Fort Myers Beach Archives - Fort Myers Real Estate and Homes For Sale

SW Florida listing counts headed higher in the past week. Over listings rose by almost 400 units as single-family homes and condos shared the rise in inventory.

As listing inventory rose this past week, pending sales declined, which is a double whammy for the local real estate market. To be fair, America has been in an election hangover waiting for results.

Post Election Market

We went back and looked at local real estate inventory the last time Trump was elected. This data might deliver clues on what to expect this time.

Listing inventory in SW Florida remained constant until the Fall of 2019. Trump became president in January of 2017. It took about 2 ½ years for his economic plan to take effect. We also looked at local home prices back then. It was roughly Fall of 2019 before they started rising as well.

This tells us two things. Home inventory levels are a good measure as to where pricing will go. Secondly, new economic policies take time to take effect.

Speculation

Some speculate that Trump will be smarter this time and hit the ground running. If his policies are enacted sooner, their effect could take place sooner. Of course, things are different this time around. Our national debt is over $35 trillion and climbing, inflation roared, and interest rates tripled in less than 4 years. Will the president’s policies work with these new conditions? Will he be able to execute every financial option he’d like to because of the debt and interest rates? We’ll be watching to see if the effects work faster or slower than last time.

Slow Your Roll

These are all questions to be answered over time. Trump has proposed ending the cap on SALT deduction. This would help real estate in high tax states like CA, IL, NY, NJ. Those high tax states were responsible for sending many residents to Florida. The high taxes will remain, but the deduction might slow the flow of migration to Florida from these high tax states. This could affect demand in Florida, which would limit price increases.

SW Florida has excellent supply. With listing counts headed higher, we do not need demand to drop off radically. We believe many will still choose to migrate to Florida because of the weather and tax advantages. Allowing a higher deduction for high tax states may keep some there is all we are saying.

The Fed

We are watching interest rates moving forward. The Fed just reduced another 1/4%, but so far the bond market hasn’t liked it. Bond rates have gone up about .8% since the Fed has lowered 3/4%. In fact, many on Wall St are worried the Fed may have to raise rates in 2025 due to the economy doing better and high debt. This would essentially be egg on the Fed’s face because it would mean inflation is not under control.

The worst thing a Fed can do is lower rates before inflation is under control. We saw this back in the 80’s when the Fed was forced to start raising rates again. It threw us into a double dip recession. The Fed was wrong about transitory inflation, and they may have been wrong about lowering rates too soon. The bottom line is, rates may not come down as fast as people thought in 2025. We may need lower taxes and lower cost of oil to help the economy out, or risk recession.

The next year will be fascinating to watch. Many economic conditions will be in play and depending on what the new policies are moving forward and how quickly they take effect will shape which direction our real estate market moves.

Either way, we’ll help you keep track of what is really going on in the real estate market. You can always call Sande or Brett Ellis with Keller Williams Realty 239-310-6500 with your questions, or get a value for your home online at www.SWFLhomevalues.com

With inventory high, who you hire matters! Go with experience, and marketing! With listing counts headed higher, and we have no idea how many more may enter the market in January.

Good luck, and Happy Selling!

Ellis Team Weekend Open Houses

Open House Saturday 12-3 PM

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Bridgetown Open House — Pool Home on Lake

Open House Sunday 12-3 PM

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Live Fort Myers Beach Webcam

Inventory levels have been growing this Fall, so we decided to do an election day months’ supply of inventory report to see how it changes after the election.

Months’ supply of inventory grew across the board in all price ranges since our last update in September. Election day months’ supply of inventory stands at 5.9 months. Anything over 5.5 months supply is considered a buyer’s market.

The over $1 Million price range came in the highest at 9.74 months supply. Not surprisingly the lowest price range on our chart, below $300k, came in a 3.12 months’ supply. In the last two months, the over $1 Million price range gained the most supply at .78 months, followed by the $300-$400k range at .67months.

The inventory supply has been hit at both ends of the spectrum. Pending sales have been declining while inventory is growing. In other words, more homes are coming on the market than leaving the market.

Turn Around

What’s it going to take to turn this market around? It’s not going to happen overnight as the Ellis Team Current Market Index stands at 5.27. This is the highest number it’s been in a long time and tells us the local real estate market is headed in the wrong direction. Our current market index has been an accurate predictor of future home prices, but it can turn around.

Lower interest rates would help. Interest rates have been marching higher all Fall due to inflation concerns. Inflation and government spending just isn’t what the markets hoped it would be by now.

Consumer Sentiment

Consumers are maxing out credit cards, so many fear the consumer spending fueling the economy may run out of steam. A little bit of good news, whether it’s the economy, interest rates, or reductions in inflation could give consumers some hope. How people feel about their future finances goes a long way towards big spending decisions, like housing.

Election Day

We are writing this article on election day, so we have no idea how the election will turn out. Hopefully we’ll know within a day or so. The sooner everyone knows the outcome, the quicker people can move on with their lives. Even if their candidate didn’t win, at least the outcome is known. Sometimes just mentally knowing an outcome can help people move past whatever is holding themselves back. I feel like people have been holding back from big decisions pending the election.

No matter who wins, we won’t expect things to turn around on a dime. The next president won’t take office until next January, and it takes time for plans to be put into place. It could be a year or more before changes take full effect. The mindset change may take effect immediately, but the policy effects may not be known, especially if we have a divided government.

Tracking

We knew the SW Florida real estate market began changing Feb 15, 2022. We definitively knew June 14^th,2022, that the market would turn when the supply-demand line crossed over. It was at that point price increases were over. The Ellis Team Current Market Index confirmed price increases were over. It was just a matter of time until it showed up in the statistics.

Going forward we will be tracking the supply-demand graph, the month’s supply of inventory graph, and the Ellis Team Current Market Index. These three indicators should tell us if this market will indeed change again.

The market will change again. The question is always, when, which directions, and at what speed? We look forward to reporting on how our local real estate market responds after the election.

Track your home’s value at www.SWFLhomevalues.com Every month our system will send you your home’s new value, along with changes in conditions for your area. You probably watch your stock portfolio on a regular basis, so why not track your home value too? We have the tool for that.

Good luck, and Happy House Selling!

Pre-election real estate showing activity is down 32.5% from last year. Is the decline in showings this year due to the elections, or is something else going on?

As a real estate professional, one of the top objections we are getting from buyers and sellers is they want to wait until after the election. We hear this objection every 4 years, but this year more people are saying it.

Real Estate Showing Activity Down 32.5%

We studied the first 28 days of October 2023 and compared to October 2024. Sure enough, overall showings are down 32.5%. The interesting part is both ends of the price ranges are being hurt. The luxury million dollar plus homes have been hurt the worst, down 72.22%. The $200-$300k range is next, down 56.09%. Showings are down in every price range.

If showings are down solely due to people waiting until after the election, it would stand to reason that showing activity will pick up in the weeks following. I hope they do, but something tells me there is more to the story.

Interest Rates

Interest rates have been rising, up about .75% since the Fed lowered rates. This could influence showings. Consumer confidence in the economy and the future could also have an effect. Until people know the direction of the economy, they may wish to hold off large purchasing decisions.

I believe it’s a sense of loss of control. People no longer feel like they control their own future. The government plays a bigger role, and people are uncertain which track we will take going forward. In a way, the future will become clearer to more people, and maybe they can move on from their current state.

Of course, half the country will be shocked either way. It may take a month or two for reality to set in. After that, real estate activity should go back to normal objections and motivations.

Success Going Forward

No matter who wins the election next week, one thing is clear. The Realtor you select to buy and sell with makes all the difference. Your vote next week is important. The Realtor you select is too. When selling, marketing is key. What will your Realtor do to make your home stand out? Inventory is much higher, and still rising. Pending sales have been declining. Selling in today’s market requires more marketing than ever.

Marketing Muscle

The Ellis Team has some new marketing that may help. The Ellis Team still advertises online, in print, and with national presence using Gannett, the News Press, USA Today, as well as Google, Bing, Facebook, Instagram, our Blog, Keller Wiliams, and all the other tools to create maximum exposure. Our Team continues to operate www.LeeCountyOnline.com which is SW Florida’s premier local search site. We’re adding to this lineup with some additional muscle. If you’re in the market to sell, you definitely should talk to us. 239-310-6500

Buying

The Realtor you choose to work with on the buying end matters now too. Negotiations are more complex with the new settlement guidelines, and some Realtors don’t have the experience or understanding to negotiate several issues at once. Brett, Sande, and our team can help with that as well. Before you make a real estate decision, consult with the Ellis Team at Keller Williams Realty. Who you hire matters.

Good luck, and Happy Selling! And don’t forget to vote.

Ellis Team Weekend Open Houses

Why are interest rates rising despite Fed rate cuts? Everybody thought when the Fed cut interest rate it would translate to lower mortgage costs. We’ll explain why it’s not happening, and we’ve been warning you for months about this.

30-year mortgage interest rates are more closely tied to the 10-year treasury note than anything else. The 10-year treasury note is forward of the Federal Reserve, meaning the note reacts faster than the Fed. The markets are telling us rates should not come down yet.

Interest Rates Rising Despite Fed Rate Cuts

The bond market does not like two things, and the government controls both. The first is deficit spending. The markets are telling us we cannot continue to spend like this. The bids coming in from the auctions are at higher rates because with more deficit spending there is more risk of nonpayment in the future. Additionally, there is no plan to balance the budget, let alone pay off the $35 trillion dollar debt today. This year alone we are racking up $2 trillion dollar debt. The US government will not be able to pay its debts in the future if nothing changes. It does not matter what rate the Fed states, the markets have to purchase the debt. The markets are speaking.

The second thing the markets do not like is inflation. Inflation occurs when there is too much money chasing too few goods and services. This is exactly what the government created by spending trillions of dollars. Real wages are declining, which means the pay raises people experienced couldn’t keep up with the higher inflation costs. People lose money on the deal.

Higher Borrowing Costs

If inflation isn’t bad enough, consumers are also hit with higher borrowing costs. Not only does that new home cost more to build, it also costs more to finance. It’s a double whammy, and our government did this to us.

We the people are just as guilty because who doesn’t like free money flowing into the economy? The only problem is, there is a price to pay down the road, and we are paying the price today. Politicians are afraid to tell us the truth or we’ll vote them out of office.

The government does not create jobs or wealth. The government simply borrows on our behalf, because they can and adds it to our tab. Then one day the financial markets speak up and say we need to see a plan, or we’re not going to keep loaning you money. At least not at today’s rates.

Related Data

I will post some related articles on our Blog that explain further how the markets view our debt, and why rates are rising. They’re too long to post here. Our Blog is located at https://blog.topagent.com It’s a great resource filled with every article we’ve written for the paper for the last 19 years. It’s interesting to go back to certain dates in time and see what the real estate news of the day was. People often ask me how the market was when they bought. This Blog has your answers, sorted by date.

10-, 30-year Treasury yields end at highest since July as deficit worries grow

Worries about deficit spending after election bog down U.S. government debt

Bond-market selloff leaves 10-, 30-year yields at almost 3-month closing highs

Buying or Selling

If you’re thinking of buying or selling, Always Call the Ellis Team at Keller Williams Realty 239-310-6500. You can search the MLS like a pro at www.LeeCountyOnline.com or find your home value at www.SWFLhomevalues.com

Brett and Sande have been voted Best in Real Estate for 12+ years by News Press readers. Put our knowledge and experience to work for you.

Good luck, and Happy Selling!

October SW Florida Real Estate Market Update

Many Southwest Florida property owners are doing a cost versus benefit analysis on their property following nearby major storms in the past few years. Hurricanes Irma, Ian, Helene, and Milton have brought storm surge and flood damage to many coastal homes and inland homes near the rivers.

Not What I Signed up For

SW Florida homeowners bought paradise, and they paid a premium for it. Many even ponied up big bucks for flood insurance, while some did not. The price of paradise was worth it. SW Florida has not had much flooding in recent decades before Irma in 2017.

Cleaning up after a flood event is not fun. Some homeowners spent their life savings to restore their property back to a livable condition. Some even upgraded from what they had before the storm.

If once was bad enough, imagine going through this process two or three times. Some unlucky residents have, and they’ve had it. Nobody can tell us when we’ll get hit again. All we know is people are tired of it, and it might be time for change.

New Money Replaces Long Term Residents

Long-time residents may give way to new residents willing to take on the fight. The answer may be homeowners need to raise their existing property, or tear down and build new at a higher elevation. It costs a lot of money to raise a property. Some of our quaint and charming properties are beautiful where they sit, but will it be worth it to invest so much to raise them? In a sad way, the land may hold more value than the cost to raise a small and quaint home. The cost versus benefit analysis may dictate something else.

Future Values

We see values eventually going up along the coast as homeowners replace existing homes with more luxurious homes built at higher elevation. They may lose their charm, but they will have more cost and more value. Newer homes will not be as susceptible to ongoing flooding events. Existing homes that are raised will add value as well. Another option will be for owners to add a second story onto an existing home, essentially replacing living area on the bottom floor with living area a floor higher. The bottom floor becomes the new wash away floor that doesn’t require much repair.

Push Inland

Many potential buyers have decided they wish to avoid the high cost of flood insurance and flooding and move inland. Some inland homes require flood insurance, so it’s best to check on each property. A good real estate agent can help you select an area that meets your needs.

Blueprint

Each storm is different, and past performance is no guarantee about future performance in a storm. However, many have taken comfort in the fact that we’ve had several major storms and certain areas have suffered no flooding through all of them. There is a new required flood disclosure that sellers must complete. The disclosure details whether a home has had water intrusion and buyers will want to study these carefully when evaluating homes to purchase.

Flooded Homes Value

For areas that consistently flood, and no remedy is available other than flood insurance, such as townhomes or 1^st floor condos, prices may be subject to buyers’ appetite to take on that risk. Some condo associations will be affected as well because the flood insurance may be for the full association, and the first floor affects the policy.

Professional Advice

When buying or selling, hiring the right agent is more important than ever. The Ellis Team at Keller Williams has more experience than just about anyone out there. We’ve been voted Best in Real Estate for 12+ years by News Press readers. Always Call the Ellis Team at Keller Williams Realty 239-489-4042

Let us know how we can help! We have resources we can give to you if you need vendors. Let’s hope 2024 storm season is done so we can get back to enjoying paradise.

To get your home’s online value instantly, check out www.SWFLhomevalues.com

No Flood Insurance Required

We have several homes that did not flood and require no flood insurance. This is one home we held open last weekend that may be popular among home buers. We have others as well.

Let’s look at Pre-Hurricane Milton Housing Demand. We are writing this article before Hurricane Milton hits, so we apologize in advance to all those who are affected. We’re praying everyone makes it safe on the other side.

Pre-Hurricane Milton Housing Demand

Before the hurricane hit, housing has been soft with 6,269 single family homes currently on the MLS. We have 1,450 total pending homes which includes both pending and pending contingent. Buyers have been soft citing higher rates, waiting for the election, high insurance costs, etc. This is all indication buyers are less motivated because they have no fear of missing out.

After the Storm

We expect less homes to be on the market next week as some will suffer damage from the storm. If storm surge projections hold true, more home will receive damage than what Helene brought a few weeks ago.

In past hurricanes, a few things happened. First, less homes were on the market because some were damaged. It took people months or years to get their home back to sellable condition. Secondly, many displaced hurricane victims bought another home because their home was damaged. This took inventory down even further.

Damaged Field

There is a field in MLS regarding whether the home is damaged from the storm. I suspect we may be using that field again, so when searching make sure you know how to search on that field. This is something we can setup for you at www.LeeCountyOnline.com. Just e-mail us and ask us as it’s not a standard field available to the public.

New Flood Disclosure

Effective October 1 homeowners must now disclose previous flooding events. The disclosure requires sellers to provide potential buyers with a form that details (if Applicable) any insurance claims the seller made for flood damage, as well as any federal assistance received for those claims.

Buyers want to know the cost of homeowners insurance, flood insurance, and the history of damages. This new disclosure will answer many questions buyers already have. I have a feeling many sellers will have to update this form if we see significant storm surge in the area.

Work With a Professional

Who you hire matters. This is true on the selling side, and the buying side. A good agent can make sure you’re asking the right questions and seeking a bigger picture. More information is better if it doesn’t become analysis paralysis. Your agent should be able to help you sort out all the data so you can make a good decision for your family.

Let our family help your family! Always Call the Ellis Team at Keller Williams Realty 239-489-4042 You can get your home’s value online at www.SWFLhomevalues.com as well.

Be sure to keep up with the SW Florida Real Estate Market at our Blog. Blog.topagent.com Not only will you get today’s market stats and news, but you can also go back in time and see the news and stats from previous years. It’s always fun to see what was happening back when you last bought or sold a property and look it up.

Buckle up, stay safe, and remember to call the Ellis Team with your real estate questions. We’re here to help!

Today we want to provide a creative financing scam update to our May story “Creative Financing Red Flag Alert”.

Since May creative financing offers have increased in frequency, and they’ve become more creative. Additionally, after presenting their offer the callers have become more tenacious and downright combative with the listing agent.

More Creative

Since we wrote about how the “Subject To” can violate your lenders Due on Sale Clause, investors have changed the way they present their offers. One investor is hyping their offer as no risk because it is not “Subject To” at all but rather wrapping the mortgage to give the seller full protection. Whether you wrap a mortgage or not, it still may violate the original terms of the loan.

Furthermore, a seller is still reliant on the investor making the payment. If the investor does not make the payment, the seller may have no recourse to get their home back and be obligated to make the full payment of the loan. In a wrap-around mortgage, it’s possible for recourse to be created, but a seller might have to go through a lengthy legal process all the while mortgage payments need to be made. If the investor placed a tenant, the seller would have to abide by those terms as well.

Legal Advice

We would highly recommend a seller speak with an attorney before accepting any kind of creative financing offer. If they tell you you’re off the hook when you sell to them, look harder. Accepting a creative financing offer may prevent you from purchasing another home because you still have a loan in your name. They don’t tell you that, or they sometimes mislead about this fact.

The Ellis Team is looking into adding language into the listing agreement such that we have authority to reject creative financing offers for our sellers.

Agents Beware

These investor groups are so skilled and convincing that we’re afraid inexperienced agents, and perhaps some experienced agents may fall for some of the claims made over the phone, and in emails.

We have had sellers call their attorney and their lender. In each case, they were told not to engage in the offer before them.

I’ve even had investors point out that it is my duty to present all offers, and question why I wouldn’t want what is best for the seller?

Creative Financing Scam Update

As a service to the community, I will post screenshots of the written correspondence on our Blog. I invite attorneys and lenders to comment on the language. I will take out the address of the property and the names of the sender. It is our hope that you will begin to get a feel for what is happening out there. Please seek your own legal advice. We are not attorneys and are not offering legal advice in any way. We are simply informing you about a topic you might want to investigate before taking action should this happen to you.

Considering Selling?

Please call Brett Ellis or Sande Ellis 239-310-6500 at Keller Williams Realty. We can answer your questions and guide you through the real estate maze. Changes are everywhere, and you need an experienced agent to guide you through the process. Or get your home’s value for Free at www.SWFLhomevalues.com

Good luck, and Happy Selling!

Creative Financing Ehibits to View

The following are actual emails or offers we’ve received for you to view. We have blamked out who sent them and the property to protect privacy.

Creative Financing Exhbit 1

Creative Financing Exhibit 2

Creative Financing Exhibit 3

Creative Financing Exhibit 4

Creative Financing Exhibit 5

If for any reason you cannot open these links, leave a comment and I will find another way to share them. We are using Google Drive to share, but not sure if we can share outside of our organization

Lee County single family August home sale prices declined 3.9% from last year. Median home prices were also down $5,000 month over month from July as well.

Median home prices peaked this year in April at $425,000 and are down to $390,000 now. Some of that is seasonal. Many agents are complaining that homes sales are down, but actually, new pending sales are up 1.2% over last year. Of course, last year was a small number as interest rates were rising and sales fell off in the second half of the year.

Listing Inventory Gone

Something amazing happened this month. In July there are 8,054 single family homes listed officially on the market in Lee County. This month the number stands at 6,628. We believe there could be a problem with the official numbers because the numbers we track in MLS have actually gone up by 142 homes, not down 1,426 homes.

The official numbers forced the months supply of inventory down to 5.7 months supply, down from 7 months in July. We believe the months supply of inventory is 5.37 months, and that number has not changed much since August when it stood at 5.39 months.

Don’t believe the change in data. Official numbers may be coming into closer alignment to what we track, or they were missing some external MLS data for August.

Closed Sales

Closed sales were up 4.8% over last year. August 2024 sales were 1,225 compared to 1,169 last August.

It is clear home prices are still under pressure. Since the Fed lowered rates by half percent, we have not seen much change in mortgage rates. If anything, they have risen a bit. Mortgage rates are not directly tied to the rate the Fed sets but can be influenced by market conditions which cause the Fed to make changes.

Economic Conditions

Economic conditions are still worsening, and this is why the Fed has been able to cut rates. The Fed is hoping to cut rates such that the economy has a soft landing all the while protecting against inflation. The Fed’s hands have been tied because the government has been spending so much money, and raising rates was the only way to tame the labor market in hopes of taming inflation. This is why Real Wages have declined. If the government spent less, we could have lower rates and paychecks would go further because inflation would be in check.

This is not the world we live in today, so don’t expect rates to go back to almost free. Rates could see a 5 in front of it in 2025. If rates get back in the 4’s, that would be about the best we could hope for someday. It really depends on inflation and the strength of the dollar.

Seminars

How will future rate cuts and economic conditions affect the SW Florida real estate market? The Ellis Team plans to host several seminars this Fall which will help homeowners, and homebuyers alike make better decisions based upon market data and facts. Put politics aside and let the data guide your decisions. Watch for info on our Blog at https://blog.topagent.com

You can track your home’s value over time at www.SWFLhomevalues.com each month our site will send you an updated analysis of your property. It’s fun to track them over time.

You can always call Brett Ellis or Sande Ellis at 239-310-6500. We’d love to speak with you and answer your questions one on one, or feel free to attend one of our seminars.

Good luck, and Happy Home Selling!

Hurricane Helene Update

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The Ellis Team is projecting home closing activity in Lee County to be somewhere in the vicinity of 14,109 for 2024. You might ask, how did you pick that number? Was it a wild guess?

Without boring you with a complex mathematical computation, basically we compared year to date sales with previous years and extrapolated a percentage of where we are this year compared to previous years. We then looked at averages and compared economic climates for those years and did our best to make a prediction.

Projecting Home Closing Activity

There is absolutely no way our number will be correct. However, if it is even close, 2024 would be the 7^th best year on record, and the 4^th best year on the chart.

We hear agents saying how dead the market is, and nothing is selling. Statistically that’s not true. It may seem like nothing is selling if you have listings that are not selling. Through July more homes have closed in 2024 than 2023. I can already track through MLS about as many closings for August and we know not all sales are in yet.

Economy

We do know the economy is slowing down, and high interest rates are having their effect on buyers. However, we are expecting interest rates to begin declining starting this month. In fact, the mortgage markets already have begun their decline. Add in sellers buying rates down for buyers and there is light for home sales to remain steady.

Election

We have heard many buyers say they are waiting for the election. Somebody is going to get elected, and people are still going to need housing after the election. If you live in Washington DC, I could see why the election outcome might make a difference. For the rest of America, we either need housing or we don’t.

I could also see where some people could be concerned about their job going forward. Perhaps one candidate is more favorable to certain industries versus the other. Consumer confidence makes a difference, I get it.

It’s kind of like all those celebrities that promise to move to another country if so and so gets elected. They never do. I believe most people make a housing decision after the election about the same as they would have before the election. For some reason they just feel more in control. Buying a home is scary, and people like to feel in control. Even though we have the right to vote, that whole election thing feels out of control for most people, so they use it as an excuse to delay a decision.

Affordability

In the end, home sales and pricing come down to affordability. Affordability is determined by the price of the house, plus HOA fees, taxes, and insurance, financing costs, and anticipated maintenance. Home sales have slowed from better years because affordability has slipped. If real wages were to rise, inflation cools, or insurance costs abate, this would help affordability. Absent any of those, affordability must come from seller’s home prices, which is what we’ve seen the past few years.

Selling

If you’re selling in today’s market, who you hire matters. Marketing and experience matter. Always call Brett Ellis or Sande Ellis 239-310-6500 for the best advice in today’s market. Our marketing can work for you. Or visit www.SWFLhomevalues.com for your home’s instant home value. Our system will even track your home’s value each month and send you a comprehensive report on your area.

Good luck and Happy Selling!

Ellis Team Weekend Open Houses

Open House Sunday 12-3 PM

2304 NE 13th Ave Cape Coral, FL

Open House Sunday 12-3 PM

1417 NE 10th Ln Cape Coral, FL

If you’ve been following our column, you’ll know that we’ve been writing about housing inventory levels falling since April. After more research we learned about rentals affecting housing resale inventory supply.

According to a leading rental agent, rent prices have been down 35% in the last three months. He mentioned there are 176 single family homes in Cape Coral alone that came on the rental market. Because he has conversations with his clients, I asked him what is driving the rush to rent their homes.

Rentals Affecting Housing Resale Inventory Supply

The rental agent said many have tried to sell their home and could not, or just do not like the resale prices today, so they’ve decided to rent instead. This caused a rush of rental homes to enter the market, and some are still asking for 3 month ago rental prices.

Like the resale market, rentals are price sensitive. Whether you are renting or selling, you must price your home according to market conditions. For those that choose the correct rental price, those homes are rented within four to six weeks. For those owners that overprice their rental, it’s taking three to four months to rent their home. Presumably it takes longer for the owner to realize they are overpriced, and they eventually reduce rent until it rents. Our conversation didn’t get that far, but why else would it rent for more down the road?

Rent Vs Sell

There are three reasons why a homeowner would rent versus selling. First, they emotionally want what their home used to be worth and decide to wait until the market recovers to that point. Secondly, they may owe more on the home and need to wait until market recovers to pay off the loan. Third, they may decide it’s a good investment and would like to keep it. Perhaps they have a low interest rate and can afford to keep it until rates fall again.

We may never see rates get below 3% again. If they do approach sub 4% it probably means the economy isn’t doing well and the Fed is trying to pump the economy. If this scenario occurs, home prices wouldn’t be doing well.

Economic Projections

We just sat through an economic projection of three possible scenarios. The first was no recession, the second scenario was a normal recession, and the last scenario was a banking recession. Let’s pray for no recession or or a mild one because the outlook for home prices and sales time isn’t pretty if we hit a normal recession or banking recession.

Buyers and sellers should prepare for rates to come down, but it will take awhile, and real estate will lag while they do. Recovery will be slow. If we enter a normal recession, home prices could be stalled or fall for 3+ years. And if we enter a banking recession, unemployment would rise dramatically and the economy could get ugly. We last saw this scenario in the Great Recession and savings and loan crisis.

The difference is today our country is in so much more debt than we were in 2006. Latest odds have the US entering a recession at about 70%. The definition of a recession is negative growth for two straight quarters, so we won’t know we’re in one until 6 months in.

Bottom Line

Real estate is moving, if it’s priced correctly. Those rentals will come back on the resale market one day, adding to inventory. For now, it might be a good time to sell while inventory is down. Of course, when all those rentals come back on the market, interest rates might be lower and maybe there will be more buyer demand to offset the increased supply.

We’ll keep watching the market for you. Always call Sande or Brett Ellis 239-310-6500 with your real estate questions or visit www.swflhomevalues.com to get your home’s price.

Good luck, and Happy Home Selling!

Ellis Team Weekend Open Houses

Open House Saturday 12-3 PM

6216 Emerald Pines Cir Fort Myers, FL

Open House Sunday 12-3 PM

10813 Dennington Rd Fort Myers, FL

Open House Sunday 12-3 PM

914 SW 12th Terrace Cape Coral, FL

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Ellis Team Weekend Open Houses

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