realty.  We love helping people, and market knowledge matters more than ever.

Are you ready for a career change? Find out of a career in real estate might be right for you.

Recent closed home sales have housing market indicators flashing full speed ahead, so what could cause that train to slow?  One of the best ways to judge a market is supply and demand, and yet supply is the one thing that may hold this market back.

Housing Market Indicators Flashing Homes Closed
Homes closed in SW Florida real estate market through October 2020

Housing Market Indicators Flashing

As you can see from the homes closed graph, 2020 home sales are outpacing the previous four years.  The thing is, the previous four years were good years in real estate, so 2020 is shaping up to be a phenomenal year.

What may limit a record number of home sales in 2021 could be supply.  If we do not see more listings entering the market the SW Florida real estate market will simply run out of fuel.  We believe however that more sellers will decide to list their home in 2021 than 2020, for a few reasons.

More Listings Coming?

The first reason is profit taking.  Home prices are up 18.8% over last year for October.  That is an unbelievable month over month price gain.  Each year sellers assess their situation.  One trend we are seeing are rental homes suddenly becoming available.  Typically, the landlords have not raised their tenants rent like other landlords because they have had years long tenants. Sometimes it is hard to raise the rent on longtime tenants, to the next easiest thing to do is sell the property.  Either way the tenant ends up moving unless a new buyer wants to keep a tenant.

The second reason we may see more homes on the market in 2021 is covid-19 relief.  Many sellers did not want people in their home in the middle of a pandemic.  As therapeutics and vaccines are released, this may change.  Whoever thought herd immunity is a term we would use in real estate or any other faction of society?

As we approach herd immunity, more people will be comfortable returning to a normal life and buying and selling real estate is a part of that return.  Some people put off their life plans for a whole year.  This may add to pent-up supply hitting the market in 2021.

Interest rates are low and should remain low for the balance of 2021.  We may have enough housing supply to get us through a few more months.  Last month we had 1,593 new listing come on the market, while 1,770 went pending.  We have a little over 2 months supply of inventory which is as low as we have ever seen it.

We believe we will see more listings enter the market in January, but who knows for sure.  Once Covid numbers abate and as the vaccine is released, we think more people will be comfortable placing homes on the market.

Sellers Looking for Top Dollar?

Sellers wishing to sell for top dollar may want to call us before other sellers enter the market.  Supply is limited and demand is high.  We have buyers coming here from out of state markets where their business and life is restricted.  We know how to market to these buyers and achieve top dollar for our sellers.

Nobody can time the market perfectly. If we could venture a guess, selling before May 2021 may be a great idea.  Many experts are predicting herd immunity by May.  If our theory is correct about sellers holding off for Covid reasons, this timeline makes sense for maximum leverage.  Of course, economic factors will be in play, a new administration taking office, new tax policies, etc.  Many things can affect the real estate market and the economy.

The bottom line is right now is a great time for home sellers.  We think it should last awhile as interest rates are expected to be low through 2021.  As usual, we will keep watching housing market indicators for you.

To find out your home’s value go to www.SWFLhomevalues.com or call Brett or Sande Ellis 239-489-4042 Ext 4.

Good luck and Happy Home Shopping!