Category Archives: Cape Coral Real Estate

News and information relating to Cape Coral real estate market

It’s Official-3rd Quarter Sales Sets All-Time record

Posted on by

Last year we told you 3rd quarter sales were very strong, which led up to an almost record 4th qtr in 2008.  Official numbers are in, and 3rd qtr sales in 2009 blew past last years big numbers and surpassed 2005 record numbers by a mile.  To put this in perspective, last years sales numbers were up 72% over 2007 numbers.  This year’s numbers were up 109% over last year.  2005 was the biggest sales number year we had ever seen, and 2009 was up 35% over 2005.

All you read or hear about is how bad the market is, and there is some truth to what you hear.  Rarely though do you hear the whole story, and sales numbers tell a compelling story.

Our market has gone through a predictable healing process.  It’s a process nobody looked forward to, but sometimes you have to hit bottom before you can go back up.  Simply put we had too much inventory and phantom demand.  The demand we thought we had was investors flipping to other investors like musical chairs, until one day the music ran out.  We had high employment because builders were building at warp speed, and we needed mortgage brokers, closing agents, not to mention appliances, carpet, etc.

Then one day when it became apparent the demand was phantom, building stopped as speculators stopped buying from one another.  That led to a severe market correction that was inevitable, which further led to job losses throughout SW Florida.  These further job losses created a downward spiral, which increased foreclosures from not only investors who walked from deals, but regular people who lost their jobs.

The only solution unfortunately was to begin a healing process of selling these homes, which of course was going to be at a price much lower than the high’s of 2005.  The prevailing questions were always, how low would prices have to go, and how long would it take.  And the answers are related.  The higher the prices, the longer the process would take.  Because SW Florida led the state in price drops, it also led in the healing process.  Our prices dropped faster than any other area as evidenced by pricing reports on our website at www.topagent.com under housing statistics.  Thus we have set record sales levels even surpassing the 2005 levels.

Single Family Home Sales By Qtr Lee County Florida Real Estate Market
Single Family Home Sales By Qtr Lee County Florida Real Estate Market

Many people think that because we’re setting record sales levels, prices should rise, and they are partially correct.  However, we’re not done yet with the healing process.  Prices coming down from unsustainable levels was only the beginning of the process.  Prices won’t rise dramatically until we bring back employment to the area.  Oh, we’ll see some rising prices as snow-birds flock to the area this season not wanting to miss out on a great deal.  This won’t lead to massive price increases though because we still lack a driving economic force, which are jobs.  And jobs is not just a SW Florida problem, it’s a nationwide problem.

We’ll also see some price increases as less entry level foreclosures enter the market and we swing more to mid and upper tier foreclosure price points.  Again, these are just statistical numbers.  Median prices may rise, but prices in certain neighborhoods can actually fall due to more foreclosures and distressed sales at higher price points.

The good news is SW Florida has cleansed itself pretty well comparatively speaking.  It’s kind of like a company with lots of inventory in a down economic cycle.  The company can place the inventory on sale and blow out the old inventory, and when the economy rebounds that company is well positioned to capitalize as they are not saddled with high inventory coming out of a recession.

Our market has done a good job of discounting and selling the inventory.  What’s out of our hands is the national economy.  We have sunshine and good weather, but we’ve always had that as an advantage.  We either need the national economy to improve, or we need to steal some jobs from another city and have them relocate to SW Florida.  This may sound bad, but it’s done all the time.  GM just relocated some plants from one state over to IN.  Indiana’s gain was another state’s loss.

So let’s pray the economy gets better soon as it’s good for our real estate market and good for jobs.  And if our local leaders have a few tricks up their sleeves to lure businesses to our area it would be great.  I think our area has suffered and we deserve some good news.  If a company is looking to relocate, it might as well choose SW Florida vs. some other state.  It would be good for their employees to move to a nice place like SW Florida where we have a good work force, decent schools, great weather, and wonderful things to do year round.  If you’ve ever been cooped up for months during a miserable winter, you know the advantages of living here.

So let’s hope our Economic Development Council will be announcing some exciting news soon.  We could all use some good news.  Until then, let the healing continue.

SW Florida Real Estate Current Market Index

Posted on by

It’s been a few months since we’ve reported numbers for the Current Market Index, so here is the update.  The Fort Myers-Cape Coral area index now stands at 4.02, up slightly from 3.86 in September and 3.81 in August.  The lower the index numbers the better the market for sellers.

This is a result of slightly rising inventory numbers, but very much in line with inventory numbers back in August.  We’ve seen continuous dips in inventory for quite a few months leading up to October, and this is the first month we’ve seen a slight increase.  Pending sales are down ever so slightly as well, however nothing that is statistically significant.

Current Market Index SW Florida Real Estate
Current Market Index SW Florida Real Estate

Existing sales are holding up nicely and still showing healthy gains over last year.  Buyer interest from around the country is strong.  In fact, our team has so many buyer leads coming in that we need to hire 4 more buyer agents to keep up with the activity.  We think season this year is going to be very strong.  Temperatures up north have been unseasonably cold this fall and it’s looking like they could have a long and cold winter.  Traditionally this is always good for the Florida market as snow-birds look for a tropical escape and potential property purchase.

The snow-birds we’ve talked to are already motivated to purchase.  They witnessed first hand that some properties are up about 20% in price over last year as the pickings are getting slim in certain segments.  They realize this season may be the last season to pickup many of these bargain basement priced properties.

We’re seeing waterfront properties in the Cape for example bouncing off their bottom last year for entry level direct access properties.  We’ve also seen a bottom in Cape Coral for entry level homes, especially pool homes.  This has fueled an increase in sales in the Fort Myers and Lehigh Acres market. Fort Myers home sales in September increased by 6 sales. Cape Coral lost 35 sales versus the previous month.  Lehigh Acres gained 7 sales versus September.

As sales potentially shift from the Cape over to Fort Myers and Lehigh Acres, we could see a bottoming in prices there as well.  You’ve heard the term that water seeks it’s own level.  As prices get too high in a given area, buyers shift their focus to other more affordable areas.  Many have preferred to live in Cape Coral over Lehigh Acres, but in the run-up back in the early 2000’s, prices in the Cape got so far ahead of Lehigh Acres that buyers shifted to Lehigh for the value, and thus a boom began in Lehigh.  As foreclosures hit hard, many buyers scooped back into the Cape for the bargains and preferred the Cape over Lehigh all else being equal.  Because we’ve sold many of the Cape foreclosures, the bargains are not there like they used to be, so we’re seeing this shift to wherever the bargains are.

We’re still in a bargain market for the time being, but that could change.  Northerners are starting to fear that the bargains are drying up and they don’t want to miss out, so this season could get very exciting.  It’ll be interesting to watch where the money goes, and what happens when the foreclosure well starts to run dry.  How will that affect the overall market?

Speaking of foreclosures, it appears banks are cranking up the process on a whole new batch of foreclosures.  Some have speculated that banks purposely waited until the end of 4th qtr which ended Sept 30 to file these new lawsuits so their books would look better.  Wall Street has a history of doing this for earnings and results.  A friend of mine has even speculated banks are keeping losses off their books this year to pad their earnings so they can collect bigger bonuses.  There may be some truth to that.

Last year we saw a spike in Lis Pendens filings for precisely the same theory.  We’ll have to watch the November and December filings to get a feeling if this is another Wall St accounting trick of holding back what they can, and thus the October spike, or if this is a long-term trend.  If this is a long-term trend, then it will stall increase in prices.  If this is merely a short-term blip like last year, we could see fewer bargains and more actions from northerners fearful for missing out on one of the best buying opportunities in awhile.

Just like back in 2005, you cannot calculate the absolute top of the market until it’s in your rear view mirror.  Timing the bottom of the market is much the same way, and in fact we’ve seen a bottom already in certain segments.  The entire market doesn’t always move in unison.

Our advice to buyers is simple.  Regardless of whether this is the absolute bottom, we’ve already seen the bottom, or we have a little bit more to go, prices are bargains right now.  You may not want to miss this general time period, because one day soon we may look in the rear view mirror and kick ourselves for missing the buying opportunity of a lifetime.  All the bank’s misery and misfortune can now become your gain.  Somebody is going to capitalize on this misfortune.  Why not you?

Next Wave of Foreclosures

Posted on by

A few weeks ago we stated here that we believe there will be more mid to upper priced foreclosures coming to the market in the next year, as more Alt-A mortgages are foreclosed on as scheduled interest rate resets take effect. We’ve seen most of the sub prime loans already come and go from the market. So the next wave should be the Alt-A and the economy driven foreclosures as regular people who have lost their jobs due to the falling economy begin to stop paying.

We based this upon a graph in our State of the Market Report published last January. You can view this graph in greater detail and in color on our Blog at http://ellis.realty-buzz.com or visit our Fan Page on Facebook at www.Facebook.com/Ellisteam As you can see by the chart, Option Arms are scheduled to reset at their highest point about August of 2010.

Reset Schedule of Mortgages by Type
Reset Schedule of Mortgages by Type

A feature of the Pay Option Arm is that borrowers are allowed to pick a payment, meaning they can pay any one of several payment options.  These loans began with low teaser rates, and one of the ways they allowed borrowers to minimize their payment was by allowing the buyer an option to make a payment less than the “Interest Only” portion of what the loan would have been.  These types of loans are called “Negative Amortization” because each month the borrower is losing equity.

Pay Option Arms were used primarily by borrowers who wanted to maximize their purchasing power by leveraging as much as the banks would lend with the absolute minimum payments.  These buyers didn’t worry that they were getting further behind each month as they figured the home would appreciate faster than the negative equity would accrue due to the loan.  Most of these borrowers planned to “flip” the property and make a fortune, then repeat the cycle all over again.

In this cycle of irrational exuberance, few thought about when the musical chairs would run out.  It seemed like that crazy market would last forever, until one day when the music died.  You could see the train wreck that would one day ensue.

Simultaneously, the value of the property is in free-fall and the loan amount is increasing by the month.  You’ve heard the terms “Upside Down” and “Getting Hit at Both Ends”.  This pretty much sums up what happened to Option Arm borrowers in heavily concentrated investment areas like many new subdivisions here in SW Florida.

Have you ever wondered why certain established neighborhoods held their value fairly well through the downturn, while newer communities seemed to take it on the chin?  The answer is investors and speculators flocked to newer construction, as this is where the perceived pre-construction deals were back in 2003-2005.  The problem is we had too many speculators.  Investors can be quite healthy for a market, but a speculator just drives up prices for the sole purpose of Flipping to another buyer.  The only useful purpose this would serve is providing the capital to speed up construction to provide much needed supply due to high levels of demand.  The problem is, we had phantom demand.  Our market sped up the supply side without real end users.  There’s something not quite right when the end user is another speculator buying to flip same property for a 3rd or 4th time to another speculator.  Eventually the music dies and the musical chairs run out, except this is real life and not fun and games.

The rest of us have been picking up the pieces from this sad game, and we’ve all paid a price.  Construction jobs have left, values have plunged, banks have failed, taxpayers have paid for a bailout, and just about everyone that played the game is sorry.

Many of these Option Arm’s have already defaulted as the speculators learned early on they couldn’t flip the property for a profit, so they quit making payments.  We do believe there are some regular buyers who also used the Option Arms to purchase more home, and some have been hanging on for as long as they can because they can’t afford to sell their home.  Once these payments reset, we could see another round of foreclosures hit the market.  These buyers tended to buy the mid and upper tier homes.  This is one reason we predict you’ll see more higher priced homes coming out of the foreclosure pipeline.

We’ve seen the foreclosure pipeline growing in the past few months, and due to processing delays, we expect several foreclosures to start hitting the market this month.  Filings are down, so the foreclosures coming out now were backlogged from back in December and January.  The resets in 2010 and 2011 will also take awhile to work their way through the system, so bottom line is we’ll see a certain amount of foreclosures for the next several years.  The sooner we clean them up and ship them out the sooner we’ll be on our way to a normal market, so I say bring them on without delays, so we can all get back to listening to the music.  Leave your chairs at home.

Seasonality of the SW Florida Real Estate Market

Posted on by

You’ve heard the expression Tis the Season, and in real estate season can mean many different things depending on where you live, and what type of product you’re referring to.  Let’s talk about the Seasonality of the SW Florida Real Estate Market. For many years in SW Florida condo sales were highly dependent on seasonal sales, and in many tour developments that is still true.  However, even with condos there are differences.  Some condos are located at the beach; some can be rented weekly Vs monthly, and so on.  There are only a few golden rules in real estate; Location, Location, Location, and Price.  If you over price a home in this market, chances are good it will not sell, and we all know location makes a difference, although some would argue it’s still a function of Price.  The better the location, the better the price, but that’s the old chicken and egg theory we’ll stay away from today.

Today we thought we’d illustrate some seasonal trends in single family home sales throughout the years. For many years we’ve told people single family home sales traditionally peak in the summer months, perhaps because kids are out of school and that’s when the relocations tend to take place, and perhaps that many of our buyers over the years were move-up buyers and they had more time to look after the Season their business just had.  For years we didn’t have large companies employing hundreds or thousands of people, so many of our buyers worked for or owned small business, and they were busier in Season than out of season.

 

Seasonality of the SW Florida Real Estate Market
Monthly Sales Graph since 2005 Showing Seasonality of SW Florida Real Estate Market

We have attracted a few large employers, although a few more would be welcomed by all here I think.  Our market has been in turmoil since 2005, so we weren’t sure the charts would show the traditional rule of thumb that home sales tend to peak March through end of summer.  Upon further study of the home sales graph, it does seem to hold true even in this time of change that home sales peak in the March through Summer time frame, and as we enter the fall one might expect home sales could decline.

This year may or may not be like recent past years as we have a first time home buyer tax credit in play that expires November 30, artificially low interest rates as the government has been buying treasuries at least through October, and artificially low property values due to the distressed nature of the market.  Put all this together and you’ve got a Perfect Storm for record sales, and we’ve seen that for the past year.

So what could speed this train up or slow it down going forward?  In a few weeks interest rates could head up if the government doesn’t decide to keep them lower.  If so, rates could shoot up over 6% almost overnight like it did a few months ago last time their decision was about to expire.  Additionally, the first time home buyer tax credit could go away, thus taking some motivation out of new buyers in the market.  How the public reacts to the overall economy, health plans, stimulus money, bailouts, etc. could also affect public confidence about the direction the country is headed, and affect purchasing decisions.  All these could slow the train down.

The train could also gain momentum if the government enacted a tax credit for all buyers, not just first-time home buyers.  Nationwide we’ve been lacking the move-up buyer, and that’s certainly true here as well.  A tax credit for everyone would spur a recovery in the overall market, and may decrease pressure on banks.  As tax payers we either spend it here or spend it there, however if we help save the banks and spur home sales we also help the economy and increase jobs at the same time.  It would also help if the government keeps interest rates low by buying treasuries allowing the market more time to heal itself.

A reform of the newly enacted (May 1) appraisal rules would also help the market, as new rules intended to help have actually hurt, and have not increased quality of many appraisals.  We would argue the new government program has increased costs, increased inefficiencies, and spurred out of town appraisers who don’t know the market’s intricacies, but what would you expect when you put the US government in charge of local property valuation rules?

Some banks are getting better at evaluating and approving short sales when they make sense and some have gotten worse.  How banks make decisions today will affect future foreclosure inventory.  We believe foreclosures coming to the market may increase in the next year, which will help sales because inventory has been shrinking, and this will bring more affordable housing to the market to replace dwindling inventory.  We don’t see rapid price increases on the horizon until we see job growth, and even though we have artificially low sales prices, we are seeing sales because they are bargains.  I’m not sure we’d see anywhere near the sales volume if these bargains went up significantly in price overnight, and this is why I don’t think prices will jump dramatically when inventory contracts until the overall economy heals with the housing market.  And this is why we are in favor of a home buyer tax credit for all, so we can heal both simultaneously.

Fort Myers Cape Coral Real Estate Sales Soared to Another New Record in May

Posted on by

SW Florida real estate sales in Fort Myers and Cape Coral Florida set new records again in May with single family home sales in Cape Coral and Fort Myers totalling 1,417 sales, eclipsing the May 2005 sales record of 1,309.  See SW Florida Real Estate Homes Closed 2005-2009 chart illustrating home sales by month since 2005.  Median sales prices for single family homes in Cape Coral and Fort Myers was up 3.51% from April median home prices, up to $88,500.  For a complete look at median single family home sale prices in Fort Myers Cape Coral since 2005, see the SW Florida Real Estate Sales Prices 2005-2009 graph.

Prices are still falling in the mid to upper levels of the SW Florida real estate market, while prices seemed to have stabilized in the entry level market.  First time home buyers are buying as fast as they can as they compete with investors for the best bargains.  Short sales are picking up as banks cut through the red tape of approving short sales, although time frames are still long.  Canadians are buying properties in SW Florida due to the favorable exchange rate, and the fact that Florida is on sale.

Fort Myers Cape Coral Real Estate Sales Soared

Condo sales for May in Cape Coral and Fort Myers were up 41% Vs. the State of Florida which was up 21%.  Median sales prices for condos in SW Florida were down 35% year over year, as opposed to the statewide average of down 38%.  See the Florida Sales Report May 2009 Existing Condos graph.

It looks like the 2nd Qtr is shaping up to be another record setting quarter for home sales.  The 1st Qtr home sales in Lee County Florida sure was.  We won’t know for another month when June sales are officially released.

Shortly we’ll be releasing the latest Current Market Index for Fort Myers and Cape Coral for June which should explain where our market is headed.

SE Fort Myers Florida Real Estate Video Update

Posted on by

This week’s SW Florida real estate video update presented by The Ellis Team at RE/MAX Realty Group focuses on SE Fort Myers Florida.  SE Fort Myers consists of zip codes 33912, 33913, 33966, and 33967 and covers Gateway, Fort Myers South around the Daniel’s Parkway Corridor over to US 41 down tthrough San Carlos Park.

SE Fort Myers Florida Real Estate Video Update

View this week’s SE Fort Myers Florida Real Estate Video Update  Average prices were down about 22% in SE Fort Myers, however sales were up significantly.

Follow the Ellis Team on Twitter for news on the Fort Myers and Cape Coral Real Estate Markets

Posted on by

Follow The Ellis Team on Twitter, so you can keep up to date on Fort Myers and Cape Coral real estate news and information, including information on the entire Southwest Florida real estate market.  Our latest post on Twitter includes our Cape Coral real estate video update.  Check our our Ellis team SW Florida Top Agents page on Twitter.

Cape Coral Real Estate Video Update

Posted on by

This week’s SW Florida real estate video update presented by The Ellis Team at RE/MAX Realty Group focuses on cape Coral Florida.  Cape Coral is leading sales transactions in Lee County due to the number of foreclosures and short sales bringing affordability back into the SW Florida real estate market.

Cape Coral Real Estate Video Update

View This Week’s Cape Coral Video Update.

Check out the entire SW Florida real estate State of the Market Report

SW Florida Real Estate Home Sales Statistics Released for September 2008

Posted on by

SW Florida Real Estate Home Sales Statistics

Fort Myers and Cape Coral saw a 128% increase in home sales over last year as reported by the Florida Associatiopn of Realtors.  Statewide sales were up 24%, but locally they were up much greater becuase affrodability is back in the SW Florida real estate market what is not priced into all Florida markets. Median sale price is Fort Myers and Cape Coral dropped to $141,400 from $231,600 last year.

Condo sales in Cape Coral and Fort Myers saw a 50% rise in condo sales over last year, while the median price dropped 17% to $185,000.

Home sale prices declined for the 4th straight month in Fort Myers and Cape Coral real estate.  See our month over month prices graph. You can also view a monthly price summary by year for Fort Myers and Cape Coral real estate.  We’ve also included a home sales by month for the past several years for Fort Myers and Cape Coral.

We’ve created some videos for you to learn about the SW Florida real estate market better.  Some of these videos were newscasts done on TV, while others were simply us on a video camera talking about the market in our office.  We’ll be adding more videos like the newscast we did for NBC Nightly News with Brian Williams a few weeks ago, so stay tuned.

Thank you for reading our SW Florida Real Estate Home Sales Statistics update this week.  We look forward to bringing you further SW Florida Real Estate Home Sales Statistics.

Busy Week in the News For The Ellis Team at RE/MAX Realty Group in Fort Myers Florida

Posted on by

 

 

Brett Ellis on NBC Nightly News with Brian Williams SW FLorida real estate affordability

 

Busy Week in the News For The Ellis Team at RE/MAX Realty Group in Fort Myers Florida

NBC News featured SW Florida’s real estate market and the Ellis Team at RE/MAX in a story which concentrated on housing affordability.  Lower prices are attracting buyers back into the market, and home sales statistics bear this out.  Home sales have been up dramatically over last year each month this year.  NBC News decided to come to the epicenter of where the housing crisis turned bad, and noticed there may be a turn around in the works, which could be a positive sign for other parts of the country in the coming years. Click here to watch The Flip Side of Foreclosures: Affordable Homes  MSNBC also has a Blog article up about this story Mortgages Are Out There . And So Are Bargains which also features the Ellis Team in the Blog.

NBC Today Show from Fort Myers Florida featuring Brett Ellis of RE/MAX Realty Group

The NBC Today Show visited Fort Myers on September 23 and reported on foreclosures in the SW Florida real estate market, particularly on Lehigh Acres and Cape Coral Florida.  NBC came to The Ellis Team for answers.  Click here to watch Florida’s Foreclosure Hot Zone.

 

Last night Brett Ellis was also on the ABC News about home sales increasing while prices have been declining.  Click here to watch this story.

 

This past week Brett Ellis was featured on WINK News regarding Governor Sarah Palin’s speech in Fort Myers, and Mike Ellis was seen live on WINK News as a local business leader and his reaction to the presidential debate.  We’ll try to get video uploaded on these two stories later on.

The O’Reilly Factor called and asked Brett Ellis to be on The O’Reilly Factor this past Tuesday.  Unfortunately the taping time with Bill O’Reilly conflicted with Brett’s son’s baseball game that night, so we had to pass on that interview.