Monthly Archives: July 2021

Have Real Estate Prices Leveled Off?

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If you look at the graph it would appear that real estate prices leveled off the past few months.  Is that really the case?

Real Estate Prices Leveled

Median and average prices are up 36% in June over 2020.  That is a huge gain and expecting future gains like this is not sustainable.  Let’s dive into 3 key price components to get an idea on where this market is headed.

  1. Most of the price gains you see reported monthly have already occurred. For instance, May’s numbers were up 38.7% over last year. June’s numbers are a continuation of those gains that have occurred because they are year over year, not month over month.
  2. It is not uncommon for prices to adjust backward month over month in June. Traditionally April and May are the biggest price months and prices slip back in summer. It is the seasonality of the market as to when higher priced homes sell in SW Florida.  This graph doesn’t go far enough back to show this.
  3. Listings are on the uptick even though we are still too low. Listing inventory peaked in February 2019 and has been on a steady decline since then. Typically, inventory does not pick up in April, May, and June, but it has this year. Is the increasing inventory enough to make a dent in this market? Not yet, it is still way too low.

So, what can we take from all of this? Prices can continue to gain going forward, but not at the 30% plus rate.  Future price gains depend on listing inventory, interest rates, the economy, and northern states buyers continuing to see Florida as a better alternative to where they are now. We doubt real estate prices leveled off, but gains will be more moderate going forward.

Inventory is Rising

Listing inventory is rising.  Home inventory does not usually rise this time of year, however Covid may have influenced timing is seller’s decisions. Many sellers were prevented from coming to Florida to get their home ready.  Others did not want to sell while they occupied the home during a pandemic.  It is possible Covid put off some sales decisions and altered the timing of when listings hit the market.

June 2021 Listing Inventory Levels

Inventory levels will be something we watch going forward.  It is quite possible all the typical historical seasonality and trends will be off until the economy and real estate market rebalances itself.

Is Now the Time to Sell? 

If you are a seller, now is a good time to sell.  Inventory is rising but not to an extent that will hurt home sellers.  We are still seeing multiple offers on properties.  Buyers still outnumber sellers.  Sellers hold the advantage right now, and it is always more fun to sell when you have the advantage.  When buyers hold the advantage, they do not care about how much you want or need for the home.

Buyers today are not in competition with the seller.  They are in competition with other buyers for the home they want.  When the market turns, the seller will be in competition with other sellers.  Right now, sellers have little competition.

After the Fall, season will be here before we know it.  We do not know what the Covid landscape will look like, which states will be open, or if we will have Covid issues at all.  Right now, we do, and the economy may tighten down again.

We are writing this article before the Fed releases comments from their July meeting.  How the markets react to these comments and the future of interest rates could impact the stock and real estate markets.

If you have contemplated selling, call Brett or Sande Ellis 239-310-6500 and get the facts.  Home prices are going up, but for how long?  If you just want a quick home price for your home, go to www.SWFLhomevaules.com Our online value system will give you a good estimate of your home’s value, and it will email you every month the price changes.  Even if you don’t agree with the actual estimate, you will be able to see which direction the market is moving for your home.

Don’t Settle for Appraised Value

Of course, Sande and Brett Ellis will be happy to visit your home and give you a more detailed value for your home if you would like.  We can show you how our marketing is getting sellers more than the price estimates of their home and how we generate multiple buyers.  Don’t just sell for appraised value when you can get more in this market.  You need the right Realtor to do this. Brett and Sande have over 30+ years and over 5,000 transactions experience, so we know our stuff.

We look forward to helping you!

SW Florida Listing Inventory Rose 11.24% in Past Month

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Good news for home buyers.  SW Florida listing inventory rose 11.24% in the past month.  Buyers cannot rejoice as listing inventory is still low.  In fact, currently we have 1,336 listings in Lee County.  Last year we had 3,044, and that number was low.

SW Florida Listing Inventory
SW Florida listing inventory July 2021

We track the number of listings as well as the 365-day rolling number of homes closed.  Homes closed in the last year were up 2.14% versus last month.  It may take a little while for closings to catch up to the new inventory coming to the market.

It is too soon to know if rising inventory will become a trend.  We have a serious backlog of buyers, and it would take quite a few new homes on the market to meet that backlog.  We are hearing from the Northern markets that inventory is building, and homes are taking longer to sell.

Florida May Buck National Trend

The resurgence of Covid could also affect the market.  We are not sure how.  We have seen interest rates fall in the past few days because of speculation Covid could slow down global markets.

If real estate markets slow down up North, could that trickle down to the Florida market?  It could, but then again, Florida is attracting buyers from other markets.  It is only natural that one day those markets will lose residents who sell and do not replace in their state.  Many are replacing in their home and moving to Florida.

The U.S. economy generally affects the real estate market, but all bets are off now because the markets have not been behaving in a normal way with so many relocating to Florida.  Reasons vary by buyer.  Some choose Florida because it is a low tax state.  Others choose Florida because it did not lockdown like other states.  Still others appreciate the relaxed mask standards implemented last year.

Whatever the reasons, Florida seems to be an attractive place that may drive buyers here for years.  Not all buyers can simply pack up and move.  Sometimes it takes years of planning.  Family could be involved as well as a business.  Once a decision is made, it can take a while.

Has Market Peaked?

 Many sellers ask us when will the market peak?  We believe when June’s official numbers are released, we will see big numbers.  The same holds true for July.  Are there as many buyers bidding on each property?  Maybe not, but each property we list attracts many buyers.  Because inventory is still light, it will be interesting to see what happens next season.

The economy will not hold at this pace either.  Economic numbers released today are compared to last year’s Covid economic numbers. So of course, they will be great.  Economic numbers are expected to taper off as we get into the 1st quarter of 2022.

We see a good housing market in Florida continuing for the next several years.  We should not see rising prices like we have seen recently, but they should still rise.  Inflation will bring about higher costs to build.  Inflation could also eat into buyers spending money, so it is possible interest rates may stay low unless we see runaway inflation.

Nobody wants to see runaway inflation.  Inflation is like a hidden tax.  We will be watching inflation numbers through the 4th quarter of 2021 to get a read on whether it is transitory or real.

Now May be Good Time to Sell

If you are a seller, now might be the time to have a conversation with us about how much we can sell your home for.  While home prices may rise further, we believe we have seen the brunt of the increases.  Call Brett or Sande Ellis 239-310-6500 or visit www.SWFLhomevaules.com to get a quick estimate of your home’s value.

Now might be a good time to capitalize on this market while prices are still going up and before additional inventory hits the market.  It is always fun to sell to multiple buyers than waiting around for a buyer to make an offer.

Good luck and Happy Home Buying and Selling!  Always call the Ellis Team at Keller Williams Realty!

Florida Homes Sold Above Asking Price in 2021

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The most common question we get from buyers is what should I offer on this home?  The most common question we get from sellers is what price do you think I should list my home for? In May, 55% of Florida homes sold above asking price.

Florida Homes Sold Above Asking

In some price ranges as many as 70% are selling above asking price in Florida.  Even the luxury market saw as much as 40% selling over asking price in May.  The numbers are rising.  As you can tell by the graph, there is about a 20% gain in percentage of Florida homes sold above asking price.  Those numbers are progressively growing each month.  This means the market is still gaining momentum.

The numbers are telling buyers that if they want to score a home, they cannot mess around.  This is not the market to negotiate or nickel and dime a seller.  The sellers have the upper hand. Ignoring reality will be a big waste of time.

Top Agents Leave a Blueprint for Buyers

As a top listing agent, we see many offers on our listings.  We give clear instructions on what the seller is looking for and the kinds of things we will be evaluating. When the offers come piling in, it is almost as if the buyer agents did not read any of the instructions. These instructions provide a blueprint for writing a competitive offer. Unfortunately for these buyers, they will probably miss out because their offer is not competitive.

An offer is judged by how well it is written.  A buyer’s ability to close is judged not only by the financial terms, but the language in the contract.  We have talked about how relationships matter in this market.  They absolutely do, and so does the competency of the language in the contract.

If the offer is written sloppily, it is fair to assume that is how the whole transaction is going to go.  If a buyer’s agent does not understand the contract, how are they going to counsel their buyer.  A purchase agreement is like a test.  It is a snapshot.  The offer tells a story.  If the story is sloppy, ambiguous, and does not add up, a top listing agent will sniff that out and the deal will likely go to a better offer.

Best Means Most Likely to Close Near Top End of Value

You have heard of the term Highest and Best.  Highest means highest price, but best to me means most favorable terms and most likely to close.  Best equals confidence.  Am I as the listing agent confident this deal will close?

For instance, it does no good for an FHA buyer to offer above list price with minimal down just to win the bid.  If the buyer cannot cover an appraisal deficiency, they are just trying to score the deal on price alone.  The listing agent should know the price will get kicked back down to appraisal value, which is not always actual value.

Why not take the best offer upfront?  Experience matters!  Experience matters when you hire a listing agent, and it matters when you hire a buyer’s agent.

For a seller, taking the wrong offer can cost you tens of thousands of dollars.  Many sellers sell their home 3-4 times because they take the wrong offer.

For a buyer, writing the wrong offer will cost you a sale.  There are buyers out there that have lost out on 30+ offers, and you must wonder if they wrote a better offer if they might have scored one of those deals.

Strategy Session Important for Buyers

Our team has a buyer consultation with each buyer followed by a strategy session. We educate our buyers on how to score a home, and it is not just on price. We have our ducks in a row.  Our offers make sense, and they often get accepted.

If you want a Top agent to sell your home, call Brett or Sande at 239-310-6500 or visit www.SWFLhomevalues.com to get an instant home value of your home.

If you are looking to buy in this market, call one of our buyer agents at 239-489-4042 or visit www.LeeCountyOnline.com.

Experience matters.  Call the Best, expect the best!

See latest home price data “Southwest Florida Home Sales Prices Rise Whopping 38.7% in May“

Condo Safety Questions Arise Out of Surfside Tragedy

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This past week we have seen condo safety questions arise in the wake of the Surfside tragedy.  Prior to the condo collapse, it was unthinkable that a building in the United States would just fall like that.  The surfside tragedy has opened eyes and left many questions.

Condo Safety Questions Arise out of Surfside Tragedy

The first question I received was from agents asking if it could happen here, and if buyers would be worried about that.  Here are my thoughts.

We really do not know what happened or what the cause was.  Some say there was some payoffs and funny business in the building permit, and inspection process at the beginning.  Other theories speculate that the salt water may have rusted the rebar in the concrete which caused the failure.  Others have said the pool collapse put pressure on the building.

It is possible that all these things are true, or it was caused by something else entirely.  What we do know is there needs to be a thorough investigation so that we can determine if other buildings are in jeopardy.

Are Changes Needed?

Whatever they find could lead to changes in construction practices.  I also believe we need to have inspections before building is 40 years old.  I am not an engineer and do not have any answers.  This may not be a widespread problem because you really do not hear about buildings just falling.  However, it did happen once.  If it happens once, it could happen again.

We owe it to the lost souls at Surfside to demand answers.  If changes are needed, let’s implement them now.  If inspections and solutions to existing structures are needed, let’s get going now.  I am not saying panic, I am saying we should not kick the can down the road.

Will this affect buyers view towards condo buildings?  The truth is I do not know.  Logically, we have mid and high-rise buildings everywhere seemingly without issues.  I could foresee additional costs associated with owning a hi-rise in the way of inspections and remediation to older structures.

More Legal Scrutiny

Condominium association boards will be under more legal scrutiny to investigate and remedy potential safety concerns.  Many associations may not have reserves to cover costly repairs and maintenance items.  Imagine a board member’s dilemma voting whether to spend lots of money the association does not have for repair items.  That may not be an easy vote among the constituents.  On the other hand, imagine voting no and having another tragedy.  Condo owners would sue for malfeasance like we have already seen in the wake of this tragedy.

All I can say is it is time for leaders to show up, both at the city/county level and at the association level. Tough decisions will have to be made in the coming years, and residents better be prepared to dole out some money in assessment fees.  Do not be hard on your condo board.  They may be forced to make some tough decisions because safety is on the line.

The Surfside tragedy will probably increase the cost of ownership of high-rise buildings.  It may increase the cost of insurance as well.  Insurance companies will probably require more inspections and changes like they have on the single-family residential side.

Cost of Ownership May Increase

Condo living can be a wonderful way of life for many.  The cost of ownership may go up for some of the older buildings, but that does not mean people will stop enjoying the condo life.

Let us all say a prayer for those over at Surfside.  They deserve it. Let us also take steps to make sure this does not happen again. Be kind to your fellow residents, and when tough decisions arise, do not be too hard on condo board members.  Picture yourself in their shoes. Would you want to be the board member who voted to raise assessments?  Would you want to be the one who voted to save money and another tragedy happens?  They have tough decisions, so let’s try to support them.

God Bless and stay safe!

See last week’s article “We Would Like to Ask You a Favor“

We Would Like to Ask You a Favor

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As you may have heard, the real estate market is hot.  Interest rates are low and there is heavy demand for homes.  The challenge is there is not enough listed homes for sale for all the buyers looking.

Ask You a Favor

In fact, we are working with a number of buyers that we are struggling to find homes for.  So here is the favor. Who do you know that may be thinking of moving in the next 30-90 days?

Could you introduce us?  We may have a buyer willing to pay top dollar for their home.  Our marketing is working as we are finding buyers from all over the country looking to purchase in SW Florida.

Feel free to call us 239-310-6500 or email me Brett@topagent.com with their name and phone number. We will be sure to take great care of them.  And if you do not know of anyone now, please keep your ears open.

Listing inventory is down 65.9% from last year. We reported last week home sale prices are up 38.7% over last year.  What a perfect time to be a seller!  We love showing graphs.  If you were a seller, you could not draw a more favorable graph.

The question we always get is how long will this market last?  We do not see this market changing anytime soon.  We feel sellers will be on solid ground for a while.  As America gets back to work the economy should continue to improve.  The real question will be where do interest rates go from here? There is much debate about inflation and whether it is permanent or transitory.  There is little debate that it is real and here now.  Interest rates have risen.  Typically rising rates are headwinds to the real estate market, but rates are still low compared to previous booms.  The thinking is we have some room left for more price gains.

Some sellers are truly not aware of what their property is worth.  When they find out, their motivation to move increases.  Typically, people stay in their home 5-7 years, but in SW Florida many homeowners have stayed much longer than that.  They have stayed because the value was not there to make them move.  When you sit in a property so long, you kind of give up on the idea and forget to track changing values.

Our website gives an instant value, and it tracks the changes.  Every 30 days homeowners get an updated value.  It struggles a bit with new properties on the tax roll, so if your home is new it may not give a value until November. Check it out at www.SWFLHomevalues.com

We have seen listings rise a bit the last few months.  We believe some sellers held off putting their home on the market due to Covid.  As life returns to normal, more sellers may take advantage of this seller’s market.  That is a good thing because sellers are receiving Top Dollar and buyers are finding homes to live in.

We need more sellers though.  So back to the favor.  Please call us with your friends and neighbors who are considering selling.  We can get them top dollar and help some of these buyers get into homes that desperately need to.  Buyers will not be desperate forever and the tide will turn.  It is always more fun to sell in a seller’s market than a buyer’s market.

Always Call the Ellis Team at Keller Williams Realty.  We thank you for voting us the top real estate team in SW Florida for 6 straight years.  Please vote for us again this year in the News Press Readers poll.

Enjoy the 4th of July.  America really is the greatest country on earth.

Good luck and Happy Buying and Selling!

See last week’s article Southwest Florida Sales Prices Rise Whopping 38.7% in May

Southwest Florida Sales Prices Rise Whopping 38.7% in May

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May 2021 Southwest Florida sales prices rose 38.7% versus May 2020. Average sales prices were up 46% since the same time last year.  Cash sales are up 176.5% since last year which is helping fuel these steep price increases.

Southwest Florida Sales Prices

Financed buyers are having a hard time competing against cash buyers. Cash buyers do not need an appraisal to come in for the sale to complete.  To compete with cash buyers, financed buyers are waiving appraisal contingencies and agreeing to pay any deficiency the lender may require.  Of course, this means the financed buyer must be able to show spare cash.  FHA buyers are having a tough time in this market competing because they often do not have spare cash to meet an appraisal deficiency.

Appraisals

An appraisal is simply an opinion of value based upon what has happened in the past.  We all know today’s home price is greater than yesterday’s, and tomorrow’s will be greater than today.  In a rising market, that is just what happens.  Appraisals do not account for that, so they are almost worthless in some cases.

To find out what your home is worth, go to www.SWFLhomevalues.com and plug in your address.  Within minutes you will have your value, and the best part is it will email you a new price every month so you can track the changes.

Closed sales were up 82.4% over 2020, but keep in mind May closings were severely impacted last year due to Covid.  It is possible more lower priced homes closed last May as we did lose some sales from higher end buyers who were afraid of potential Covid impacts.  The 38.7% median price increase could be skewed by that fact.  Any buyer that completed sales back in May of 2020 will be so glad they did. Last May’s prices were a bargain compared to today’s prices.

Time will tell, but 2021 prices might be a bargain compared to 2022 prices.  We know there is a nationwide shortage of housing supply compared to demand.  We also know Florida is an attractive state.  Even if housing cools in other parts of the country when interest rates eventually rise, demand for Florida should still be high.  Of course, like last May, it was better to buy when others were bailing on offers.  Maybe it is a good time to sell and take some profit when everyone thinks prices will rise.

Should I Hold Out For More Money?

The herd mentality may get it right in the short term.  In the long term they almost always get it wrong.  If your neighbors are holding out to sell for higher prices later, that might be your sign.  From our standpoint, the Florida housing market is good.  Interest rates should stay low into 2022 and perhaps 2023, but nothing is certain.  We will keep our eyes on inflation.  The debate today seems to be, is it real inflation or temporary inflation?

Whatever it is, it is worse than people thought.  Inflation may subside later this year, but for those paying higher prices at the store, it is real.

If you own property and would like to make a move but not sure if the time is right, or how it could work, give Brett or Sande a call. 239-310-6500 We have some programs you might now know about that could help.  We also have data to help make the best decision for you.  Plus, we are fun to talk to.

We always have new listings coming to the market, and they sell quickly.  If you are a buyer and want to get on the Pre-Market list, call one of our buyer specialists at 239-489-4042 or register at www.LeeCountyOnline.com.  We can notify you of new listings coming to the market that matches your criteria.  Getting a leg up on other buyers is Huge in today’s market.

Good luck and Happy Buying and Selling!