Most buyers and sellers do not realize that Zillow busts agent marketing budgets. Let’s explain what Zillow is and what they do.

Zillow Busts Agent Marketing Budgets

What is Zillow?

Zillow is an online portal that collects leads from buyers and sellers by displaying property information from the MLS. They made their mark by offering the Zestimate which was an online value generator for homes across America. Homeowners were intrigued by the Zestimate because it was a way for them to track their home value over time. It wasn’t always accurate, but that didn’t matter. It was exciting.

Later on Zillow got into the homebuying business and bought homes to flip. They later discarded this business because they admitted they were unable to accurately predict a home’s value, nor the future direction of a home’s value. So now they pretty much stick to selling leads to agents.

How Zillow Busts Agent Marketing Budgets

Zillow collects a fee on every transaction for agents in their Flex program. The fee in the Cape Coral/Fort Myers area is 40% on homes over $300,000. It is 35% between $225,000-$299,000. Most home sales in Lee County are above $300k. What this means is the agent or team pays 40% of the listing side commission to Zillow first. Then, they must split with their broker. If there is money left over, they may have money to pay employees, rent, signs, phone, internet, gas, car, etc. Then there is advertising. If an agent is paying 40% off the top to Zillow, and another 10-50% to their broker, this isn’t much money left for advertising a home, or for buyers.

Dependent

 Agents become dependent on Zillow for everything. They receive buyer and seller leads, and they have little to no money left over to acquire leads or advertise in other places. Zillow has another program called Zillow Premier which allows agents to pay a monthly fee. I know some agents paying $20,000/Mo for this program. They avoid the high referral fee on each transaction, but again the money is sucked up by the monthly spend. The agents become dependent on Zillow for leads because so much of their budget is tied to one source. To be fair, there are other agents paying $5,000/Mo or less, but they get even fewer leads that way.

In the Way

All Zillow does is get between the agent and the transaction. Zillow is not alone, there are other online portals like Homes.com, Realtor.com. etc. Each of these charges leads back to agents in some form or fashion.  What if that money went to advertising a home instead of online portals like Zillow?

Who is to Blame?

Zillow is in business to make a profit. Some agents like the easy button where they acquire leads to work on for a price. Some agents don’t have or maintain a client database. They are transactional agents. They love working the deal, but then that’s it. Relational agents like to keep in touch or hold client events. It’s more of an ongoing relationship versus a one and done transaction. Consumers do not know the business and they like some of the features of Zillow. They don’t realize many of those features are available in other places. Other sites may have even better features, but Zillow spends so much advertising themselves that consumers find their way there. Zillow bids up the keywords and consumers click on the first link they see in some cases. So, nobody is to blame, and yet look at who benefits.

We Do Not Advertise on Zillow

The Ellis Team quit advertising on Zillow years ago. Our website has some better features www.LeeCountyOnline.com and www.SWFLhomevalues.com and we prefer to spend our advertising dollars on our clients and our clients homes. I am sure there are some very successful agents who still advertise on Zillow. We choose not to. Zillow’s success makes no difference to us as we do not use them. We do not blame other agents who do. We just want consumers to realize where their commission dollars are going and decide for themselves whish way is best for them to buy or sell.

Always Call the Ellis Team at Keller Williams Realty 239-489-4042 We’d love to talk to you about how we advertise your home and get Top Dollar. We’ve been voted the Best in Real Estate for 11 straight years by News Press readers.

Ellis Team Weekend Open Houses

Open House Saturday 12-3 PM

8515 Oakshade Cir #101 Fort Myers, FL $330,000

2 Bedroom 2 Bath in South Fort Myers
Open House Saturday 12-3 PM

Open House Sunday 12-3 PM

1417 NE 34th St Cape Coral, FL $330,000

3 Bedroom 2 Bath cape Coral Home
Open House Sunday 12-3 PM

 

I want to talk about the difference between salespeople versus order takers. Most are surprised to know that 87% of Realtors fail and leave the business within 5 years. This means that only 13% have been around since 2018.

We often see real estate agents leave the business when the market shifts. 2023 is no exception, and with real estate closings down significantly year to date, we expect more to leave the business when board fees become due at the end of year.

Skills Based Market

The 2023 Southwest Florida real estate market is a skills-based market. Only the best salespeople will survive because there are less transactions to go around. A few years ago, anyone could sell a home because the market drove sales. In many cases, you just had to show up with a blank contract in hand and write it. Buyers and sellers didn’t seek out the best agents because in their mind it didn’t make a difference. They just wanted someone there now! I would argue that did cost some of them, but that’s another story.

Sellers Need Salespeople Versus Order Takers Now

Today, things are different. Homes do not sell in a day, and certainly not with 50 offers each. It takes marketing and salesmanship to get the job done. Agents need to learn to probe deeper and find out what’s going on. When a buyer says no, there might be more to the story. Overcoming an underlying issue that has nothing to do with what the buyer said may make the difference.

salespeople versus order takers

Often the buyer’s first objection is not the real objection. Too many times we see agents solving for the objection they heard versus probing for the true objection. When agents spend time and energy solving an objection that isn’t even real, they’ve wasted an opportunity.

Imagine you were playing a game of Find and Seek. If you took the clues down the road on the right and spent all your time there, you’d be disappointed to find out the object was on the road to the left. You would have wasted all your time looking for something that was never there.

Isolate Objections

Buyers don’t intentionally lie. They throw out objections to slow the process down, because they are afraid, or they have not thought enough about what they truly want. A skilled agent learns to isolate the objection. By isolating the objection, you can determine if you chose the right road, or if you need to ask more questions. No sense spending time on the wrong road. It’s hard enough to find solutions on the right road, let alone choosing the wrong road.

This is why sellers today need salespeople versus order takers more than ever. When the going gets tough, 87% get out of the business. When you hire an agent, you want to know three things.

  1. Your agent will be there until your house sells, not quit the business.
  2. The agent you choose has been through a shifting market like this before and survived.
  3. Your agent has a plan to sell your home and overcome objections.

Experienced agents who thrived in up, down, and sideways markets give you your best chance because they have a track record. You have something to grade them by. When you hire a less experienced agent, you hire them because you like them. Liking an agent is very different than hiring the best agent. This is your home, your money, your life, and your success.

Always Call the Ellis Team

Sande and Brett Ellis have worked in the greatest Boom SW Florida may ever see, and the greatest Bust we may ever see, along with every shift in between. Today’s shift is easy peasy for us, because we’ve been here before and we thrive in a shift. We have the skills you need to sell! People skills never go out of style, and they are needed today. Call us at 239-310-6500.

If you’re an agent who is struggling, give us a call. We have sales positions available and leads. Our coaching and leads might just help you stay in this business and save your career.

Good luck, and Happy Selling!

Ellis Team Weekend Open House

8515 Oakshade Cir Unit 101 Fort Myers, Fl 33919

Open House Sunday 12-3 PM $330,000

Open House Sunday 12-3 PM
Super South Fort Myers Location

The Ellis Team at Keller Williams is introducing an online real estate auction bidding system on select listings. We are using technology to speed up the process of selling homes. This system is different than our 8-day sales program which we also offer. Both programs are designed to attract top dollar while creating buyer urgency. Most sellers do not want to show their home for months on end, so we have solutions to solve that.

Online Real Estate Auction With Online Bidding

We place the home, condo, lot, or whatever real property we are selling in both the MLS and the online bidding site. Buyers are advised that this is an online bidding system. The seller is not obligated to take an offer, although most do. The online bidding might start at a lower price than the actual price in MLS. We typically like to have appointment windows where buyers can view the property before making bids.

The seller can decide if they will accept financing or cash only bids.  Buyers can enter their bid and can even enter an amount they would go up to with an auto-bid. Other buyers do not see what your auto bid number is.  If the other bids exceed your up to auto bid number, you will receive an email that you are no longer the top bidder. A buyer can then decide if they wish to change their bid to get back in the game.

Transparency

Buyers love the online system because they can see the number they have to beat if they want the property. In the multiple offer days buyers were most frustrated by wondering how much over asking price they must go to get the property. Nobody wants to overpay, and some buyers wondered if they actually did, and by how much. With this system, the buyer is in control. The buyer is not competing against the seller. The buyer is competing against other buyers, and there is transparency. Each buyer can see what it will take to score the property.

Sample Bidding History

Online Real Estate Auction Bidding System

We’ve included a screenshot of a recent auction by another agent held up North in another state. Each buyer can clearly see the auction history. This was page 3 of the auction history. This particular auction had 53 offers or amended offers.

This Weekend’s Online Auction

 This weekend the Ellis Team is hosting an online auction on 8268 Firwood Dr in Estero. The online starting bid will be $80,000.  The Ellis Team online real estate auction can be found at www.EllisTeamAuctions.com More info on the property can be found at www.LeeCountyOnline.com in the Featured Listings tab. We will be hosting an open house preview on Saturday and Sunday from 12-2 PM for interested bidders. Bidding ends Sunday at 6 PM

Terms

Each property can have its own terms. For instance, one seller might include a home inspection upfront and offer no inspection period while another may provide an inspection period. Other terms might include how soon a buyer must close, what the escrow deposit needs to be, etc. The winning bidder earns the right to go to contract with the seller if the seller accepts the bid.

Written Offers During Auction

Sometimes buyers decide to submit written offers directly to us as listing agents during the auction period. We redirect them to the online bidding site so that all buyers are playing fairly.

Interested in Selling?

This has been a brief overview of the program. If you are interested in selling your property, we have several programs that you may love. You can speak with Sande Ellis or Brett Ellis at 239-310-6500 and we’ll be happy to help you sell your home for Top Dollar and quickly. The Ellis Team has more tools to put more money in your pocket. Always Call the Ellis Team at Keller Williams Realty.

Ellis Team Weekend Open House With Online Auction

8628 Firwood Dr, Estero FL

Bidding Starts at $80,000 Bid Online

Online Bidding Ends Sunday 6 PM ET

Online Real Estate Auction
Online Real Estate Auction

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

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

Local Home Prices Down 3.6%

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!

Today we’re focusing on Lee County duplex search results. We’ve been getting a lot of inquiries from buyers looking to buy a duplex and live in one side and rent out the other. This makes a lot of sense right now with rising rates. Why not let a tenant help you pay for the mortgage, and help qualify for the mortgage?

Lee County Duplex Search Results

Last week’s article “Cape Coral Gulf Access Homes for $500,000 or less” was so popular we decided to keep it going. Many of you reached out or registered on the website to search for homes, obtain neighborhood market reports, or get your current home’s value.  We are glad you loved the information.

Lee County Duplex Search Results

 Currently 139 duplexes are on the market. They range in price from $149,900 all the way up to $3.995 million. Of course, I had to check out the $3.995 million duplex. It is located on Captiva right on the beach. It is gorgeous. I could see myself living there. Are there any tenants out there that would like to rent one side so I could live my dream and you help me pay for it?

Seriously, buying a duplex can be a smart decision for some, and many are looking into it. You must be careful though and make sure both sides are included. I’m looking through some of the listings and it appears some are listed with only one side included. While the building may be a duplex, the ownership might not be.

To see this search for yourself, go to www.LeeCountyOnline.com and look for Fun Searches on the right side of page. We just added Lee County Duplex search this week. Keep in mind, you can search Collier County, Charlotte County, and many other areas in Florida. This website is powerful and has access to more than just Lee County listings.

Saved Searches

 You can also create and save your own searches. Perhaps you have no interest in duplexes or waterfront homes. Maybe golf is your thing. You can create your own search, and our system will find it if it’s out there. Additionally, it will email you when new properties enter the market that match your criteria, so you’ll be the first to know. Just search away. Be sure to save your search if you see properties you like. Or favorite a property to keep track of it. Buyers like to know if a favorite property goes pending, when it sells, or if it has a price reduction. This technology will do all of that.

You can have an unlimited number of saved searches. For instance, I could set up a saved search for duplexes in one area of town and single-family homes in another. Perhaps I want to buy a larger home for me in one price range and a smaller condo for my parents, or children. There is no limit to the various searches you can set up.

We have access to every field in the MLS, so if you want to drill down even further, we can help you with that. Just give us a call.

Market Report

 Perhaps you live in a current neighborhood or have an interest in one. You might be interested in our market report page. www. https://www.leecountyonline.com/sw-florida-market-reports/  This page has access to sold listings and photos. No other website we know of has all this.

Home Value Report

 How would you like to know your home’s current value? Our website will tell you. The best part is it will email you your updated value every month.

Simply go to www.SWFLHomevalues.com and put in your address. It’s fast, free, and fun to watch over time.

Of course, We’re here to talk to. All this technology is great, but we love helping and talking to people, so give Sande or Brett Ellis a call at 239-310-6500. Good luck, and happy shopping!

Changes in the SW Florida Real Estate Market

Ellis Team Weekend Open House

Open House Saturday 12-3 PM

17681 Acacia Dr

17681 Acacia Dr, North Fort Myers, FL
Open house-Golf Course View

Today we’re focusing on what Cape Coral gulf access homes for sale $500,000 or less gets you. We love to showcase what you can buy in various price ranges and locations. As of today, the Ellis Team doesn’t have any listings here right now, so we’re not promoting any of our listings. This is for information and fun only.

Cape Coral Gulf Access Homes

Cape Coral Gulf Access Homes

 Currently there are 10 listings in the Cape Coral area that provide gulf access and are priced $500,000 or less. There were 11 when we started writing the article, and it changed to 10 by the time we finished earlier this week.

We searched in the MLS and our website, www.LeeCountyOnline.com. Both returned the exact same listings. The lowest priced listing came in at $399,900 and is a 2-bedroom 2 bath home with a pool. There were several listed around $500k which featured more square footage and bedrooms, as you would expect. We even found a 4-bedroom home listed built in 1989.

Not every home listed had a pool, but several did. The cool thing is our website allows you to search like a Realtor, so you can get as granular as you like. The system has advanced search tools which allow even more precision, and a map search as well. Basically, you can put in all the features you want in a home and select a map area and the website will return all listings in the chosen map area that meet your criteria.

Saved Searches

 Our website allows you to save an unlimited number of searches. Searches are different than listings. For instance, I could set up a saved search for condos in one area of town and single-family homes in another. Perhaps I want to buy a single-family home for me in one price range and a smaller home for my parents, or children. There is no limit to the various searches I can set up.

In one step, I can perform the search. Additionally, I can ask the system to email me when new listings enter the market matching the criteria I entered. Perhaps I’m curious about new listings hitting the market in my neighborhood. Or maybe there’s that one house across town I’ve had my eye on for years.

Fun Saved Searches

 For fun, I’ve created a page of saved searches. I will keep adding to this page. It can be found at www.LeeCountyOnline.com/fun-searches or go to the top right corner of LeeCountyOnline.com and find Fun Searches! Currently I have the cape Coral gulf access homes for $500,000 or less.  I’ll be adding golf course searches, Fort Myers searches, Fort Myers Beach Gulf front Homes, downtown homes.

As a user, you can look at my fun searches, or you can create and save your own.  If there are fields you’d like to search on and you don’t see them listed, we can help you create a super-search that has access to every single field in the MLS.

Market Report

 Whether you currently live in a neighborhood, or have your eye on a particular neighborhood, you might be interested in our market report page. www. https://www.leecountyonline.com/sw-florida-market-reports/  This page has access to sold listings and photos, so people really like this page.

Home Value Report

 Lastly, we have a page where you can get your home’s value online for Free. Simply go to www.SWFLHomevalues.com and put in your address. It’s fast, free, and fun to watch over time. Every month it will send you your new value.

Obviously, we’d love to talk to you. The computer is no substitute for a well experienced human being. We know not everyone is ready to talk to someone today, so we provide tools to research until you’re ready.

When you’re ready to talk, always call Brett and Sande Ellis at 239-310-6500. Good luck, and happy shopping!

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 in August

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.

Home Prices Remain Steady

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

I’ve been reading that nationally homes sales are down because of declining inventory. Locally, SWFL declining home sales have not been caused by declining inventory.  In fact, local inventory has almost quadrupled in the last 18 months.

SWFL Declining Home Sales Not Caused by Low Inventory

On February 15, 2022 I calculated 1,071 single family homes on the market in Lee County. Today, that number stands at 4,178. Low inventory cannot be the reason homes are not selling. Currently there is a 4.2 months’ supply of inventory on the market compared to 2.5 months’ last year.

SWFL Declining Home Sales

Hurricane Ian had nothing to do with the numbers. We were seeing declining pending sales, closed sales, and pricing before the hurricane.

Often, I go on listing appointments and the sellers ask me how much prices are going up. Most sellers are shocked when they see the numbers and realize home prices are not appreciating. They read national headlines about low inventory keeping home prices steady and assume that is happening here. All real estate is local.

While many parts of the country probably have low inventory levels, SW Florida does not. Our inventory levels are increasing, and we track them by the week. When you track listings, pending sales, closed sales, price reductions weekly you begin to see trends before others do.

These Stats are Not New

If you read this article or our Blog you’ve known for quite awhile what was really happening. When supply outpaces demand, it is hard for home prices to rise.  In July, median home prices fell .7% versus last year.  That is only part of the story. Median home prices have fallen 5 straight months versus last year. Median home prices are also down 2 consecutive months currently, and down 3 out of the 6 in month over month comparisons this year.

SWFL Declining Home Sales July 2023

While inventory is rising, home sales are going down. This July marked the lowest point in 6 years for home closings. Pending inventory is down 4.2% over last year, so we’re not too optimistic August closings will be any better when they are released next month.

Through it all, The Ellis Team feels good about the market in general.  We’ve been through shifting markets before. What hurts sellers more than anything is believing the market is what it was. The market rarely stays the same, and when it shifts, it pays to be ahead of the curve. Sellers who hold onto yesterday will be stuck holding a property and will eventually sell for less-than-ideal terms. Sellers that acknowledge facts and react invariably come out ahead of those that do not.

Market is Good

The market is good for those that market their property correctly and price it correctly. This is nothing new. Hiring an experienced agent matters more in a shifting market than a sideways market. 85% of agents in the business today have never worked in a shifting market. They are learning fast, or getting out of the business.

I talked to several agents that quit this past month. That is a shame, because a 4.2 months supply of homes is not bad at all.  A balanced market is about 5.5 months. 4.2 months seems bad compared to what we had, and it requires a different skill set for agents. A shifting market separates that salesperson from the order takers. Order takers are leaving the business, and salespeople are proving their worth.

Hire a Salesperson

Don’t be afraid to hire a good salesperson. You need that right now. Otherwise, you’ll be stuck holding a property you no longer need or accepting a price you’re not happy with simply because you hired an order taker. They took your order. You told them what you wanted, and they took it. It doesn’t mean they will sell it.

For the best salespeople around, Always Call the Ellis Team at Keller Williams Realty 239-310-6500 Brett and Sande Ellis

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