Monthly Archives: February 2021

National Housing Supply Shortage Predicted Years ago

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One of the things we have admired about Gary Keller, founder of Keller Williams, was his ability to see and predict the future.  Gary does not see himself as smarter than everyone else but rather a student of the industry.  He looks at life and business with questions, and it is these questions that bring him and the company clarity.  The national housing supply shortage was predicted years ago by Gary, simply by studying the numbers.

National Housing Supply Shortage

Back in 2005 and 2006 we had an over-supply of homes being built.  We had a false sense of security about the housing market, and many people knew it.  Brett reported in 2005 the SW Florida real estate market was overbuilt.  We simply did not have enough demand.  We had flippers selling to one another, but not enough end users.

National Housing Supply Shortage

Today we do not have that problem.  In fact, it’s the reverse.  We have strong demand and not enough inventory.  Builders and banks were skeptical after the housing crisis in 2006 and held back.  As you can see from the graph, we had deficit home building starting in 2008 and 12 years later we are just now getting back to normal.  However, the damage was done and now we have a different crisis of sorts.  We have a national housing supply shortage.

Few places is it worse than SW Florida.  SW Florida has strong demand from northern states who have suffered from COVID-19 lockdowns and high taxes.  People are flocking to Florida in droves.  We don’t believe this is going to change.  The pandemic has taught us that people really can work from anywhere.

If you could work from anywhere, would you work in a high tax state?  Would you work in frigid cold temperatures?  Would you work in a big city?  The answer for more and more people is no.  They would prefer working and playing in Florida.  When you hear government talk about travel bans from Florida, they’re not really talking about Covid-19.  Transmission rates in Florida are nothing spectacular.  This isn’t about new strains either, as the new strains are or will be everywhere by March.  This is about protecting tax bases in other states.

Politicians are afraid because high tax states like California, Illinois, New York, and New Jersey have budget shortfalls.  They simply have more bills and unfunded liabilities than income and if their top wage earners leave it puts more pressure on the people who are left.

Demand Outpacing Supply

This article is not about politics.  It is about math.  The simple math tells us more people are coming to Florida and will in the future.  The trend started years ago, and 2020 sped things up.

We are going to have to build our way out of this.  If you read this article frequently, you’ll know that we talked about builders shutting down or slowing new home sales.  They simply cannot keep up.  This past week we heard of a builder refunding buyers deposits and raising prices $70,000.

New home construction costs are going up.  Builders are raising prices.  They must.  Resale home prices were rising too, but they were limited because if they got too high buyers would just buy new construction.  When new home construction prices rise or slow down, it throws buyers back into resales.

It’s getting rough out there.  Realtors say it’s a war zone out there.  We are not making light of actual war, but it is a fight.  Buyers are in combat with other buyers competing for the home they want.  Sellers, this is the best market we’ve seen for you in 30 years+ years.

Would You Sell if We Had a Buyer for Your Home?

If you are thinking of selling, please call Brett or Sande Ellis today 239-310-6500 or visit www.SWFLhomevalues.com for a free estimate of what we could sell your home for fast.

If you are a buyer, the Ellis Team knows where the inventory is.  It is limited, but we know how to find it.  We feel like a fishing guide where fisher men and women hire us to use our secret fishing hole. We know where the secret fishing holes are, and we can help you hook ‘em. Our fish finder can be found at www.LeeCountyOnline.com  It will tell you where the fish are in real time.

Good luck and happy home fishing!

Lee County Home Sales Outpace Available Listing Inventory Year to Date

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Lee County home sales outpace available listing inventory in Cape Coral year to date and it is only February 10 as we write this article.  The numbers in Fort Myers and all of Lee County tell a similar story.

Lee County Home Sales Outpace Available Listing Inventory

Is it possible to reach zero inventory?  We believe the answer is no, just like we will never see zero unemployment, for a variety of reasons.  Some sellers will never sell no matter how hot the market is, and some people will never get a job no matter how good the job market gets.

Lee County Home Sales Outpace Available Listing Inventory

We are at or near 1 month supply of inventory in several price ranges.  In my 31+ years of selling real estate in Lee County I have never seen this before.  To make matters worse, builders are turning on and off the building spigot.  We covered that extensively in last week’s article.

Where will inventory come from?  Buyers are still moving to Florida in droves from New York, Illinois, California, and other states.  Demand is not going away.  We have pressure on the market.  Not every buyer is going to get a home.  Only the buyers willing to step up and win the game are securing homes.

Many Realtors are asking, how low can inventory go?  We have been watching inventory draw down for the better part of two years, and now it is getting critical.  We have a message for both buyers and sellers.

Sellers

Sellers now is your time.  You are in the driver’s seat.  It has never been more fun to sel a home than right now.  If you are priced and marketed correctly you will have multiple offers to choose from.  The agent you hire to represent you will make all the difference.  Choosing the wrong offer can cost you, just like choosing the wrong agent.  If you have questions about how that is possible, talk to Brett or Sande Ellis before you list, and we will talk about that.

Choosing the wrong offer is just as bad.  If today you knew the offer in hand would not close, would you take the offer?  Of course, you wouldn’t.  This is another reason why hiring the right Realtor with experience matters.  Experience is the ability to see the future because the agent has been there before.  The Ellis Team has closed over 5,000 homes, so we have seen some things.  We have that Spidey sense because of experience.

Buyers

Buyers, you are in competition with all the other buyers.  Forget about trying to out negotiate the seller.  You will out negotiate yourself right out of the deal.  In a balanced market where you are on equal footing, it is a different story.  This is not a balanced market.  You must play the game to win, or you are going to lose.  This may not matter if you do not really need to buy and you are comfortable in your current housing situation.  If you need to buy, get comfortable being uncomfortable. You need an agent that knows how to win.

Back to Sellers

Do you know what your home is really worth today?  Is there a number at which you would sell?  What if your home is at that number and you did not realize it?

Call Brett or Sande Ellis 239-310-6500 or visit www.SWFLHOMEVALUES.com to get an instant value.  The best part is the system will email you your home’s value every month as it changes.  You will know when your home finally hits your number.

Good luck and let us know how we can help you in this market.  Experience wins.  We can help you with that.

Zillow buys ShowingTime and what that means for the industry.

Home Builders Halt New Construction Sales to Catch Up

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We have seen several home builders halt new construction sales for several reasons.  The two major reason are costs and quality control.

Home Builders Halt New Construction Sales

Costs are rising rapidly.  For instance, lumber costs have skyrocketed recently.  I found an article online that said the lumber price spike has added about $16,000 to the typical home nationwide.  Lumber is just one component in a home.  Home builders are literally outselling what they can build in SW Florida, and they must be careful.

If you outsell what you can build, it adds to the build times.  As you add to the build time, there is more chance for increased costs.  In a hot market you would hate to contract for a home and lose money on it by the time you get it built.  Even if they do not lose money, they want to maximize profit.

Homebuilders Selling Too Fast

One homebuilder said they were selling a home every 50 minutes.  We know of several builders locally that have limited what their sales agents can sell.  These limits can change daily.  Overselling is bad for two reasons.  You do not want to set the expectation it will take 6-9 months and deliver the home in 18 months.  Customers will not like that. Secondly, they do not know what costs 18 months from now will be.  Costs are going up, so they need to raise the home prices to cover those costs.

When shopping for a new home it pays to work with a Realtor that knows who can build and where the inventory is.  Occasionally new home sales fall out and the buyer cannot close.  If you work with an experienced Realtor with connections, you may find out about these homes first.  If you’re late, you’re last.

Resale Market Hot

The resale market is still a place to keep an eye on too.  New resales enter the market daily, but not enough to satisfy demand.  Speed is the name of the game when it comes to securing a new or resale home.  Make sure you are pre-approved for a mortgage.  If it takes you a day or two to get pre-approved, you have already lost.  Do that first before you go home shopping.

Remember, you are not negotiating against the home seller.  Your competition is all the other buyers shopping to get the same home you are looking at.  Structuring your offer to win is the key.  This is where an experienced agent can help.  What seems like good terms to you may not be the best offer to the seller.  An experienced agent knows how to make your offer look stronger.  Price is just one factor, and you can only bid so high.  There are plenty of other factors along with price that can make or break your offer.

Sellers Pay Attention

Sellers, it is time to pay attention!  There has never been a better time to sell your home.  I just put my own home on the market.  I am taking my own advice.  There is more demand than there is supply.  Buyers are forced to offer full price or more in many cases to win a home.

As builders raise their prices it will help pull resale home prices up with it.  We have seen home builders increase their prices over $100,000 in some neighborhoods in the past few months.

Interest rates are low. Demand is high.  If you are thinking of selling, call Brett or Sande Ellis 239-310-6500.  For a free instant value of your home check out www.SWFLhomevalues.com.  Not only will you get an instant price, our system will also email you each month your home’s value change in value.  That is a handy tool in this market.

If you are buying, go to www.LeeCountyOnline.com  It is updated in real-time which means you will have the best data.  Remember, speed wins in this market.

Good luck, and Always Call the Ellis Team at Keller Williams Realty with your real estate needs!

You’re Not Going to Believe This

New Listing in Reflection Lakes

13855 Bald Cypress Cir

Lakefront Home in Reflection Lakes

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Real Estate Sales Price Increased 20.2% in Last Year

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Official Lee County real estate sales price statistics are out, and it reveals a 20.2% increase in the last year.  Median sales price rose from $262,000 December 2019 to $315,000 December 2020.  Average sales prices show an even greater gain.  December 2019 average sales price was $346,857 compared to $455,685.  That is over $100,000 gain and a 31.4% increase.

real Estate Sales Price Increased 20.2%

The rate of gain is not sustainable.  Do not expect prices to rise 30% year after year.  There is room for further price gains, but not at that rate.  Low interest rates are helping buyers afford more home.  High interest from out of state buyers is also fueling demand.  This trend picked up 4 years ago and we expect that to continue.

Florida a Work From Home State

Covid-19 has taught us much of America can work from anywhere.  With that being said, many are choosing to exit big cities and work in less crowded areas with better climate and lower taxes.  Florida stands out as an excellent choice.  I read an article yesterday that showed Florida is now the most attractive state for net migration from other states.

Fort Myers was also named the fasted growing city in America by Business Insider.  The Fort Myers/Cape Coral area has been undervalued for years.  If you go back and read our past articles, we talked a lot about Florida having 67 counties, and two saw price gains below the state average.  Those two counties were Lee and Martin counties.  Eventually this equalizes, and the world has taken notice.  If you are an out of state buyer looking for sunshine and a nice place to live, you are not necessarily tied to one area.

Naples and Bonita have always been expensive compared to rest of Lee County.  I remember the day when Bonita was not expensive, but recently it has been as growth filled in.  Growth is marching right up the coast and now Fort Myers is the bullseye.  Therefore, we are seeing price increases greater than some areas and it will continue.

Excellent Buys if You Know Where to Look

There are still some excellent buys out there, both in resale and new construction. We need more new construction to help with demand.  We are seeing builders raise prices dramatically on lots, home construction, and pool costs.  Some of that is demand, and some is increased costs for lumber and supplies.

New construction prices rising dramatically will help pull resale prices even higher.  When new homes go up $100,000, resales follow.  We expect 2021 to be another great year, but some buyers are getting priced out of the market.  The market does not care who buys the home.  An out of state buyer with more money may be able to pay more than a local buyer.

We are seeing buyers having to adjust where they want to live as some are getting priced out of their desired neighborhood due to real estate sales price increases.

Getting Top Dollar Not Easy For Everyone

We are also seeing For Sale By Owners giving up and hiring Realtors.  Getting top dollar is not easy if you do not know how to reach today’s buyers and you do not know how to close the transaction.  Anybody can find a buyer, but can you find many?  Today there is typically more than one buyer for every property, you just have to find them.  When you have more buyers to choose from, you will get a better price.

An experienced agent also knows how to select the best offer.  It’s not always price.  We are looking for the buyer most likely to close.  If you have questions on that, reach out to Sande and Brett Ellis at 239-310-6500

Some people like our Free Instant Home Price Evaluator. If you are thinking about selling, we can validate the price and make sure it is accurate.  Prices are changing by the week, so do not leave money on the table.  Always call the Ellis Team at Keller Williams Realty!