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.

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 26^th, 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

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?

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

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.

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?

The natural law of economics tells us that supply and demand will determine the price, but there are limits as to what a buyer can afford. Home affordability dictates prices in the real estate market. Individually one buyer may pay out of the norm for an item or house, but in the macro the market determines the overall value.

On average about 20.3% of a homeowner’s income goes to cost (principal, interest, taxes, and insurance) of owning a home. In 2021 that number was down to 16 which tells us there is room for growth in prices.

Rising Headwinds

This is the point in the party where the music stops, or at least skips a beat. Three out of the four items that affect affordability are rising. Principal is going up because more people are paying more for housing, so they are borrowing more.  Interest is rising and expected to climb much higher. Insurance is rising too as many insurers are pulling out of Florida and they are raising rates. The only thing not going up today is tax rates, but then again property taxes go up as the value increases.

If 3 out of 4 factors go up, there is a limit to how far each one goes up before people stop buying because they cannot afford anymore.  I would argue that rising interest and insurance costs are one day going to zap the upward pricing pressure right out of the market.  The question is when?

Interest rates fell from 4.46% in 2018 down to 2.74% in January 2021.  Since January 2021 rates have stayed low until this January where we’ve seen rates march higher.  Today rates are back up over 4% and going higher.  We have seen a runup in prices since those rates began to decline.

Real Estate Price Driver

In October of 2018 the median price of a home was $246,995 and the average was $327,081. In February 2022 the median was $410,000 and the average was $569,697. That is a 66% increase in median prices 39 months, and a 74.18% in average price.  This was possible due to interest rates declining like they did.

Today is the opposite.  Rates are going up quickly, and on top of rising rates we have rampant inflation also eating away at buyers’ income. Add to that rising insurance costs and we’ve got a recipe for home affordability rising. Can the line go above 20.3%? Sure it can, and it has before.  Each time it has it was followed by pressure on prices. Home affordability dictates prices, so we keep an eye on that going forward.

There is a limit to what people can afford. We are graced here in Florida that more people are moving here.  This is helping with demand. What happens when rising rates affect their ability to sell their homes up North? Will they be flush with cash like they have been the past few years? You see, these same economic forces work up North too, and when they are affected, it can eventually affect us down here.

We Have a Great Market

Nobody is saying the sky is falling or prices are going to decline anytime soon. In fact, many experts predict a 9% rise in home prices in 2022.  Experts sometimes get it right, but they rarely get the timing exact.

If you are a seller and your home isn’t working for you like it once was, you might consider taking advantage of this opportunity.

The Ellis Team marketing is still generating multiple offers and Top Dollar.  We do things a bit differently than most Realtors and we’ll be glad to show you how we do it. It is more fun to sell when you have multiple offers to choose from. What if one day in the future you don’t? Remember the days when sellers would be glad to just get one offer?

If you are wondering what your equity position is, we should talk. It is wise to review your equity position and determine if this asset still works for you.  Brett or Sande will be glad to help. Call us at 239-310-6500  for or visit www.SWFLhomevalues.com for an instant and Free online home valuation.

Good luck, and we’ll keep an eye on the market for you!

Where are Real Estate Prices Headed?

See Last Week’s Article “Housing Market Priced Correctly in SW Florida?“

For the past year we have been talking about how rising interest rates harm buyers by eroding purchasing power. Today we would like to focus on how the housing market correction risk harms sellers more than buyers.

In this example we have posted before, we illustrate a $350,000 home that falls to $300,000 in a correction. That is a 14.29% correction. Also shown was a 1.25% rise in interest rates.  The net effect to the buyer was only a $2 savings per month in payment. The seller on the other hand suffered a $50,000 loss by waiting to sell.

Housing Market Correction Risk

This is one of those times where it can cost a home buyer to wait because interest rates are expected to increase in 2022.  A market correction can really cost a seller to wait. Both can be hurt, but in this example the seller is hurt the most.

Next week the Fed is expected to meet to begin their interest rate hikes. It is almost certain they will hike rates .25% and some believe it may be .5% Inflation is rampant and may only get worse as fuel prices spike. Inflation hurts the low to middle income earners the hardest, so the US government is determined to slow inflation, even if it means slowing the economy.

As rising rates, rising oil prices, and rising inflation eats into consumers pocketbooks it can eventually eat into people’s ability to afford a home. Home affordability is an essential ingredient for rising prices. As homes become less affordable there is less upward pressure on prices. Remember, a 1% rise in interest rates robs buyers of 11% purchasing power.  If you rob enough buyers, eventually it will hurt the market.

Florida in a Good Position

Florida is better insulated than many states at is tax friendly and a desirable place to live. More people are moving to Florida than leaving, so we are a net migration state. Other states, primarily high tax states, are losing residents to states like Florida.

Which force wins out is anybody’s guess. The point of this article is that if a buyer waits and prices go down, they are no better off.  But if a seller waits and prices go down, a seller is definitely worse off. Since nobody can tell for sure how the economy will go and where housing prices will go, waiting to sell could be at the seller’s own peril.

We are not making a market prediction.  We can see scenarios where prices could still rise, and others where they could correct a bit.  The point is, it is not our money, and sellers are asking the question. If your home is not working for you, give Brett or Sande Ellis a call 239-310-6500. We can talk about your circumstances and discuss if now may be right for you to sell.

Nobody is Predicting a Crash

Markets do not go up forever, and corrections are not a bad thing.  Crashes on the other hand are bad, and nobody I know is throwing around the crash word except for hopeful buyers wishing they had bought years ago.

To find out what your home may be worth instantly, go to www.SWFLhomevalues.com Not only will you get a pretty good idea of your home’s value, but you can also track it to see the direction of your home’s value.  Each month it will send you a new value and it is fun to see if your property is appreciating or declining and by how much.

Need a place to go. We can share some creative ideas other sellers are exploring that might be a way to cash out at today’s high prices. Give Sande or Brett a call.

See last week’s article “Inflation Home Affordability Perspective”

Home Seller Workshop

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