Today we want to explore real estate false imprisonment. Back in 2007-2012 we used the term real estate prison because people felt they were in prison in their own home because they were upside down on their mortgage.  The only way out was to short sale, bring a bunch of money to closing, or default and risk foreclosure. Their needs changed but they could not financially get out.

Get Out of Jail Card

Virtually nobody is in real estate prison today because so many paid cash in the big runup or paid a large down payment because they were competing with other buyers. Additionally. prices appreciated so much and have not fallen like they did back in the 2000’s. Sellers today do not feel like they are a prisoner in their own home because of home values, they feel locked in for another reason. We call it real estate false imprisonment.

So many people financed their home at rates around 3% and they don’t want to give that up. If they were to make a move today, they would trade in that 3%ish rate for something closer to 7% or more. So, many are holding tight.

Waiting For Interest Rates to Change Could Cost You

Last week we talked about how waiting for rates to come down might hurt many home buyers. This is also true for homeowners who feel locked into their existing home. There is a downside to waiting to make a move.

Here is what we do know. A home feels comfortable for you for a period of time. It meets your needs. Then things change in your life, and your homeownership needs change. Some people outgrow their home, others want to downsize when the kids move out, and others need to change locations. Still others get tired of the homeowner life and opt for the carefree condo life. Some try the condo life and love it while others say not me and move back to a single family.

Whatever your needs are, they change over time. Back in the early 2000’s people were locked into their homes due to financial reasons. This isn’t true today.  While it can be uncomfortable living in a home that no longer works for you, many do it. Most do not realize there is a better way. Sellers today have options, and there is more inventory available to move to. When rates were rising, many sellers didn’t pull the trigger because they didn’t know where they would move to. Be sure to read last week’s article “Interest rate Purchase Strategy”

New Programs

We literally have new programs now that allow you to purchase another home, so you are not homeless, then sell your existing home. You only make 1 payment on the new home with no payments on the existing home. This gives you time to move into the new home and sell the home that is no longer working for you. You also avoid having 2 payments.

Trusted Advisor

The key is sitting down with an experienced Realtor you trust and going over your options. We perform a needs analysis and identify where we can improve your situation. Our team has resources to help you identify ways to make a move happen for you at the least inconvenience to you, and the least cost. It doesn’t cost anything to sit down with us and discuss your options.

We know what it’s like to sell and buy. We’ve done it ourselves, and we’ve helped thousands of clients just like you do it. Making a move doesn’t have to be hard if you’re working with the right people.

Give the Ellis Team a call. 239-310-6500. Brett and Sande will sit down with you and discuss your needs. Is a move right for you? We won’t know until we talk. For some it is the right move. Some decide to stay put. The decision is yours, and it’s always easier with the right information. We are not here to sell you anything. We enjoy giving people their options. Should you decide a move is right for you, of course we’d be honored to work with you. Don’t let real estate false imprisonment keep you from living in the home that best suits your needs. Or visit www.swflhomevalues.com to get a quick estimate of your home’s value.

Good luck, and Happy Selling!

We’ve been having a lot of discussions lately with buyers regarding their interest rate purchase strategy. With rates rising so fast, naturally they ask the question if now the right time is to buy.

Here is what we know about interest rates, and the 3 implications of waiting for rates to drop.

Interest Rates Could Go Up

If rates go up, it will cost you to wait. As rates increase, so does your payment.  You may even qualify for less home if rates continue to rise.

Interest Rates Could Stay the Same

We could have a period where rates stay the same for a while. In this scenario, as a renter you’re getting nowhere.  Your landlord thanks you, but you are gaining no equity whatsoever. When you rent, the interest rate is always 100% because all goes to somebody else and none to you or your equity.

Interest Rates Could Go Down

This is perhaps the worst possible scenario for buyers. Like you, other buyers have been on the fence too. When rates decline, other buyers hop off the fence and jump into the game. They become your competition for buying the same homes you are looking at.

When this happens, it can put pressure on the market and cause prices to go up. We saw this movie a few years ago when the rates were lower. Buyers were tripping over themselves to buy anything they could. At this point, sellers are not your competition. Your competition is all the other buyers looking to purchase the same home you are.

Added Benefit

Not only can you lock in a home price today while there are fewer buyers competing for more homes, you have an added benefit. You may be able to refinance later when rates come down. Contrast this with buyers who wait. They may be paying a higher price for the home. You locked in your price when rates were higher, and now you can refinance at the same rate they’re trying to buy a similar home for. You’re both financing at the same rate down the road, but you may be in the home for much less because you bought before prices started rising again.

In all three scenarios a buyer is better off buying today than waiting for rates to drop. We haven’t even mentioned yet the tax advantages of writing off interest versus rent. It’s easy to follow the masses and do what everyone else is doing because there is safety in numbers.

The truth is, this is where the opportunity lays. Opportunity always comes from doing the opposite of the masses. In the stock market you buy when everyone else is selling and sell when everyone else is buying. While we are not giving stock advice or predictions on what the real estate market will do, we do know a few things.

Over time, owning your own home is a good bet. The sooner you start that process the more wealth you are likely to have over your lifetime.

Home Buyer Seminar

The Ellis Team conducts home buyer seminars for people wanting to learn how to get into their first home or build wealth through real estate. If you’d like to attend a future seminar, give our office a call at 239-489-4042 We’ll be happy to get you into our next seminar, or meet with you one-on-one if that helps too.

You can also search for all the homes in MLS at www.LeeCountyOnline.com Our team is experienced and can give you the latest market data to help you make better decisions. We also have access to financing options that you might not know about. We have ways to get that rate down and several programs to get that down payment down too.

The Ellis Team looks forward to helping you make a good decision for your family. If you are a seller, you should call us too. Put our Know How to work for you. Experience wins the day, and the Ellis Team definitely has the experience.

Good luck, and Happy House Hunting!

We’d like to introduce you to the neighborhood market report update, and it’s a good one. It’s a popular feature for those that know about it, and one we haven’t found on any other website. It’s just one of the features at www.LeeCountyOnline.com that makes it the Go-To real estate website in Southwest Florida.

Neighborhood Market Report Update

 What is the neighborhood market report update and why is it important to me you might ask? This report shows all the active listings, pending listings, and sold listings in one easy report.  However, it also allows you access to all the photos of each listing, even the pending and sold listings.

In a nice and easy to read format, you’ll also be able to see the price per square foot and the days on the market. It will also show you the sold date on each sold listing, so you can decide which listings you want to click on and check out.

We find this particularly useful for those who have a home on the market or are considering putting their home on the market. You can quickly look at your neighbor’s kitchen, bathrooms, and flooring when determining where to price your home. Many times, those considering selling see what their neighbors home sold for if they are lucky. They really don’t get to see the upgrades and renovations unless they personally go inside.

We’ve included a sample report. We randomly picked a neighborhood that only had a few listings so you could get an idea of how the report shows the actives, pending, and sold properties. This neighborhood doesn’t have any pending sales currently.

Upcoming Changes

 We believe there may be a change coming soon to the way listings are displayed in MLS and on the portals. If these changes occur, it could drive more traffic to the bigger players who hold more of the listings, and the data. Currently www.LeeCountyOnline.com holds more of the data, and the Ellis Team combined with Keller Williams controls a large share of the market. By control I simply mean we work with a larger number of listings than a lot of brokers.

Find Out What Your Home is Worth

One of the other things people love on this site is the Free home valuation report. The quickest way to get there is www.SWFLhomevalues.com but it is hosted on the LeeCountyOnline.com site. The home valuation tool not only gives a fast value for your home, but it also automatically updates the value each month. This is especially helpful when the market is changing.

Advanced Searching Capabilities

Customers love the advanced search, which gives you control over 20 additional MLS features you can search on. And if that’s not enough, our agents can log in and help you create a search on every single MLS feature, even the ones you don’t know about.

In Person

Of course, Sande and Brett Ellis love talking with people about their real estate needs. We don’t hide behind a website to serve you. Our website is there to provide additional tools nobody else offers. Brett and Sande are here to provide insight and experience few in this market possess. Simply call us at 239-310-6500. We can’t help you if we don’t talk to you. Even if you’re not ready yet, no question is a dumb question.

Always Call the Ellis Team at Keller Williams Realty and let’s see what’s in your future.

SW Florida Real Estate Market Update

See last week’s article “Local Home Prices Down 3.6% Officially From Last Year“

Official sales numbers are in and it shows August median local home prices down 3.6% from last year. Average home prices were down 7.5% from a year ago. August median prices were $405,810 this August in Lee County compared to $420,750

Average home prices this year were $535,629 compared to $578,873 last year.  If we go back and compare against the height of the market back in April and May of 2022, median home prices are down 13.66% and the average local home prices down 18.71%

We have been amazed at how stable pricing has been given two factors. Interest rates have gone from the 2’s into the 7’s in a record amount of time.  Secondly, inventory has quadrupled in the last 18 months.  While prices have remained amazingly stable the last 12 months, most people don’t realize the price declines we saw last year from May through December as rates began rising rapidly.

Buyers Waiting For Prices to Fall

We hear many buyers are cautious to purchase because they believe prices are going to fall. Nobody knows for sure if prices will continue to drop. However, most buyers do not realize prices have already fallen almost 14-19%

Buyers listen to the news, and the headlines say prices may fall out and foreclosures could rise. We believe the economy would have to get a lot worse for anything like that to happen.

We do know that for every 1% rise in rates it takes away approximately 11% purchasing power away from the buyer. Because rates have gone up more than 4%, you might fear buyers can now afford 44% less than they could 18 months ago.

This may be true. The hope is that enough people with money will continue to come to Florida. Interest rates have hurt a large portion of the market, but people moving here are the wildcards.

What We’re Watching

We are keeping our eye on inventory levels. They are spiking.  If the trend continues it would tell us more people are putting their home on the market than people moving here. For right now, inventory is OK.

However, we have noticed the rate of increase in listings the past few weeks. If the rate continues to climb while pendings continue to go down, this could change the dynamics in a matter of weeks.

Thinking of Selling?

I would call the Ellis team now 239-310-6500. Our inventory is still low as our homes have been selling. We hear from other agents they expect a slew of homes coming on the market starting in October. We have been on several listing appointments in the past 9 months where the sellers haven’t decided to sell yet. It could be that many decide all at once the time is right. Or visit www.SWFLhomevalues.com to get an instant online estimation of your home’s value now.

Government Shutdown

We are writing this article the Tuesday before an anticipated government shutdown. Any shutdown will not help real estate sales, as new national flood policies will not be written. Buyers will be forced to buy private flood insurance at sometimes much higher prices, or wait to close. We may be able to assume a seller’s flood policy if they have one.

FHA, VA, USDA loans may cease as well. This would disrupt a certain portion of the financed buyer market and would certainly harm home sales.

Tricky Times

Tricky times call for experienced agents. Home insurance is difficult on a good day. Throw in possibly higher rates, or high rates lasting into 2024 and 2025, and a government shutdown and you’ve got a mess. If you are selling today, you need an expert who’s been through market shifts, government shutdowns, and insurance problems before. About 85% of the agents working today have never worked in a shifted market, and even fewer were here for the 1995 and 2013 shutdowns.

Experience Matters

Always call the Ellis Team at Keller Williams Realty 239-310-6500. The Ellis Team has been voted Best in Real Estate 11 years in a row by News Press Readers.

Good luck, and Happy Selling!

The Lee County Florida housing demand gap widens in August to its largest point in years. Last July we reported the gap was widening. Since then, the gap has widened another 21%. This means that Supply is outpacing demand.

Housing Demand Gap Widens

Back on June 7, 2022, we knew that the market crossed over. More homes were coming on the market than going off.  Inventory started increasing in February of 2022, but it wasn’t until June that we reached this critical point.  Even though we say critical, it still takes months for it to influence the market.

We have been seeing the number of price reductions in the 9-11% range of all listings as sellers have been reacting to the market. This past week it was 7.9% and the week before that was 8.08%. This tells us that sellers in general are tired of reducing their price, or they believe a buyer is just around the corner.

What might be around the corner is another home on the market competing with existing homes. Buyers today have more to choose from, and they are being squeezed by higher interest rates.

Last week we posted an article about how home prices have remained relatively steady. The current market is tracking like 2018, and 2018 showed us the market can take more listings without significantly impacting home prices. However, if you are a seller and wish to move, you must be price competitive against your competition. You either win on price, or your home must offer value that exceeds your neighbors.

This value could be a refurbished home with a new kitchen. It could have newer major items such as roof, HVAC system, appliances, water heater, etc. Or it could have some improvements your neighbors do not have, like a pool and spa, outdoor kitchen, or other upgrades.

Marketing Matters

 No matter what your home has, in addition to offering value, it must be marketed correctly. I know of a home on the market listed by another Realtor that is not selling. Their neighbors cannot believe it hasn’t sold yet. I have no idea where the agent may be marketing the home, but I did spot a glaring item that may be holding buyers back. Sometimes things in the MLS are entered incorrectly. This item I feel should be mentioned in the confidential comments. The fact that it isn’t leads me to believe either the agent is inexperienced, or the agent has no idea it is entered incorrectly.

What Will the Fed Do?

Some people believe the latest labor numbers will give the Fed a chance to pause rate hikes in September. Others believe they are not done and will continue the rate hikes. Rising interest rates along with rising insurance costs are sapping home buyers’ buying power. The housing demand gap widens in August, and further rate hikes could widen it even further.

Home prices are steady for now, but there could come a tipping point where there are just too many sellers for the number of buyers. So far, not all sellers are motivated. They do not have to move. Some would like to, but they don’t have to. Over time needs change, and if listings keep piling up, sellers may be forced to sell at lower prices.

This is why we track supply and demand numbers. It gives us clues into the future. Prices are a lagging indicator to these metrics, and sometimes the metrics change back again before prices move.

Current Market Index

A better barometer of the forward direction of the real estate market is the Ellis Team Current Market Index. We no longer publish this index as it is reserved for our clients. What we can say is the index has moved in one direction for 4 straight weeks.

If you are thinking of selling, Always Call the Ellis Team at Keller Williams Realty 239-310-6500. Not only will you receive the finest marketing in all of SW Florida, you’ll also receive decades of experience which is especially helpful in changing markets. And you’ll receive our up-to-the-minute statistical analysis, so you can make decisions ahead of other sellers who won’t be as educated as you on what’s really happening.

Good luck, and happy selling!

Search the MLS like a Pro with adnaced search features not found on other sites.

Top 10 Buyer Questions

Southwest Florida home prices remain steady for the last 12 months. The median home prices in July of 2022 were $420,000. This year it was $417,000, for a drop of $3,000. The average home price last year was $550.845. This year the average was $585,866, for a $35,000+ gain.

As you can see by the chart, the averages tend to be more volatile, so the median price is the one most quoted by economists. Median home prices throughout the year have been bouncing around between $400,000, and $447,500. That’s roughly a 10% swing, but of course there is some seasonality to the market. Year over year the median price is down .7% in July.  Fort his reason, we would say home prices remain steady.

Interest Rates Rising

 Given that interest rates have risen at their fastest rise in history, home prices have held up pretty well. This is a function of people moving to Florida and money that has been floating around in the economy. Everyone always asks, where are home prices going from here?

Excess money in the economy is burning off. Consumer savings is down, and consumer debt is increasing, which is a sign that inflation and high interest rates have taken their toll.  We may be getting close to the point where consumers slow down spending en masse. When this happens it invariably leads to a slowing economy, and job loss. Currently unemployment is at 3.6%, but that could rise once the slowdown begins.

Once student loans become payable in October excess money in the economy may not be available for spending.  Additionally, about $1.5 trillion dollars of commercial debt is coming due by the end of 2025. Companies will be forced to make difficult decisions. With credit costing 2-3 times what it did before, many companies may decide to close, default, or close locations and sell. These decisions may occur in 2024 because the lead-time for refinance takes a while.

Lending

 Banks are not as apt to lend anymore either, so some companies who decide to refinance their loans may not be able to.

For these reasons, we believe the Fed should halt further interest rate increases. It takes time for these rate increases to have their effect, and the damage may already be done. Sometimes it’s wiser to let the pot simmer for awhile before turning up the heat further.

The Fed is known for over-shooting their target. If they keep raising rates, they may very well do so again. Of course, our government is not making their job easier either. We keep spending, and as long as we do that, it means the Fed has to tighten monetary policy. If we could slow down spending, they wouldn’t have to tighten as much.  But that’s another story for another day.

Bottom Line

Florida is still a desirable place to live. We have no state income tax, lower property tax rates than many areas, and good weather, for the most part. This article is written before Tropical Storm Idalia makes her full presence known, so hopefully Lee County fares well.

Nobody knows for sure what will happen with home prices.  All we know is rising interest rates, insurance, and HOA/condo fees are not helping buyers spend more. That is money that could have gone into seller’s pockets, but now is going to total cost of ownership. Hopefully insurance reform will help lower the cost of insurance, and we won’t see many more storms.

If you have a property to sell, always call Brett or Sande Ellis at 239-310-6500 or visit www.SWFLhomevalues.com If you’d like to purchase, call the Ellis Team at 239-489-4042 or visit www.LeeCountyOnline.com

Good luck and have a Happy Labor Day Weekend!

See last week’s article “SW Florida Declining Home Sales Not Caused by Low Inventory“