Monthly Archives: February 2024

Lee County Housing Supply Increases in February

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Lee County housing supply increased in February up to 5.84 months supply, up from 5.05 months at the beginning of the year. Let’s break down which price ranges have changed the most.

Lee County Housing Supply February 2024

All price ranges increased in inventory, but as we go higher the effects seems to be much greater. For instance, the $300-400k market increased by .44 months. The $400-600k market increased by .82 months. The $600k-$1 million market increased by 1.07 months, and the $1 million+ market increased by 2.31 months.

Lee County Housing Supply Grows on the High End

 The data shows the higher priced homes have been hit the hardest by inventory supply. So, what is causing the buildup in inventory? Is it increased homes for sale or decreased sales, or both?

For the $300k and up price ranges, it’s a mixed bag. Home sales in the $300-400k range are steady, down only 7 sales. The real reason is inventory is up 164 listings. For the most part, the increase is due to more sellers bringing their home to market and the market not absorbing them.

The $400-600k range saw a decrease of 46 sales and an increase of 237 listings since the beginning of the year. This tells us more listings are coming to the market, and there are less buyers for the existing inventory, let alone new listings.

In the $1 million plus market, sales only declined by 10 homes. The reason inventory supply shot up so much is because listings increased by 214 homes.

Technically the $400-600k range had the largest drop in home sales and the largest gain in listings, so you would think this range would have the greatest increase in housing supply. The reason it is not is because there are so many more listings in sales in this price range than the $1 million plus range, so the changes don’t move the numbers as much.

Cost of Sitting on the Market

If you have a home in one of these price ranges, it pays to know exactly what the market is doing, We have a series of charts that shows definitively the cost to sellers when they fail to understand where their home fits in the marketplace. The charts show the difference in selling in a stable market versus a shifted market, and the disadvantages of chasing the market down. When Sande and Brett meet with sellers at a listing consultation we can go over these graphs, as well as the inventory graphs of our current market.

Economist of Choice

It is by truly understanding the market data that a seller can make appropriate decisions about marketing their home. Marketing is a combination of pricing a home commensurate with today’s market conditions, as well as all the daily activities and paid advertising sources a Realtor employs to sell a home. Your selection of a Realtor should consider who will pay to advertise your home, how much and where they will do so based upon results, the activities and communication the Realtor provides, and the pricing based on today’s market conditions. The Realtor you select should be your economist of choice, not who tells you what you want to hear and is your friend.

If you selected a price to sell your home 3 months ago, it may already be outdated. We spend hours each week making sure our listings are current with the market. If we met with you in the past but did not list your home, we need to update that value because it could be obsolete.

Market is Always Moving

We have one of the best free online home valuation tools available at www.swflhomevalues.com. However, even these online value tools can be several months behind the market. It pays to consult with a real estate professional that can provide you detailed market statistics. While the online tools are great, nobody really knows how they come to the conclusions they do.

Always call the Ellis Team at Keller Williams Realty 239-310-6500 Good luck, and Happy Home Selling!

FEMA Flood Insurance Discounts by Community

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FEMA flood insurance discounts range from 5% to 45% and is determined by the participating
community’s level of participation. In other words, communities can lower their premiums by taking
action to mitigate future flood losses.

FEMA Flood Insurance Discounts by Community

FEMA issues a class rating to each community based on the activities they take. Essentially, the
community earns points towards a discount. A class 1 rating earns the 45% discount, and a class 10
rating earns no discount. Class 9 earns a 5% discount.

How to Earn Credits

What can a community do to earn credits? The first is having elevation certificates for new construction.
Have written procedures for managing floodplain-related certificates for new construction in the
floodplain. The second item is having a map information service for those that inquire. I count 19 items a
flood plain manager can do for the community that earns credits toward flood insurance. For more
information, check out https://www.fema.gov/floodplain-management/community-rating-system

SW Florida FEMA Flood Insurance Discounts by Community

So how do our local communities score on the discount scale? Most SW Florida communities scored as
a class 5 and earned FEMA flood insurance discounts of 25%. Estero earned a class 6 which earns a 20%
discount. Fort Myers didn’t do as well and only earned a 5% discount. So flood insurance policies in Fort
Myers would be more than Lee County, all else being equal.

This is why floodplain managers had to enforce the 50% rule for damaged properties after Hurricane Ian.
Had they not done so, they risked losing credits under the Community Rating System which would have
affected the discounts all insured policy holders pay. The better the community does earning points
towards a discount, the less everyone pays who hold a National Flood Insurance Policy (NFIP).

What Can You Do Individually?

You can contact your community or municipality and ask questions about how they are managing their
floodplain policy. Perhaps plans are in place to increase activities to obtain more credits. The credits are
divided into four main categories:

Public Information, Mapping and Regulations, Flood Damage Reduction, Warning and Response. FEMA
updates their certification on a regular basis. The above numbers are current as of October 2023.

FEMA Risk Rating 2.0

I met with FEMA last week. They told me they are evaluating properties on a continued basis. Not only
does FEMA evaluate the floodplain management plan of the community, but they also look at each
property. They use tools such as satellite imagery, topographical measurements, and proximity to
nearby waterways to determine risk levels. The published FEMA maps can change at any time. I happen
to live in flood zone x, so flood insurance is not required on my property. However, I get a policy anyway
because I never know when FEMA might change the map.

Grandfathered Rates

Current NFIP policy holders are grandfathered in even if FEMA changes the map. In these cases, rates
can only go up 18% per year. Let’s say you have a policy that costs $800/yr. FEMA changes the map, like
they did a few years ago, and now your flood insurance would be $3,000/yr. In this hypothetical
example, next year’s policy would cost you $944 ($800+18%) If you didn’t have flood insurance, and not
it is required by your lender, it would cost you $3,000.

Flood Policies Assumable

NFIP policies are assumable, so if you have a policy that is grandfathered in, it makes your property
more attractive than another nearby property with similar rating at a much higher rate. Private flood
policies are not typically assumable, so be careful not to give up your NFIP policy unless it makes sense
for you.

If you are considering selling your home, talk with an experienced agent who knows how to handle and
market assumable flood policies. It can make a difference in your sales prices. An experienced agent can
help you in so many ways, and flood insurance is just one example.

Always call the Ellis Team at Keller Williams Realty 239-489-4042 and we’ll give you the information you
need to get Top Dollar for your home!

Good luck, and Happy Selling!

Check out some of our new listing videos

 

 

 

Waiting For Lower Interest Rates a Dangerous Game

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Many buyers we talk are waiting for lower interest rates before purchasing a home. Today we’re going to explore why this may be a dangerous game, and why we believe the next 6 months may be the best time to purchase your next home.

Waiting For Lower Interest Rates a Dangerous Game

Traditionally home prices appreciate about 4% per year over time. Some years yield more, and some years yield less. Even though we have a greater supply of current inventory on the market right now, we don’t have enough supply to satisfy all that will be able to buy when rates move lower and those moving here. Builders have not been keeping up with demand moving to Florida.

Waiting For Lower Interest Rates Home Price Appreciation

FNMA issued home price predictions moving forward. If you were to buy a home in 2024 using their price predictions your home would be worth $472,405 in 5 years, for a gain of $72,405.

Interest Rate Comparison

Let’s say you could finance a home today in the 6.5% range. The actual rate doesn’t really matter because the point I’m going to illustrate is a 1% interest rate decline from whatever rate you could get. If a buyer were to finance today at 6.5% mortgage rather than a 5.5% mortgage it would cost them $3,802.71 in extra interest for the 1st year. As you pay down the principal the interest declines slightly for each year. The total a buyer would pay over 5 years for a 1% differential in rates would be $19,027.04 in this hypothetical example.

Wait a Minute

A buyer who does nothing waiting for rates to decline would cost themselves $53,377 by waiting.  Now you might argue, “yes, but what if the buyer bought a year or two down the road? It wouldn’t cost them the whole 5 years.

Equity loss by waiting for interest rates to drop 1%

That’s right, it wouldn’t, but we have three other items to consider. First, the buyer who waits for rates to decline down to 5.5% may convince themselves to wait longer until they come down to 4.5%. Those that wait now are just as likely to wait longer later. Secondly, as rates come down, inventory may come down and there would be less homes available to bid on. Getting the home that meets your needs could get tougher. Lastly, when inventory gets low, prices can appreciate faster, especially when builders have not kept up with new demand. Existing homes just are not enough for all those moving to Florida.

If you were around a few years ago, you know that when things heat up, a 4% appreciation rate is conservative. Waiting for lower interest rates can be a dangerous game.  It’s kind of funny, because back in December of 2017 I wrote an article about the cost of waiting as interest rates were rising. It’s ironic that there is a cost of waiting as interest rates are falling as well. The result is the same, it’s just the variables in the equation have flipped. If you’d like to read that article it is available at https://blog.topagent.com Simply go to the archives in December 2017.

Best Time is Next 6 Months

We believe the Fed won’t begin to lower rates for about 4-6 months. The mortgage market may bounce up or down, but until the markets get a sense of bond market stability, rates will remain high. Buyers have a window as inventory is building. They are in their best negotiating position, but that window could close or shrink later this year.  Why not buy now and lock in those potential gains? Then, when rates do go down, refinance and capitalize. That way you can lock in appreciation and lower housing costs later if rates fall. The best of both worlds, and you’re on the equity train.

Don’t be that buyer that waits, and waits, and regrets it later. Some people wait to see evidence the market has turned, and it’s too late for them. All the people who should have bought in 2018 but waited are still kicking themselves.

Always Call the Ellis Team at Keller Williams Realty 239-489-4042. We’ll get you pre-approved with a great lender and a ticket on the equity train to start building your wealth. Call us today! Search the SW Florida MLS like a pro.

Third Best Dollar Volume Year on Record in Lee County

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2023 was the third best dollar volume year on record in Lee County. Dollar volume measures the total health of the market in a way few other statistics can. In a year where real estate agents are getting out of the business in droves, these statistics place a new way to look at the market.

Don’t Know How

The reason why agents are getting out of the business is because they don’t know how to sell in a shifting market. It feels like home sales fell off a cliff, especially in the 4th quarter of 2023 and into 2024. This is exactly why we don’t go by how the market feels, but rather what it is.

Third Best Dollar Volume

The dollar volume of the market measures both the number of home sales and prices. When you multiply the number of sales by the averages sales price you get the total dollar volume. You could just add up all the single-family home sales in Lee County and you’d get the same number.

Third Best Dollar Volume Year on Record

Prices could go up with home sales going down and you could get a higher or lower total dollar volume depending on how much in each category the numbers changed. Last year we saw prices falling and home sales dropping, so we knew the dollar volume was going to drop in 2023.

What seems like disaster to many real estate agents really isn’t. 2023 was the third best dollar volume year on record in Lee County, it just doesn’t feel that way because sales are slowing, and prices have fallen.

Feelings

Maybe agents don’t care about actual statistics. If feelings are all we’re going after, all we’d have to do is track the direction of the market. Are home sales going up or down each month? Did prices rise or fall last month? The problem with that line of thinking is we have seasonal months, and measuring one month against the last doesn’t tell the whole story. It also gives you no clue about where the market is or where it may be headed. When you get down to feelings, even that isn’t so accurate. One agent could have a good month compared to a similar agent who just had a bad month of sales. One would say the market is on fire while the next would say the market stinks.

This is why we track. We take the feelings out of it. The market is exactly what it is, and we don’t need to put a spin on it. If we want to change something, it might be how we market properties in a shifting market.

Seasoned agents know how to sell a home in shifting markets. It may not be easy, and it may take more time and counseling buyers and sellers, but it can be done, if the agent knows how to do it.

Listing a Home Today

If you’re listing a home today, it pays to hire an agent with experience. 85% of the agents in business today have not worked through a shift like this. I get a kick out of sellers interviewing 4 agents for the job of selling their home. It’s never a bad idea to interview more than one. What is important is that you interview those with experience. Your questions should be focused on what will the agent do that’s different to market my home? Questions today should not be focused on who will list it for the least commission, or at your preferred price. That’s not going to sell your home in today’s market. Those days are gone! You need a Realtor who knows how to sell in today’s market and will spend the extra marketing dollars to reach a broader audience.

Buyers are less motivated than they were two years ago, so you must spend more to reach enough motivated buyers.

If you have a home to sell, Always Call the Ellis Team at Keller Williams Realty 239-310-6500 or 239-540-9070 at our Cape Coral office. Or visit www.SWFLhomevalues.com to get an instant free online estimate of your home’s value.

Good luck and Happy Selling!

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