Category Archives: Fort Myers Beach

Inflation Rocks Financial Markets This Week Forcing Fed’s Hand

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Staggering inflation rocks financial markets this past week essentially forcing the Fed’s hand going forward.  This caused interest rates to skyrocket to over 6.625% for well qualified buyers, up from about 5.375% the week prior.

Inflation Rocks Financial Markets This Week

We are writing this article before the Fed makes its decision on rates. Some believe the Fed will raise rates 75 basis points while other believe 100 is in order. Essentially the overall market has priced in the anticipated Fed decision.

Of course, the stock market reacted negatively because rising rates is not good for earnings, which will impact stock prices.  The yield curve on the 10-year note and 2-year note inverted again this week briefly, which signifies what we saw earlier in the year. The financial markets believe we are headed for recession. The Fed will be forced to put us into a recession to curb demand and get inflation under control.

Experts disagree on how high rates need to go to curb demand. As oil continues to rise it adds inflationary pressure to everything, so getting oil prices under control is crucial. Failing that, the Fed’s job will be much tougher. As we write this article oil prices are at $123.50/barrel. Many believe it will go to $150, and if it does, the Fed may need to raise rates significantly more throughout the year.

None of this is good for the financial markets, and it’s not good for real estate either, in the short run. In the long run we know real estate holds up as a hedge against inflation. Home prices long term outpace inflation, and we have written an article on that. See our post from May 26th  Housing Best Hedge Against Inflation in Uncertain Times which covers that.

The game plan for buyers right now is get in before interest rates rise further, as rising rates will cost you much more than a possible price decrease from sellers in the short term. See our video from April 15th  Better to Buy Now or Wait? on our YouTube channel https://www.youtube.com/Topagent which shows you exactly how much it costs by waiting in a rising rate environment.

We have been predicting this day for the past several months and advising our clients. There are no surprises for the informed. We always say, hiring the right Realtor makes all the difference, especially in a shifting market. What you do next will determine your financial future.

If you are thinking of selling, knowing the latest statistics will help. You must price your home for the market we are in and for the market we are going into. Some sellers are holding on to the market from 3 months ago, and those strategies may not work. Gone are the days of throwing up a listing and expecting 20 multiple cash offers. You may need to look at financed offers and appraisals.

If you are a buyer, you may want to get ahead of this. More listings are coming on the market to choose from, and waiting can seriously cost you. If you see a home that meets your needs and is priced correctly, you may want to make your move. Waiting for a seller to reduce their price 5% might cost you 15%.  This is what we just witnessed this past week. Waiting absolutely cost financed buyers.

Our team is not here to sell you anything. We present the facts and let you make the decisions. We do so in a factual and logical way so you can make the best decisions for your family. Most people appreciate the truth, and that’s just what you’ll get when you work with our team. If you’re thinking of selling, talk to Brett or Sande Ellis 239-310-6500 or visit www.SWFLhomevalues.com

If you’d like to buy before rates go up again, visit www.LeeCountyOnline.com or call us at 239-489-4042. We’re here to help. Remember, when the markets get rocked, stay calm and work with a professional.

Market Turmoil

Housing Inventory Trend Line Headed Upward

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Lee County housing inventory trend line is on the rise. Local inventory has grown above the trend line for 6 straight weeks. Housing inventory has risen for 17 straight weeks.

Housing Inventory Trend Line Headed Upward
Housing inventory trend line headed upward

This tells us the top of the frenzy probably occurred back in February. Agents across the county are noticing less offers on their listings, and the upward pricing pressure has abated.  We will still see higher prices year over year as the numbers come in, but we may not see substantial price increase month over month going forward.

The housing inventory trend line is a leading indicator for the local real estate market. Inventory levels tells us about the relationship between supply and demand. With inventory rising, supply is outpacing demand at these prices. Therefore, we are seeing so many price reductions in our market.

Sellers Pay Attention

Home sellers may have missed the peak of the market, but it is still a great time to sell. Housing inventory currently stands at 1.43 months supply which is still fantastic. We just do not have the upward pricing pressure fueling large price gains like we used to.

The best indicator we have is the Ellis Team Current Market Index. While we are no longer publishing this live data to the public, we can tell you that it almost doubled since April 26th, which was just 6 short weeks ago. Ellis Team clients get access to this data which is crucial in making proper pricing decisions in a changing market.

Focus on Marketing

Today sellers are hiring agents with a focus on marketing. The past two years we noticed sellers were interviewing agents and sometimes selecting the lowest cost agent. Perhaps they felt any agent could sell a home in the heated market, and that was true. Not all could get Top Dollar, but they could sell the home for full price.  There is a big difference in the two.

Today marketing matters again. Sellers are not looking for the cheapest way to sell but rather the agent who can fully market the home and get Top Dollar. When the buyers fall off, marketing becomes more important to sellers. As inventory grows sellers know they must make their home stand out. It used to be that buyers were in competition with other buyers for the best homes. Now buyers have more choices, and we are heading towards sellers being in competition with other sellers for the best buyers.

Home prices have exploded in recent years and sellers do not want to jeopardize cashing in at these prices by hiring an agent that simply puts their home in MLS. When inventory grows, buyers shop online, and homes begin to look alike. Each home has its unique features, and you’ve got to create ways for that home to be seen by buyers who want those features.

Target Marketing

This is why we target market. Placing a home on Zillow or Realtor.com is not going to sell the home when inventory grows. We take our listings and place them in interested buyer’s inbox, social feed, and search online. Our marketing contains various target sets depending on which listing we are advertising.

We can reach buyers in out-of-town markets who want to buy here. Why advertise to only local buyers when you can target out of state buyers too?

This is the difference between selling a home to just one buyer or reaching many buyers from all over. Do you think you would get more money if you had one buyer interested or dozens of buyers interested?

If you are thinking of selling and want Top Dollar in today’s market, we should talk. Call Sande or Brett Ellis 239-310-6500 We’ll be happy to discuss your situation and show you how our marketing can give you an advantage. Real Estate agents aren’t cheap, so why not hire the best? A great agent can actually put more money in your pocket at closing!

Good luck, and Happy Selling!

Father’s Day Giveaway

Oil Prices and Housing Market Direction Tied Together

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Could future oil prices and housing market direction be tied together? We are beginning to think future oil prices may dictate a lot of things, including the direction of the housing market.

Oil Prices and Housing Market Direction

Up until now, the stock market and housing market has been influenced by the market’s perception around the Fed and 10-year interest rates. How the Fed navigates inflation versus throwing the economy into recession has steered the markets up until now. Of course, food and energy costs are a part of inflation. The thinking has been, either higher interest rates will cure inflation or higher prices will.

Dependent on Oil

There is an old saying in finance that says nothing cures high prices like high prices. This assumes demand will soften for an item once it reaches a certain point. The problem with oil is, we are dependent on it. Not only do we use oil for our cars, but it is also used at many everyday things like clothing, roofing material, etc. It is a very long list.

High prices may not cure high prices because it is a need, not a want. The fear is the Fed may be forced to raise rates higher than Wall St thinks. This would be a double whammy because the consumer is not only being hit with higher costs everywhere, but they will also be hit with rising rates.

This will have an effect on housing prices going forward if this happens. Many believe it is already having an effect. Back on February 26th I wrote about if oil got to $115/barrel I didn’t think it would be good for our economy. In essence, it just felt like anything north of $115 would be a breaking point for the economy. As I write this article, oil futures stand at $119/barrel.

Scary Thing

The scary thing is oil could easily go to $130/barrel or worse. If that happens, $5 plus gas is on the table, and I just do not believe our economy can take that for long. This will also cause the Fed to be more aggressive than they have in the past, and Wall St has not priced that in yet.

The Fed has worked hard to placate Wall St, but the jig may be up soon. Do I feel the Fed has been honest about inflation to this point? No, I do not. But who am I to call them out? It does not matter what I have thought through this process. What I am saying is, time may be out, and they may be forced to deal with this.

It is also possible the Fed has some geniuses that know more than we do.  I should hope so. Maybe they have a better handle on this than we think. If they are right, real estate should be just fine and interest rates should settle down within a year.

Lots of Upcoming Economic News Expected

For the next two weeks people will be talking about the Consumer Price Index, the Producer Price Index, core inflation, unemployment numbers, workforce participation, and company earnings.  These are all the things that give us clues as to the economy and inflation, and the direction the Fed might take.

For my part, I’m watching oil. I think it’s as simple as that. I’ll analyze the other things once oil prices are under control. Until then, I believe we’re just massaging numbers and fooling ourselves as to how great things are and not dealing with the issues.  If we get oil prices down, the Fed has more choices. Failing that, watch out.

If rates rise, it will cost buyers more. Rising buyer costs ultimately hurt sellers because it limits what buyers can afford to pay. That leads to lower price gains, or reduced prices, depending on how soon the Fed acts.

For now, watch oil. If you have real estate to sell, call Brett or Sande Ellis 239-310-6500 or visit www.SWFLhomevalues.com for a free instant analysis of your home.

Good luck, and Happy Selling!

New Listing in Cape Coral- Open House Sunday 12-3 PM

3457 NE 11th Ave

Housing Best Hedge Against Inflation in Uncertain Times

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One of my finance professors in college named housing best hedge against inflation and I never forgot that.  He said tangible assets like real estate, gold, silver, etc. retain their value as the dollar is devalued due to inflation.

Construction Costs Going Up

In fact, as inflation heats up, the cost to build new construction only goes up. Because our market has been under-supplied for years, we are forced to build our way out of this. The only thing that could change the equation is if demand slowed.

Demand has slowed somewhat due to rising interest rates and insurance costs. Consequently, inventory has risen the past several months, and this should temper price increases like we’ve seen the past two years.

Whether home prices will appreciate or decline slightly no one can say. What we do know is the stock market has been volatile and has mostly headed down in 2022. Real Estate may be a much safer play in the short run, and the long run.

Housing Best Hedge Against Inflation

As you can see by the chart, since 2000 real estate has outperformed inflation. This includes the real estate crash years in 2006-2009. While searching the Internet I found more data dating back to 1967 that shows real estate outperformed inflation as well.

We May Already be in a Recession

Many people say the US will enter a recession in 2022. Others believe it will be 2023, and still others believe we are already in one. Negative growth impacts stocks, and as such we have seen a pullback in stock prices. When the Fed raises interest rates it is not usually good news for Wall Street.

Rising rates can dampen home affordability, and therefore it can have a negative impact on real estate prices short-term. We still believe now is a good time to buy before rates go higher. We did a video on our YouTube channel (https://www.youtube.com/c/Topagent) which shows how waiting to buy in hopes prices will come down actually costs a buyer when rates increase.  Send me an email if you’d like a direct link to that video Brett@TopAgent.com

Whatever happens with real estate prices in the short run it should be less volatile than stocks and should protect against inflation. The other nice thing about real estate is you can live in a home; you can’t live in a stock. You can rent out a home for income when you are not using it.  Real estate has so many advantages over stocks, including some tax deductions.

Is Your Home Working For You?

If you have a home that’s not quite working for you, now may be a good time to sell. Real estate prices are strong and while inventory is growing, it is still a good time to sell. If you wait to sell, you are occupying a home that doesn’t quite work for you, and it may be harder to sell when more homes enter the market in the future. Not to mention, interest rates could keep climbing.

As interest rates climb less and less buyers qualify for your home. If you are getting a loan on your next home, it may cost you more in the future. Interest rates have held steady the past week or so waiting on direction from the Fed at next month’s meeting. The inflation outlook will dictate how that goes, and we are expecting another rate increase in June, and perhaps several more this year. Either high prices will slow this economy down, or high rates will. It may be a combination of both, but rest assured the Fed will slow down the economy to get inflation under control.

The question is, will they overshoot and put us into recession? The other question is where is the best place to put our money in uncertain times.? Real estate may be a good option, and now is a good time to get into the right real estate for you.

Always Call the Ellis Team at Keller Williams

To get your home sold Always Call the Ellis Team at Keller Williams Realty 239-310-6500 or visit www.LeeCountyOnline.com to search the MLS, or www.SWFLhomevalues.com to get your home’s value instantly. Our marketing reaches more buyers, which brings more offers.

Good luck, and Happy Memorial Day Weekend!

How does Inflation and recession Affect Housing?

Housing Inventory Grows Most in Higher Price Ranges

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We just pulled new numbers from MLS and found that housing inventory grows most in the higher price ranges since March.

Overall single-family home market inventory in Lee County grew to a 1.18 month’s supply, up from .82 month’s in March.  Where we see the most differential between the two graphs is in the $300k price and up. Housing inventory grew the most as the prices go higher. The spread in each subsequent price range grew higher.

Housing Inventory Grows Most in Higher Price Ranges
May 2022

This explains why we are seeing price reductions again in the housing market. Some sellers got a little ahead of the market, and that was OK while the market was rising rapidly. Today, the market is price sensitive again. Sellers must be priced correctly in this market.  Competition from other sellers is coming as more listed properties hit the market each day.

March 2022 housing inventory
March 2022

It is still an excellent time to sell your home, but you must be competitive in the market. Overpricing your home in this market may not accomplish what you want.  We are not saying prices are headed down. That would depend on how many more sellers choose to list compared to how far and fast interest rates rise and how that affects demand.

Marketing and Pricing Crucial

What we are saying is marketing your home extensively and pricing it correctly are critical. Gone are the days you can just list it in MLS and post on some portal websites and it will sell. To receive Top Dollar, it takes marketing and correct pricing. especially when housing inventory grows most in higher price ranges..

If you follow this advice, we think you will be happy with the result. Sellers that do not do this will not receive top dollar for their home, and worse, might miss the market altogether.

The Ellis Team has been through changing markets many times in our career.  If and when the market does change, there will be some sellers that look back on 2022 and kick themselves because they missed one of the greatest opportunities in their lifetime.

Maybe the market isn’t as hot as it was 6 weeks ago, but it is still excellent. Throughout the history of real estate markets most sellers would kill to have a 1.18 month supply of homes on the market as competition. This is an opportunity for current sellers, and perhaps those wondering when the market would top.

We cannot say for certain if the market has topped and where it will go from here. Rising inventory levels and price reductions tell us it has at least paused, which markets sometimes do. Markets don’t always go up or down. Sometimes they meander awaiting direction from buyers and sellers.

We have so many factors pulling and tugging at this market, and it will be interesting to see which forces win out. Rising rates usually cools the market, as does fear of recession. However, Florida is still a popular destination that many would like to relocate to.

Thinking of Selling?

If you are thinking of selling your home, please reach out to Brett or Sande Ellis 239-310-6500. We can guide you through the market and help you explore your options. We can even help you find your next home which is easier not that inventory is rising. Or visit www.SWFLhomevalues.com for a Free instant home valuation online.

If you are looking to buy, our buyer specialists are here to help guide you as well. Just call 239-489-4042 or visit www.LeeCountyOnline.com to begin searching the MLS like a pro.

Good luck and Happy Selling!

Ellis Team Weekend Open Houses

Open House Saturday 12-3 PM

Eagle Reserve Lakefront Pool Home
Open House Saturday 12-3 PM

3951 Spotted Eagle Way

3 Bed 2 Bath Pool Home on Lake

 

Open House Saturday and Sunday 12-3 PM

Waterfront Pool Home Gulf Access
Gulf Access Pool Home

2519 SE 22nd Ave

4 Bed 3 Bath Home Direct Access Waterfront Pool Home

 

Open House Saturday and Sunday 12-3 PM

Pool Home on Golf Course
Cape Royal Home

3 Bed 2 Bath Pool Home on Golf Course

11849 Lady Anne Cir

See Listing Inventory Rose 40% Since February published just a few weeks ago. Since that article, inventory has now risen 64% since February.

Is Real Estate a Risky Investment with Inflation and Possible Recession?

 

Good News for Home Buyers in 2022

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Finally, we have some good news for home buyers in 2022.  This article will spell out some facts that are benefitting home buyers right now and a scenario that may help in 2022.

Good News for Home Buyers

For the past several years home buyers have been competing with other home buyers in addition to personal investors and investment companies seeking return. Yields in the bond and stock market have been hard to come by in recent years, so Wall Street money started flowing into real estate.

With bond yields rising some money is starting to flow into bonds even though that is risky in a rising interest rate market. When rates rise, the price of bonds falls, so investing in bonds is risky until rates settle out. Just the same, some money is going in on bonds.

For stocks, the price multiples were so high it was hard to get any yield and investors were simply banking on higher prices in the future. Now that the stock market has been correcting in 2022, we may see money start flowing into stocks later this year.  Yield is much easier achieved at lower price multiples, and we are seeing that.  The only wildcard is future earnings and their impact from inflation and possible recession.

2 Scenarios

If money starts flowing into stocks again it could do one of two things.  It could take money out of main street and back into Wall St.  Or it could further fuel Wall St money and make its way back to main street via increased shared investment into real estate.  The answer probably depends on how far the stock market eventually falls and what the opportunity is there.  We didn’t see Wall Street money come over into real estate big time until stock valuations became quite high.

These investment companies have been scooping up homes and placing them in rental programs by the bunches.  All these sales are competition for home buyers and essentially take inventory off the market. If this trend slows, it could help home buyers in 2022.

We are seeing increased inventory on a weekly basis.  This past week single family inventory grew another 81 homes in Lee County while pending inventory dropped 38 homes.  That is a difference of 119 homes in one week. Not only is current inventory increasing, but future inventory may too if investors slow down their purchasing.

Wall St Vs Main St

The decline of stock market value may lead to this.  If investors start selling funds like Blackrock (BLK) whose stock is down 17.13% in the past month there may be less future investment in homes.  If Wall Street determines that real estate is about maxed out in price due to rising interest rates, they will simply evaluate their purchases on total returns of rent vs price and leave out expected future price appreciation due to almost free money.

Buyers have been getting hit by rising prices and rising interest rates. Rates are still probably headed higher, but price increases could slow down as inventory grows. Not only is inventory growing in SW Florida, but it is also growing in many markets across the country.

If the US enters a recession as interest rates continue to rise, it could further slow home buying. In this case, home buyers will have more choices to choose from, and perhaps lower home prices to offset those rising rates.

We believe in almost any scenario home buyers are better off getting in now before rates rise higher. Mathematically, if rates rise another 1.5% to 2%, it will take a drop of about 20% in home prices to make up for that, and we do not see that happening.

If you are trying to buy or thinking about buying, we may have more options for you than a month ago. Simply go to www.LeeCountyOnline.com to see All the inventory updated in real-time. Or call 239-489-4042 for a buyer specialist.

If you are thinking of selling, go to www.SWFLhomevalues.com to see your home’s current value online, or call 239-310-6500 for a Top Dollar Specialist!

Weekend Open House

Open House Saturday 11 AM-2 PM

2519 SE 22nd Ave, Cape Coral FL

Direct Access Waterfront Pool Home Cape Coral Florida

 

Experience Matters When Selling Your Home

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Many homeowners have no idea how much an agent’s experience matters when selling their home. Home sellers believe all agents do the same thing because they all sound alike. If all agents do the exact same thing, why not select the least expensive agent? It stands to reason the less you pay in commissions and closing costs the more will end up in your pocket, right?

Experience Matters When Selling Your Home

Big Difference in Agents

The truth is there is a big difference in what certain agents do, how they act, negotiate, advertise, and present your home. The result could be a difference in tens or hundreds of thousands of dollars, not to mention keeping the sale together.

We all know some famous attorneys win more cases than the average attorney. This is because they are persuasive, knowledgeable, experienced, and know what to say and when. They also know what not to emphasize to a jury, and they certainly wouldn’t want to make a legal argument that is not applicable in their case, even though they may be very good at that argument.

The same is true in real estate. We watch agents answering objections with their go-to script because they are good at it even when it does not apply.  This tells us they are not listening to the customer, and they do not have enough experience to understand or answer the true objection, so they go with the one thing they know.

I guess if you know one or two things well you will make some sales. The question is, are you truly serving your clients? A seller may be hiring you to sell it for all it is worth. The agent feels great because they sold it in one day in a really hot market. Did the agent sell it, or did the hot market contribute to the one day?

Agents without business or experience will often discount what they charge because they must. They may not be in business next year anyway, so why not make what you can now? This is not necessarily in the best interests of the client, but the seller doesn’t know any better and neither does the agent.

This has been one of the best markets we’ve seen in our lifetime, and it may never come around again. It would be a shame to waste it away with an inexperienced agent who could cost you a sale and net you less than all it’s worth.

Almost always experience matters when selling, and perhaps now more than ever.  We do not have enough space to write about all the ways inexperience can cost you when selling. Obviously negotiating experience matters when selling. Knowing what to say, how to say it, and when to say it. Avoiding key phrases that sound good but only turn a buyer off is another.

What’s Your Definition of Marketing?

Most agents do not market a home. Sure, they stick it on MLS, place a sign on the property, and pray that someone else sells it. By placing home in MLS, it goes out automatically to Zillow, Realtor.com, Trulia, etc.  This is not marketing.  This is the same old thing all agents do because it is free. It does not make your home stand out, and it will not bring you Top Dollar!  If everyone, does it, how does it make your home stand out?

An open house flyer and a Free online open house ad is not marketing. It is an opportunity for an agent to pick up buyers for Free! Paid targeted advertising for open houses is another matter entirely.

Paid advertising is when an agent spends money on your home. Knowing where to spend, how much, and when is critical. Unfortunately, we have thousands of agents whose only experience is taking the first offer or two in a hot market. If that is all you’ve ever known, you don’t know how to extract information to get Top Dollar!

Experience Matters When Selling

Experience matters when selling your SW Florida home. Call Sande or Brett Ellis at 239-310-6500 We’ve both been selling here locally for over 34 years, and we’ve seen a thing or two. We’ve worked in up, down, and sideways markets and know all the right questions. Chances are we have all the right answers. Or visit www.SWFLHomevalues.com to get your home’s value online instantly.

Register for our Ellis Team Mother’s Gift Package 2022

Florida Insurance Crisis Threatens Home Ownership

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The Florida insurance crisis threatens home ownership by pricing many buyers right out of the market.  Most people do not realize what has happened in the last year, and they are about to find out.  Current homeowners will be affected at policy renewal, or upon policy cancellation.

Florida Insurance Crisis Threatens Home Ownership

Already we have a home affordability crisis. The Florida insurance crisis threatens to make the affordability crisis even worse. Let’s break this down into two areas. Flood insurance and property insurance.

Flood Insurance

The National Flood Insurance Program upgraded their program to Flood 2.0 What this means is properties that were previously in flood zone x and other non-required flood insurance areas have been reclassified.  Flood insurance may now be required.  The other startling fact is most properties that were in X paid an even $677/yr.  We are now seeing X properties with premiums over $3,000.

We have seen some flood zone A policies more than $6,000/yr.  If you already have a NFIP policy, they cannot raise your rates more than 18% per year.  However, after six years you will be maxed out at the new rate.  I just looked up a property that was $677 last year and now it is $6,4000 this year.  That is $533/mo, just for flood insurance. Now we must add in homeowners’ insurance, and we haven’t even gotten to that yet.

We would suggest calling your insurance agent to see if your property has changed.  There are some private flood policies available, but when they fill up, they stop writing policies.  If you have a NFIP policy, do not cancel it without taking to your insurance agent first. It may make your home difficult to sell without it.

Property Insurance

7 insurance companies have recently filed bankruptcy and three others have stopped writing new policies altogether. If you have a tile roof over 20 years old, some are cancelling policies. Others are doing it at 30 years old. Shingle roofs are between 10-20 years. We are losing options. If you are selling a home, you may be required to replace a roof. Even if you’re not selling, you may have to replace your roof.  Insurance for older homes is increasing rapidly as well.

Insurance companies are looking for any reason to not cover the home, and any reason to charge a higher premium. They lost a lot of money, and insurance companies do not like losing money. Insurance companies are risk adverse going forward, so anything that looks like it could have an upcoming claim is being excluded.

They are checking age of water heaters, plumbing valves, air conditioners, roofs, truss tie downs, etc.  Some homeowners are seeing their rates doubling or tripling, while others are being canceled.

 

Triple Whammy

Home buyers are being hit with rising flood and property insurance along with rising rates. It is limiting how much they qualify for. In fact, some buyers on new construction are cancelling contracts because the interest rates are higher now than when they signed contract and they no longer qualify for the loan. Same with the flood insurance on some lots. Homeowners insurance on new homes is still affordable.

Typically rising interest rates curtails prices because it affects affordability. We still have strong demand and a low supply of homes on the market, although it is rising. Listing inventory today is at the highest it has been all year.

Future of Real Estate Prices?

The question is going to be, will the number of people moving to Florida offset or exceed the number of people priced out due to rising rates? The answer to that question will determine the future of real estate prices in Florida. Marketing to out of state markets will be crucial to getting top dollar for your home.

If you have real estate questions, call Sande or Brett Ellis 239-310-6500. Or you can get an instant and Free online home valuation at www.SWFLHomevalues.com Be informed. Rates are expected to climb rapidly in the coming months. The choices you make today could determine your future!

 

Should I buy Real Estate Now or Wait for Prices to Drop?

Forecast 6% Interest Rate Coming to Housing Market According to Experts

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Loan experts forecast 6% interest rate coming to the US housing market in 2022. Currently rates have risen to about 4.75%. We have witnessed the fastest rise in mortgage rates in US history the past 4 weeks.

Forecast 6% Interest Rate Coming
6% interest rates coming in 2022 according to forecasts

Mortgage rates skyrocketed 24% in the past four weeks, and they are not done yet. We have been warning readers that rate hikes were coming.  It is not too late to make a move, but those that begin the process now will benefit over those that wait.

Save Money by Buying Now

Buyers are better off buying now. Even if a buyer believes home prices will fall, mathematically they are still better off buying now at lower rates than waiting.

Home sellers are better off acting now because rising rates dampens buyer enthusiasm, not to mention the amount they can afford to pay for a home.  The real question is, how will rising rates affect homebuyers up North flocking to Florida but needing to sell their home first? This is where we could see an impact. Many of these buyers turn into cash buyers, but if they face a difficult time selling their home up North, it could affect us here in SW Florida.

There is no question people still want to move here. The question is, how much can they afford when they get here, or can they get here? Many locals have tapped out because prices have risen so much and priced them out of the market. Rising rates have already lowered the price point they can afford, so it cuts into demand.

Builders are losing contracts from buyers who no longer qualify for the mortgage since the construction contract was signed. The good news is there are still buyers out there willing to scoop the property up. Builders appreciate the fact they are losing buyers because many of those deals were signed at year ago prices. The builder can now sell to a different buyer at today’s prices.

Rates Affect Affordability

Just the same, rising rates are limiting how much buyers can pay for homes, and when enough buyers are affected, it will affect the overall market. With forecast 6% interest rate coming soon to our market we are watching its effect on home prices.

The other thing we are watching is inventory levels. Daily levels are rising a bit. Overall housing inventory levels are very low in Southwest Florida. It is still a good time to be a seller, but the future becomes a little less settled later in the year.

Most economists are predicting a recession later this year or next. The yield curve has inverted which signals an upcoming recession.  See our article on February 10th at https://blog.topagent.com to read up on how that metric has predicted every recession since the fed began publishing it in 1976.

Rising Rates Will Cost More Than Benefit of Falling Prices

Prices may continue to rise. They could fall back a bit. Nobody knows exactly where prices will go except that we don’t anticipate large swings one way or the other. What we do anticipate are rising rates, and that will not be fun for buyers or sellers. Our team has experience working in up, down, and sideways markets so we will be with you every step of the way with best guidance. Many Realtors have only worked in one cycle and don’t know what to do if the cycle changes.

I remember back in 2005 when I went on TV and told everyone the market was about to change. Many Realtors told me I was crazy and didn’t understand the market we were in.  I am not calling for a change like we saw back in 2006.  I am saying things are about to change. It will not be as fun for a seller as the last 2 years have been, but goals can be accomplished, and we’ll have to work a little harder to find buyers and keep deals together.

If you have questions about the market, call Brett or Sande Ellis 239-310-6500 or visit www.SWFLHomevalues.com to see the value of your home instantly.

Good luck and happy selling!

 

Homeowners Watching Interest Rates Rise

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Current homeowners watching interest rates are contemplating whether to make a move in this market. Potential sellers are worried about where they would move to. They are also worried about financing their next home and how much more it might cost if they wait.

Homeowners Watching Interest Rates

 

We’ve talked a lot recently about how rising interest rates can dampen future prices. Rising rates not only hurt first-time buyers, but they also hurt move-up buyers.  Lateral and move-down buyers are hurt too if they are obtaining a mortgage.

The advice we give is look at your current situation. Do you love your home? Does your current home meet your future needs? If you love your current home and it meets your future needs, moving isn’t necessary. If your current home needs some expensive repair items like roof, air conditioner, water heater, etc. are you prepared mentally and financially to make that investment? Insurance companies are requiring these improvements, so they will not be optional.

6% Rates

Interest rates could increase another 2% or more this year. Waiting might seal your fate in your current home, so asking yourself these important questions are crucial right now. As agents, we are not here to sell you anything or convince you to do anything. These are questions you should ask yourself and answer yourself.

We are here to answer your real estate questions. When a homeowner comes to us with an idea, we help structure a plan to make that idea a reality. Or we point out potential deficiencies in the plan. There is nothing worse than starting a plan and not having it thought through.  We have talked some people out of selling because the back end of the plan didn’t have a realistic end game and we did not want to make the homeowner homeless.

On the other hand, we have helped some sellers devise a plan to accomplish their end goal in ways they didn’t know were possible. For instance, we have some lenders that will lend money at today’s current rates and allow the seller time to sell their existing home, all while only paying one mortgage payment.

Other times we have negotiated lease-back terms favorable to the seller to give them time to make their next move. The point is, there are options current homeowners may not have considered.

We Can Talk

If you are trapped in a home that doesn’t work for you, call Sande or Brett Ellis at 239-310-6500. We can sit down and talk about your situation.  We’ve helped many homeowners in the past because we listen to your situation and provide answers.  Sande and Brett have built their reputation on giving sound advice and not selling outcomes just because we want more sales. When you start with the consumer in mind first, everything just seems to work out the way it should.

Homeowners also like our home valuation website www.swflhomevalues.com because it gives an instant value of your home. It is fun to track the value each month as the system gives you a new number over time, because the market changes. Many homeowners are not aware of how much their home is worth.

Do not make decisions based off a computer number though. The Ellis Team has been selling homes for far more than appraised value lately, so selling it for appraised value in one day might be leaving tens of thousands of dollars on the table. The Ellis Team uses advanced marketing to reach the greatest number of buyers, not just the ones looking at national portal sites. We can target buyers looking for homes locally and from out of the area. Marketing is more complicated than ever. Anybody can sell a home in 1 day in this market. Few can sell for Top Dollar, and that’s where we come in.

Give Sande or Brett Ellis a call. Interest rates are rising in 2022 so this is the time to ask yourself an important question. After that, you know who to call. Sande or Brett Ellis 239-310-6500