FNMA predicts price declines in the housing market nationwide for the next two years. In the first quarter of 2023 they predict year over year appreciation at 3.3%, but all this appreciation has already occurred in 2022.  Home prices have been dropping nationwide and the stats won’t show year over year declines until the 2^nd quarter.

Starting in the 2^nd quarter of 2023 FNMA predicts declines of 1.3%, followed by declines of 1.4% and 1.5% in the 3^rd and 4^th quarters. Going into 2024 they are predicting declines of 1.4% in the 1^st quarter, 1.5% in the 2^nd quarter, and declines of 1.4% in the 3^rd and 4^th quarters.

Have Home Values Peaked?

If FNMA is correct, what does all this tell us? Home prices have already peaked, and interest rates and the economy are influencing home prices. They are not predicting major price swings, so buyers can rest assured if they find a home, they love at an interest rate they can afford, they should buy.

For sellers, it is a slightly different story. Your home probably already peaked in value back in May. We study the local median and average home prices, and they are split as to when home prices peaked. One says May, the other says June. Since then, we have watched home prices fall locally and nationwide.

As Realtors we do not advocate for prices to rise or fall. The market is what it is, and a trusted Realtor should properly interpret the market and the data and explain what is going on. A good Realtor is your economist of choice if they study the numbers. Over the years the Ellis Team has been able to get our listed sellers out in a declining market because we know how to market a home in a shifting market.

Experience Counts

85% of Realtors today have never worked in a shifted market. They only know one thing, and it’s up. How you price, market, and find buyers changes in a shifting market.

Our Current Market Index stands as high today as it has all year. While the numbers are not alarming, it is not a good sign as our index accurately predicts the market going forward. We have also noticed the differential between active listings and total pending listings is as high as it’s been all year. Another sign that the market has cooled.

The 2021 market is not coming back. We are back to a normalized market subject to market conditions and changing economic numbers. Builders are reducing prices and offering incentives. It is not a horrible time to sell. It might seem horrible compared to previous years. Sellers no longer have the upper hand. The good news for sellers is, neither do buyers. We have a more balanced market than we have seen in years, and that’s not a bad thing.

It Pays to Know the Data

If you’re playing a sport or a board game, it pays to know the rules. If you are buying or selling in the real estate market, it pays to study the data. Knowing what is going on in the street is invaluable. Always ask a Realtor to prove to you what the market is doing. So many Realtors give advice based upon how their personal month is going. A Realtor can have one good month and think the market is great followed by a horrible month the next. This doesn’t mean the market changed drastically, simply that their sales did.

Too many Realtors judge the market by how they are feeling in the market and how their sales are going. True professionals study the market and can explain to you what you need to know to make the best decision. A Realtor’s value is never greater than in a shifting market. Choosing the wrong Realtor can cost you thousands, even when you think you are saving.

Good luck, and Happy Selling! If you are thinking of selling, call Brett Ellis or Sande Ellis 239-310-6500 or visit www.SWFLhomevalues.com

December SW Florida Real Estate Market Update

Toys for Tots

The Ellis Team is a drop-off location for Toys for Tots. Please help us provide a Happy Holiday Season by dropping off toys to our office by December 15th.

Single family home and condo listing inventory resumes rising trend for third consecutive week. Single family home inventory rose for the third consecutive week while condo inventory rose four consecutive weeks.

Pending sales have moderated a bit too, leveling out the past two weeks. One of the things we look at is the difference between listing inventory and total pendings. That difference just reached the highest level all year. Basically this means more properties are coming to the market then jumping off.

This is a trend we saw prior to Hurricane Ian. When Hurricane Ian hit, there was a temporary lull which caused that differential to drop. Since November 9^th that differential has begun to resume that upward trend.

Forget Button

Hurricane Ian caused many in SW Florida to hit the Forget Button. They forgot what was happening in the market prior to Ian. Our lives were turned so upside down that economics and reality didn’t matter, if only temporarily. We were in survival mode and everyone did what they had to do to find housing, work, food, water, etc. Now things are settling back down for most and returning to normal, even if it is a new normal.

I don’t like the new normal, but nature didn’t ask my opinion. I don’t like that we don’t have a beach to go to, or the fact so many cannot live in their home after the storm. So many people don’t have their same job because the business isn’t open or doesn’t exist.  Nobody asked for the new normal, and yet to survive we must deal with it.

Rising interest rates caused home buying activity to slow nationwide, and here locally. One of the reasons prices were able to rise like they did the past several years was because of low borrowing costs, but those days are over.  Home prices haven’t statistically fallen much, but it has affected home closings which are down significantly.

Inventory Levels Affect Future Pricing

One of the reasons we track inventory levels is because eventually that could affect home prices. Right now many home sellers can be choosy. Many don’t have to sell, so they don’t. Eventually more and more homeowners must sell for various reasons.  If supply continues to build, it could affect home prices going forward.

The Fed is still tightening short term interest rates. Economic data is due out this week after this article is written which could affect long term interest rates. Recently 30-year mortgage rates have fallen back to about 6.58%, down from over 7%. This has helped some real estate deals. We will keep our eye on rates going forward. Any help we can get on interest rates can directly impact the market.

30 year mortgage rates are pegged on the 10 Year treasury note which declined in recent weeks because many thought the Fed would be less aggressive going forward. We believe the Fed will talk tough this week, and the markets will react. The tougher the Fed talks, the quicker we can get to peak rates and eventually lower rates. The Fed has been slow and behind the curve. They must raise unemployment and slow housing to curb inflation. Both are moving, just not quickly enough to move the needle.

Home Prices

Home prices have remained amazingly steady locally. They don’t seem to be rising or falling, although we are seeing price reductions. This is a sign that sellers do not rule the roost anymore and it is heading towards a balanced market. Going forward we will be watching interest rates, inventory levels, and of course our Current Market Index which we share with Ellis Team sellers.

Home to Sell

If you have a home to sell, Always Call the Ellis Team at Keller Williams Realty 239-310-6500 We’d love to sit down with you and discuss your options. We have more inside information we can share. Good luck, and Happy Selling!

New 50% rule modifications benefit Lee County Homeowners by changing the way damage repair is calculated.

In the past, if a property suffered more than 50% of the home’s improved value in total damage the homeowner would be required to rebuild the structure to today’s codes, including new flood and height requirements. This could cause a total rebuild and would be very costly, exceeding flood insurance coverage if the homeowner had any.

New 50% Rule Modifications Benefit Lee County Homeowners

By adopting a Permit-to-Permit mode, each permit must stay within the 50% rule.  So, let’s say a home suffered severe damage and needed several permits to repair the home.  All told, the permits together total well in excess of the 50% of the improved value of the home. By breaking out each permit, the homeowner can file for one permit, complete the work, then close it out.

Each subsequent permit only needs to be within the 50% of the total value, and so on.  The only drawback is you may be forced to do some work, close the permit, and wait for the next portion of the project. This may slow down the project, however the benefit is the home is rebuildable without having to change codes. Sure, the new roof may need to meet new codes, but the elevation and building height could stay the same.

This is a game changer for many residents. So far, this only applies to unincorporated Lee County. If you live in a city like Cape Coral or Fort Myers, you may need to wait and see if they adopt similar language. We find it hard to believe they wouldn’t, but it is the government, so you never know.

FEMA Controls the Flood Insurance Discount

I’m sure FEMA won’t be completely happy, but each entity oversees implementing their own floodplain plan under FEMA. Fort Myers Beach isn’t taking the same approach, and this video explains why.

This past week we have attended two insurance seminars, so we have learned a great deal about insurance after Ian. Of course, insurance is changing weekly. It’s not that the Ellis Team is smarter than other agents about things like insurance, it’s that we talk to more people, so our learning curve is faster. Having connections is valuable, especially after a disaster like Ian.

Having the reputation and clout to get top people on the phone when you call is valuable. We can offer ways to sell a property when others say it cannot be done. There are options to get insurance even when there is an existing claim, and it is challenging.

Here to Help

Our team is here to help. If you’d like to buy or sell, there may be a way.  We are experts at listening to your situation and helping find resources to accomplish your goals. There are some people that are unrealistic with what they are trying to do, and that’s OK. We listen and help where we can. In some cases, the goal is unrealistic today, and then something changes, like the new 50% rule implementation.

Insurance carriers are opening back up, and so are the options. A seller’s ability to get Top Dollar or sell the property at all will be determined by who they hire to sell their home. The same with a buyer. A buyer’s ability to purchase a home will be determined by the agent they choose to work with.

We have a way of searching MLS and finding damaged home or undamaged homes. Knowing inside tips on searching MLS along with keeping up on insurance and building permits enables us to better serve our clients. We don’t know everything, but we are willing to get in there and talk to people and help figure stuff out.

Always call the Ellis team at Keller Williams Realty 239-489-4042 or visit www.SWFLhomevalues.com to get your home’s value instantly, or www.LeeCountyOnline.com to search the MLS.

Good luck and Happy House Hunting!

Expect large interest rate hike at next Federal reserve meeting Sept 21^st.  Inflation numbers were released this week and CPI rose .6% over last month and 8.3% over last year. This number came in hotter than expected and left the Fed little choice in raising rates.

Most experts now say a .75% hike is certain. Some were hoping for a .5% hike, and still other fear 1% hike as a possibility.  Our bet is on the .75%. The bad news is that persistent inflation may lengthen the time before the Fed can begin lowering rates. Many hoped for lower rates next year.

If our government keeps spending money, the Fed will have to keep raising rates. On the one hand rising rates should stifle economic activity while on the other, more spending adds to the money supply we are trying to slow down. We have competing forces instead of both working together to fight inflation.

National Call

We sit on a national call each week of top agents. This week they reported that housing demand had dropped due to higher interest rates. Nationally, inventory stalled. Over 40% of listings had at least 1 price reduction. When that number gets to 45% it is considered bearish. The average is 30% for those that are wondering.

Pending home sales nationally are down 22% year over year. Showing requests are down 41.2% nationally, and closings are down 17%.

Target Rates

The Fed had set a target rate of 2.25% to 2.5% for 2022, but many Fed governors are now saying they may have to raise that rate to 3.5% to even 4%. The 10 Year note typically will follow the target rate because it is longer duration and helps predict what the economy will do after 1-2 years out.  So far, we have seen the 10-year note creeping up. As we write this article on Sept 13^th it sits at 3.432% Remember, 30-year mortgage rates are pegged off of the 10-year note. As we get closer to Sept 21^st and future guidance by the Fed, we expect this target could increase, which could increase the yield on the 10-year note. If that happens, mortgage rates will increase, putting further pressure on stock market and real estate market. We expect large interest rate hike later this week.

We expect the stock market to do better later in the year, but we may have some rocky weeks until then. The real estate market may feel pressure until we get ahead of inflation and start to see the downslide.

Local Statistics

Locally listing inventory has also stalled. Closings are down but pending inventory has also stalled. Demand has been persistent, and if we don’t see a major influx of sellers, we should see stable prices going forward. If more sellers decide to pile on to our inventory numbers, it could lead to modestly lower prices as we do not see demand picking up in a rising rate environment.

New Seller Program

The Ellis Team has a new program designed to get sellers Top Dollar and sell quickly. Call Brett or Sande Ellis for details 239-310-6500. The program is so good it has several patents at the US Trademark Office, and we are pleased to be able to bring this program to our area.

Or, if you’re just curious about your home’s property value, or would like to track it over time, check out www.SWFLhomevalues.com It will be interesting to see how continued rising rates will affect the market.

If you have real estate questions, we’ve got answers. Give us a call. Always Call the Ellis Team at Keller Williams Realty, your local market experts.

The SW Florida 2022 housing market stalls out in many categories. Closed sales and pending sales are down. Let’s take a deeper look at home prices and inventory levels.

2022 Housing Market Stalls

The average price of closed single family home sales in Lee County fell by 4.1% this year. The median price has risen 1.57%. If you look at the graph it is plain to see that home prices have stalled out.

Home and condo inventory levels have also stalled out the past 4 weeks, holding steady around 3,180 homes and 959 condos on the market. Ironically, there has been a direct correlation between the housing inventory levels and closed sale prices.

Inventory levels are a direct result of supply and demand. Sometimes more listings hit the market and the demand is so high the market gobbles them up.  Other times demand is less than supply.  For about four months we saw supply outpacing demand, therefore inventory grew. It not only grew, but it also doubled in a short time period.

Inventory Stalls

Thankfully inventory levels have stalled out, and so has the pricing. Home prices are down from their peaks in June and July. Unofficial numbers we have studied in MLS suggest home prices may have gone up slightly in August. This is unofficial because not all home sales may have been reported as of Sept 6^th, and there could be a few sales outside of our local MLS that could affect the numbers.

Unofficial numbers suggest around 1,130 closings in August. For perspective, July saw 1,168 officially.

At any rate, while an uptick in August, it is not a significant rise. We also caution people not to focus on any given month. We like to look at trends. The trend we are seeing now is that the 2022 housing market stalls out in SW Florida in several categories.

We are returning to a normal market, which is healthy. Of course, nobody knows what will happen with the economy or interest rates going forward. What we do know is this market is very steady. May buyers fear the market is going to go down. We can state the market has already gone down and buyers may have missed it.

Some sellers have missed it too. The question on everyone’s mind is, where do we go from here? Nobody knows for certain, but we can say the market has acted rationally through this transition and there is no reason to believe it won’t again if circumstances change. We don’t have a crisis market. We have a market sensitive to interest rates and economic fluctuations, and that’s a good thing. It means the market is healthy and predictable depending on what economic conditions persist.

New Home Selling Program

The Ellis Team will be rolling out a new program for home sellers. This program is proven to get sellers Top Dollar and their home sold quickly. Stay tuned for details. If you are thinking of selling, you can call Sande or Brett at 239-310-6500 to get on the schedule for this new program. We’ll be happy to view your home and go over the details of the program.

If you’d like to check out your home value, visit www.SWFLhomevalues.com You can track each month whether your home is going up or down in value.

If you have real estate questions, our team is here to help. Always call the Ellis Team at Keller Williams Realty 239-489-4042, the Real Estate Authority in SW Florida!

Home prices have declined recently so we are telling our buyers to marry the house and date the rate. We don’t see major price declines going forward because we have a housing production deficit that has kept supply at bay.

Back in 2005 we had an oversupply of homes. Today we have an undersupply. Rising rates have made homes less affordable than they were 6 months ago but it doesn’t change the fact that we are short on housing inventory. For this reason, we do not see home prices declining off the charts.

The Ellis Team Current Market Index has leveled off the past 4 weeks showing stabilization in the market. For those who do not remember, the Ellis Team Current Market Index accurately predicts the future direction of the real estate market.

We’ve written how real estate is a great hedge against inflation and historically a better investment than the stock market. The sooner people get into a home the quicker that home can start working for them financially. While none of us like the fact that rates have risen, we cannot change that. We can lock-in a home to protect ourselves financially and refinance the home when rates go down later. We need a place to live anyway.

New Program

FNMA predicts that interest rates will average 4.5% next year and fall to about 4.4% in the 2^nd half of the year. We have a program whereby a buyer can purchase a home today from us and refinance later when the rates go down with zero lender fees. This saves the borrower so much money on interest and in closing costs when they refinance.

The Ellis Team at Keller Williams also has a program that will save home buyers closing costs when they purchase and get a mortgage. We can offer that same zero lender fee loan on the purchase.

As inflation goes on the cost of building a new home is not going down. We know the nation has underproduced housing for over a decade. It makes sense to get into a home sooner rather than later, even if the rates are higher today than what they might be next year.

Marry the House and Date the Rate

Find the home you want to marry. It’s yours. You own it.  The rate you can date. We can change that out anytime along the journey. Our team of buyer specialists can help you find a great home. We are still in a seller’s market, so the best homes go fast. Inventory has risen since February, but it has leveled off in recent weeks.

If you’re thinking of selling your home someday you might want to keep track of its value over time. Our Free home valuation tool will tell you your home’s value each month, so you can track it over time. Simply go to www.SWFLhomevalues.com Type in your address and our system will email you the new value each month. Pretty cool!

If you’re thinking of buying, our MLS search website is the Best out there. Go to www.LeeCountyOnline.com and search away. You can even save your search and the system will email you new properties that match your criteria.

Or you can call us at 239-489-4042 and speak with Brett or Sande or a member of our team. We’re not here to sell you anything, only present you with your options.

Good luck, happy shopping, and Happy Labor Day weekend!