Category Archives: Southwest Florida Real Estate

Market updates and news and information about the SW Florida real estate market

Fenway South a Big Hit With Baseball Fans

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You can’t turn on the TV without getting daily updates from Fort Myers on the state of the Major League baseball teams.  TV networks love to use the new JetBlue Park, affectionately nicknamed Fenway South as the backdrop.  It’s named Fenway South because the field is designed to look like Fenway Park in Boston.  There is the green monster in left field baseball fans from all over will remember.  The designers took note to match the exact dimensions of Fenway Park when building this new stadium. Fenway South a Big Hit With Baseball Fans.
Fenway South a Big Hit With Baseball Fans
Fenway South-JetBlue Park
Some Lee County residents weren’t happy the county invested $80 million for a stadium that is in use one month of the year when we have such other pressing needs, and there is an argument for that.  The stadium was paid for by the bed tax, which is a tourist and development tax.  I think it’s fair to say this new stadium has caught the eye of baseball enthusiasts everywhere, and hopefully this translates into tourism dollars coming back to the area.
It’s hard to put a price tag on the free publicity our area is getting.  On a recent trip to a night game, I noticed the satellite trucks beaming the game up to folks in the New England area.  Combine that with ESPN broadcasting games and the daily baseball newscasts from Fort Myers, and you begin to realize this free publicity is worth something.
How many people from New England came this year or will in future years?  That’s hard to tell.  We can say that the real estate market got hot back in October, a full 3-4 months earlier this year.  We noticed many northerners buying, and that trend continues to this day.  I think people are also intrigued that we have two major league teams here, so maybe there’s something special and worth looking into in SW Florida.
Now there’s talk a 3rd team, the Washington Nationals may be interested in relocating here and taking over the old Red Sox stadium.  This would come with a price tag as the Nationals would want some of the very same things the Red Sox asked for, like practice fields closer to the stadium.  I’m not sure how much more money Lee County has to spend on baseball, especially in light of the fact the Twins are now asking for renovations to their stadium to the tune of about $60 million.  They won’t get anywhere near that, but they’ve asked.  Their contract says the stadium must be looked at every 5 years, and must be kept up with a certain percentage of the top spring training stadiums.
So the Red Sox stadium not only cost Lee County $80 million, but potentially lots more with upgrades to Hammond Stadium.  Politics aside, this is a time to revel in the fact that this new stadium has put SW Florida on the map, in a positive light, and after 6 years of making news for a housing crash, it’s nice to make the news for something good.  Our housing market is getting much better by the way.  All this leads to economic recovery and dollars being spent here locally.
While locals hate the traffic, keep in mind season only last a few more weeks, and we certainly enjoy the money spent all year long.  I’d say the 1st year of the new stadium was a success, and let’s hope it inspires more people to come here next year.  All the visitors bring money to the area, which spurs local jobs, and local jobs lead to economic recovery.  It’s all related, and each feeds off the other.  We’ve spent the money for the stadium.  That argument is over.  Let’s reap the benefits, enjoy some popcorn, peanuts, and Cracker Jacks, and cherish the sound of “Play Ball”.
Buyers and sellers have decided to Play Ball too.  Houses are flying off the market.  Let’s root, root, root for the home team and for our good fortune to continue.
Happy St Patricks Day to all, and may the luck of the Irish be with you.

Season Off to Fabulous Start

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What a difference a year makes. As you can see from the 2010-2012 Single Family Median Price Comparison chart, January 2012 prices are up 30.86% over last year’s numbers.

Lee County Florida Single Family Price Comparison Chart
SW Florida Single Family Median Price Comparison Chart

We’ve been reporting that prices have been on the rise for months and that we thought we could be in for a strong selling season and the numbers are bearing witness to those sentiments.

Inventory levels are down which is affecting sales.  There are fewer transactions because there is less to sell, which is causing prices to go up.  Word is spreading up North too, as snowbirds and baby boomers are looking to buy now before prices go higher.

Don’t worry; it’s still a very healthy market.  We still have buyers offering $10,000 less on bank owned properties even though there are more than 10 offers on the property and the bank is countering at highest and best.  Some buyers just have to try even though their Realtor is advising and educating them on the market.  I always get a kick out of buyers that call me because they’re disgusted with their Realtor.  Upon asking a few questions inevitably the buyer tells me they’ve made offers on several properties but they never win any of the bids.

Usually the buyer isn’t following the advice of their Realtor.  If they are, perhaps the buyer just isn’t strong enough to compete with other buyers in that price range.  If the buyer feels they’re strong, ie. Writing cash offers, decent money in escrow, few contingencies, and offering above asking price and still not getting the properties, perhaps they need an experienced agent who knows how to structure offer to compete.  We’ve written many articles in the past that may help your agent understand what a seller considers when looking at multiple offers.  Check out our Blog archives at http://blog.topagent.com

Lee County Homes Sold by Price Points
SW Florida Homes Sold by Price Points

Look at the price point’s chart. Foreclosure sales are down across the board as foreclosure inventory is down significantly. Conventional sales are up as prices have risen since 2009.  Many more sellers can afford to sell today than 3 years ago.

You’ll also notice more sales in the higher price ranges.  This is because there is less inventory to sell in the under $100,000 range, so those sales are off.  That’s pushing buyers into higher price ranges.  Additionally, the economy is faring just a little better in some places.  Buyer sentiment is stronger, and buyers in the higher price ranges realize if they want an investment or place to eventually retire, buying sooner rather than later may be their least expensive option.  These higher priced homes seem like such a bargain compared to 6 years ago, and who doesn’t enjoy a good bargain, even if you’re rich?

We look forward to reviewing the February numbers once they’re out.  We think February will be another strong month, and already March has been super busy.  It should be, as March is the height of season.  It’s also the month of St Paddy’s day, so with a little luck of the Irish, our market might just end the season in fine shape.

 

Follow-Up on SW Florida Military Veterans Article

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Last week’s article drew much attention from readers all over the country. The article’s intent was to create interest and educate the public about military veterans’ issues, and from the feedback it worked. Follow-Up on SW Florida Military Veterans.

Follow-Up on SW Florida Military Veterans Miltary Residential Specialist Certification
Brigadier General Earl Jakes

We have limited space, so it’s impossible to clarify every detail, but there are a few points worth mentioning. Last week we said ” People don’t realize that if a veteran or active duty military is foreclosed upon, or does a short sale, they lose their military benefits forever. That’s a pretty steep price to pay. Remember, we, the United States, are the ones moving them around. They don’t have a say, and yet they suffer all the consequences.”

We should clarify this. If a veteran has a VA loan and has a short sale or foreclosure on that loan, they will lose their ability to get another VA loan. If they are foreclosed or do a short sale on a conventional loan this will not affect their certificate of eligibility. They are still entitled to their other military benefits.

This week we’ll touch on some new items as they pertain to real estate. Did you know that per the Servicemembers Civil Relief Act (SCRA) active duty military and their families are protected from eviction if they lease a house or apartment and cannot make rent. Service members also have the right to terminate a housing lease when they receive Permanent Change of Station orders or when they are deployed to a new location for 90  days or more.

There is also protection against default judgments against anyone in the military. This is especially important in SW Florida. Often I am asked to attend evictions and lockout proceedings against former owners or tenants on behalf of a bank foreclosing on the property. Before a court can enter a default judgment against a military member for not responding to a lawsuit or appearing at trial, the plaintiff who is suing the Service member must provide the court with an affidavit stating the defendant is not in military service.

Imagine someone working here in SW Florida and being called up to serve and being deployed overseas to Afghanistan or anywhere else the military needs them. They receive regular military pay during that time, not the regular pay they might be accustomed to. Just imagine if they came home and the landlord or bank evicted them while they were gone. How would you feel if this happened to you? For the privilege of serving our country, many service members returned home only to find their houses were foreclosed upon and sold to someone else. That’s quite a kick in the pants.

The SCRA creates rights for our Service members, like the right to terminate a lease if they are called, protection against foreclosure, health insurance protection, motor vehicle lease protection, and so on. There are many details that cannot be explained in a short article like this. I would highly recommend Service members contact their local AFLA office or visit http://legalassistance.law.af.mil A quick and easy way to read up on this act is go to www.Military.com and type SCRA in the search box. From there you’ll be able to read up on the entire act. This information is important to Service members, landlords, real estate agents, and the public in general.

I’d also highly recommend agents and lenders take the Military Residential Specialist course. There is so much more information you’ll learn that will not only help your business, but will also help educate the public and Service members as to options in dealing with military and their benefits. If you’d like more information on this course, feel free to contact me at Brett@Topagent.com

A few weeks ago I met with several military leaders including Brigadier General Earl Jakes pictured above, the civilian assistant to the Secretary of the Army from Texas, and others as we talked about the course and ways to improve the education of agents and loan officers. We hope industry has a better understanding of protecting and meeting Service members needs, because I can assure you, our military is protecting and meeting our needs.

SW Florida a Hot Bed for Military Veterans

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SW Florida a Hot Bed for Military Veterans
SW Florida Military Veterans and Active Duty

Recently I had the opportunity to attend the Military Residential Specialist Program and I learned some very interesting things all agents should know in learning how to better assist our veterans.

I must admit, even though several members of our family served in the military, I didn’t have a full understanding of the needs of veterans because I personally didn’t lead that life.  This class has helped shed a light on some of those things.

I’ll share a few facts many people may not know.  When someone is active duty military, they tend to get moved around quite a bit.  Each member must find housing.  Some rent, some buy.  They get orders for periods of time, but you can just imagine how up in the air their life is.  Many have a family behind they care about deeply, so housing is important.

Because they never really know where they’ll be for great periods of time, making housing decisions can be difficult.  If they buy today, they may need to sell in 2 years.  What if the market declines due to base cutbacks or other economic factors in a community?  We don’t pay them a lot for their service, and they may not be able to afford the loss.  Many around here in SW Florida understand what it’s like to be stuck with a property that isn’t worth what you paid or what you owe.

People don’t realize that if a veteran or active duty military is foreclosed upon, or does a short sale, they lose their military benefits forever.  That’s a pretty steep price to pay.  Remember, we, the United States, are the ones moving them around.  They don’t have a say, and yet they suffer all the consequences.

Here’s another scenario.  Let’s say a doctor, lawyer, pharmacist; anybody really is now in the Reserves.  A Reservist can get called up for duty, just like many were for the Iraq wars.  When you get called up you leave behind the pay you were making and only get the pay the military pays you.  People tend to live a lifestyle depending on their job, so if you’re a doctor making a certain amount, and all of a sudden you get called up your pay may be cut 50% or more.  Your bills don’t go down 50%, they remain the same.

People need to understand the burden placed upon our military.  Not only do the serve our country, but they risk their life, and do so many times for less money than they could make back home.  Unemployment is 7% higher for veterans returning home than it is for the general population, and we all know unemployment is too high anyway.

The largest employer of veterans is the postal service.  What is the number one thing our government is trying to cut right now?  You got it.  In addition to cutting the military, we’re cutting the postal service.  Somehow we’ve got to do a better job protecting our vets.

As a real estate professional, we need to encourage a vet to use their benefits.  Several agents shudder when they see a buyer come in with an offer with VA financing.  Actually, VA loans are easy to do if you know what you’re doing.  An offer with a VA loan shouldn’t be looked down upon; it should be treated equally with other financed offers.  I understand cash is king and the seller only cares about their own sale, I just think we can portray these offers in a more positive light.

SW Florida a Hot Bed for Military Veterans

SW Florida has in excess of 250,000 veterans living among us.  Veterans are 9.5% of Florida’s population.  They served our country well.  The freedoms we have today can be directly linked to their efforts. Some of our military were spit upon when they returned.  The public has turned off on them in the past, and will in the future.

They may not be a cash buyer.  They have certain needs other buyers may not have.  Let’s at least try to give them a level playing ground and an opportunity to enjoy the good life SW Florida has to offer.  They’ve earned it.

If you’d like more information on the Military Specialist Certification, give me a call.  I’d love to share with you how you can learn to better serve this segment. Call Brett Ellis 239-489-4042 or email Brett@TopAgent.com

 

2012 State of the Market Report-SW Florida Real Estate

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The past two weeks we’ve written Top Tips of Selling Your Home and Buying a Home. This week we thought we’d focus on where the market is headed as so many have asked for an update on the market.

Prices in 2011 were up all year since February and never looked back. Most buyers realized the bottom of our market was back in 2009 at the height of the foreclosure crisis. Inventory has fallen dramatically although it has risen again which is a surprise to many.

Fort Myers - Cape Coral Pending Home Sales Chart
Pending Home Sales in Fort Myers- Cape Coral

Attached is the pending sales chart. As you can see, pending sales are up 15.44% over the previous month. Looking back, February always sees a jump in pending sales as the Northern Snowbirds are here in mass every year when our weather is beautiful and it’s cold up North. This year, we started noticing seasonal visitors back in October which was an early start.

While the pending sales chart doesn’t show it, people have been here looking for months. We believe they realize Florida is still relatively inexpensive compared to 2005 levels, but prices are rising and nobody wants to miss out on a good deal. Unfortunately, we have less inventory to sell, so not all are leaving with a deal. In fact, several commented they wished they would have bought last year as prices are definitely higher and selection is definitely less.

SW Florida Distressed Sales
SW Florida Real Estate Distressed Sales

We still get calls from buyers looking for $25,000 properties 3 blocks from the beach. We’re not quite sure which website they’re looking at. The only thing we can guess is maybe it’s a 2008 or 2009 version that hasn’t been updated. Maybe they’re reading old headlines, or headlines about falling prices up North. Whatever the case, they’re convinced our agents are holding out on them and they move on to call other agents who they think will have those old deals for them.

The reality is the market moved on. The market rarely stays in one place, it is always in flux. Look at the Lee County Total Distressed Sales Chart. Last month only 44.84% of all single family home sales in Lee County were distressed compared to 71.86% back in June 2009. We have seen a rise in traditional sales combined with a fall in foreclosures available to sell which has contributed to higher prices.

We’ve actually seen more homes being built because of higher price points, declining inventory, and builders have been able to cut costs from suppliers and workers looking for work. While building activity has increased, it’s still a far cry from where it was back in the prime of the market.

We’ve got dozens more charts we could share but only so many would fit in a one page article. Suffice it to say that SW Florida is looking up a bit in housing. Our economy seems to be doing mildly better as well, which we ultimately need to fuel and sustain any housing run-up.

We know more foreclosures are on the way, but nothing like what we saw back in 2009. We have a slight backlog due to legal slowdowns because of the robo-signing issue. The market is easily absorbing all new foreclosures we bring to market and in fact has a thirst for more. We don’t believe this thirst will be quenched. We believe this year will produce a good season and hopefully things will continue on.

This is an election year, and the unknowns are always tax laws, gas prices, instability overseas, and the future of our economy. Absent the wild cards, our market looks in good shape and is healing in a positive way. This healing may be slow for some sellers, and fast for some of those buyers looking at outdated headlines or websites, however it is occurring at a healthy and sustainable pace. It is a process that had to occur, and thank God it is occurring.

Whether you’re buying or selling, it pays to get the facts. A mistake will cost you. Each neighborhood can be different, so be careful about relying on countywide information. It may or may not apply to the home you’re considering buying or selling.

Good luck and happy house hunting.

Top 10 Tips for Buying a Home in Today’s Market

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Last week’s tips on selling a home was such a hit we decided to write an article on home buying tips to help buyers.

Top 10 Tips For Buying a Home in Today's SW Florida Real Estate Market

  1. Shop in Your Price Range– One of the more frustrating things a buyer can do is shop in the wrong price range.  If you shop in a higher range than you can afford, the homes in your range won’t seem as acceptable and will feel like a let-down
  2. Get Pre-Qualified– You’ll be competing with other buyers for the best homes on the market.  By being pre-qualified you appear more like a cash buyer than someone who has not even spoken with the bank yet
  3. Home Inspection– We recommend home inspections as the inspector may point out items that are covered under the purchase contract, as well as helpful hints on maintaining your home.  Home inspectors are very helpful in educating you on what you’re buying and best maintenance practices going forward
  4. Survey– Banks don’t always require one and title companies don’t always offer insurance in certain cases when a survey wasn’t done.  It’s best to provide that survey to the title company and let them insure the property with the full survey
  5. Competition With Other Buyers– Remember, the best properties go quickly in any market.  Rarely do we hear a buyer say they want to look at the worst homes on the market.  Because you’ll be competing with other buyers for the best properties, you’ll want to put your best foot forward with your offer. As a buyer, you don’t always hold all the cards.  For instance, you may be a finance buyer competing against cash buyers.  The seller may wonder if your bank will appraise the home at the contract price.  They may wonder if your bank will close on time, if at all
  6. Escrow Deposit– Putting a larger escrow deposit down shows you’re serious.  This is a helpful technique when competing against other buyers.  It usually amazes a seller when a cash buyer won’t put much in escrow.  If they won’t put it in escrow, will they ever come through at closing?
  7. Price– Research the market and determine if the property is priced correctly.  If it is, offer accordingly or you could wake up to see a Sold sign on the home and the seller didn’t take your offer.  Always ask yourself, “If I wake up tomorrow and see the property is sold to someone else, how will I feel?”
  8. Terms– Remember if you’re asking a seller to pay buyer closing costs, it essentially reduces your offer.  Another buyer may offer the same amount as you without asking seller to pay closing costs and you’ll lose out.  Many buyers increase their offer to cover seller paying buyers closing costs, if the property is priced correctly to begin with
  9. Out Clauses– Only use out clauses if you need to, and remember they do weaken your offer.  If a buyer can cancel a contract the seller will wonder why they should take the property off the market for you versus waiting for a more serious buyer
  10. Title– Be sure to look at title policy, especially if it is a foreclosure.  Ask the title company what policy covers and what it does not.  Look at the title exceptions page carefully.  Consider hiring a real estate attorney to review your policy if you have any questions whatsoever.  Eliminating mistakes now can save you lots of time and money later

There is no substitute for working with a good Realtor. Full time Realtors not only know the area, they also assist you with many of the pitfalls you may encounter.  If you need assistance, feel free to call our office at 239-489-4042 and ask for a buyer specialist.

 

 

Top 10 Tips on Selling Your Home in Today’s Market

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Top 10 Tips for Selling Your Home by a Real Estate Expert
Yesterday another agent called me wondering why his 3 listings in Lehigh Acres weren’t selling. After offering some tips to help out, I thought an article on the subject might help others as well.

  1. Curb Appeal– Buyers judge the quality of the home by what they can see.  You will never get to the home inspection stage if the buyer never offers.  Look at your yard, landscaping, outside paint, roof, gutters, etc.  If the outside looks bad, buyers judge the inside probably looks just as bad and they don’t schedule appointments to view.
  2. De-Clutter Inside– If a room has too many things in it, it make the room look smaller.  Additionally, buyers have a harder time envisioning their personals in your home when all they see is stuff.  Take out as much as you can.
  3. Be sure to remove Personal Photos– Buyers always stop and look at the pictures on the wall, and if there are too many the home feels like it’s someone else’s and they have a hard time picturing themselves in your home.  Knick knacks and photos subconsciously turn off buyers.  A few are OK, but too many can be a turn-off.
  4. If a Buyer Can Smell It, We Can’t Sell It– Cigarette odor and pet odors are the #1 turn offs for buyers today. We would suggest smoking outside and removing pets as best you can during the sales process, and hiring someone to remove any smells.  Some breeds emit more odor than others.
  5. Remove Pets For Showings– Buyers love pets, and the problem is many times they walk away remembering how cute your pet was, but they remember next to nothing about your home. Your home is in competition with other homes, and you want your home to be remembered and stand out against all others.  You don’t want your buyer’s time distracted by your pet.  Buyers will not buy your home because you have an adorable pet, but they may buy another if they don’t remember your home.
  6. Be Gone For Showings-We have a saying that every word a seller says to a buyer costs the seller $1,000.  Sellers think they know they’re home better than anybody and therefore they’re the most qualified to sell it.  Buyers typically feel uncomfortable talking with the seller, and usually give feedback the seller wants to hear.  The best and true feedback is a good offer, not meaningless words to appease the seller.  Some buyers like talking to sellers because they glean information they’ll use against the seller in negotiations.  Best advice is to be gone for showings.
  7. Price-Overpricing a home is a sure fire way to make it sit.  After your home is on the market awhile, buyers begin to wonder what’s wrong with it.  After awhile fear kicks in and buyers don’t want to offer too much on a home nobody else wants to buy either.  While the market is Hot today, it is a price sensitive market.  Overpricing is a good way to ward off potential offers.  Many buyers don’t want to insult the seller, so they just offer on another home that is priced where it should be.  Sellers usually think the buyer can always make an offer, and of course nobody ever offers full price anyway so we’ll build in some negotiating room.  This is a myth and statistically it’s proven that seller’s that overprice end up taking less later than sellers who price correctly upfront.  Many homes in the market today sell at or near full price, and some sell for over asking price.
  8. Marketing– Times have changed.  Some agents employ the 3 P’s.  Put a sign up in front yard, place it in MLS, and pray someone else sells it. Successful agents today rely on newspaper advertising, radio, TV, social media like Twitter, Linked In, Facebook Fan pages, YouTube, virtual tours, as well as mobile technology and much more.  Ask to see how your home will be marketed and which national sites it will be syndicated to when interviewing agents.
  9. If You Owe More Than Home is Worth, Select a CDPE-44% of homeowners in Florida are underwater on their mortgages.  It takes a certain expertise to work with the banks on short sales.  Buyers and sellers need lots of education attempting to close a short sale. A Certified Distressed Property Expert can help.
  10. Select the Right Offer-Don’t just take any offer. Many times it pays to wait for the right one.  Why waste time with a buyer that doesn’t qualify, or the loan program they’re pre-qualified for will present issues for your home or association.  Knowledge is power and can save you from many bad transactions.  If you don’t have time to do it right the first time, when in the world will you find the time to do it over?

Be sure to check out our 2012 State of the Market Report

 

The Bear Went Over the Mountain

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To see what he could see. We’ve all heard this particular children’s song and it’s probably playing in your head right now. I thought this headline was appropriate because our year end sales numbers graph looks like home prices went up the side of a mountain through 2005 then fell off a cliff until 2009 before rebounding the past few years.

SW Florida Real Estate Year End Prices
Year End Prices Fort Myers-Cape Coral Florida Metro Area

Official sales numbers were just released this past week for the state of Florida and the SW Florida real estate market. Year end sale prices were up 14.67% from $93,400 in 2010 to $107,100 in 2011 The year end graph isn’t where prices finished the year but rather an average of what they were all year long. For instance, November median single family home prices in Lee County was $106,300 and December’s was $123,400, a whopping 16.09% jump over the previous month and a 36.05% jump over year ago December figures.

2011 was the 3rd best year on record for numbers of sales. Inventory declined throughout the first 3 quarters of 2011 or we very well could have sold many more. To put things in perspective, 2011 outsold 2005 by almost 2,000 homes. Everyone speaks about 2005 being the height of the market, but it is the 4th best year on record in terms of units sold. 2009, 2010, 2011 respectively were 1-3.

Quarterly Home Sales for SW Florida 200-2012
Lee County Quarterly Single Family Home Sales

While prices rise it’s quite natural volume will go down. It’s simple supply and demand. If we had more inventory than our market could handle, our prices would be lower and not rising. It’s always difficult to predict a top or bottom, but hindsight always provides crystal clear clarity. The reason is you can have a false bottom whereby prices bounce back for a few months only to retreat again later. On Wall Street it’s termed a dead cat bounce when the market does that.

With several years in the books it appears we can safely say the market bottomed in 2009. If the market would go lower in the future it would be a new market, not a continuing drop. We don’t see the market going lower year over year going forward; although monthly price swings are not out of the question as closings are dependant on what inventory there is and what’s actually closing in a given month.

We have no problem listing and selling properties. The skill is really getting them closed today. The regulatory and operating environment has never been so tricky as there are so many new regulations pertaining to new mortgages. If the lenders initial disclosure is off by a little bit, it requires by law to re-disclose everything and a new waiting period goes into effect.

Combine new lending rules with negotiations with HOA’s and condo association over fees, title issues, appraisal issues, inspection issues, and challenges with short sales and you can quickly see nobody can guarantee closing dates, and scheduled closings in one month can easily pop over into subsequent months.

All these challenges affect the real estate market and can push high end or low end closings from one month to another, ultimately effecting month end numbers. In the end, these numbers all work out in the wash, so we like to look at year end numbers or a moving average throughout the year. So many people focus on one point in time when the market is always in flux and needs constant attention to understand what’s going on.

That’s what we’re here for, to keep you updated with unbiased information good or bad. We’re in the midst of season, and as predicted season started early and seems to be going well. I guess we’ll know in April or May for sure. In the meantime, stay tuned.

Watch our January 2012 Market Report

 

SW Florida Future of Real Estate Market Report January 2012-New Year\’s Resolutions

Inside the SW Florida Real Estate Numbers

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Again, we are writing this article before official sales numbers are scheduled to be released later in the week.

Because of that we’ll focus on some new information that won’t be in the release this week. Official stats in January track December sales and year-end stats which are always interesting. This tells an important, but partial story, because it only tells what has happened. Today we’ll focus on what is happening right now.

Fort Myers, Cape Coral, Lehigh Acres Listing Inventory
Fort Myers, Cape Coral, Lehigh Acres Listing Inventory

Listing inventory had risen slightly for the past 4 months, but it has dropped slightly in January. Pending sales had also been dropping slightly which is probably why inventory was rising. However, pending sales have increased this January which may help account for why inventory recently dropped.

While inventory has dropped everywhere, perhaps the most significant drop has been in Lehigh acres. Lehigh Acres has experienced a 61% drop in inventory since January 2010. Cape Coral has seen a 38.54% drop in inventory in the same period, and Fort Myers has seen a 32.52% drop. Lee County has seen a 35.42% overall drop in single family inventory, so Lehigh Acres 61% drop leads the way by a large margin.

Lehigh Acres was home to single family home sales in the $25,000-$40,000 range a few years ago and now it’s getting tough to find homes much below $70,000. Investors have swooped in and gobbled up everything they can. Homes at the lower prices were cash flowing as investors could purchase, fix them up a little bit and rent them for more return on their money than they could get at bank or other places.

Foreclosure Vs Short Sales SW Florida January 2012
SW Florida Foreclosures Vs Short Sales January 2012

Another trend we have noticed is short sale closing increased as banks have geared up to handle more short sales just as foreclosure sales decreased. We’ve included a graph that illustrates foreclosure versus short sale closings over time. Keep in mind that banks have had fewer foreclosures due to the robo signing issue and that has affected foreclosure inventory throughout 2011. We’ve been told to expect more foreclosures in 2012, however they will not process them as fast as they did back in 2009 which caused the whole robo signing legal fiasco in the first place.

Next week we’ll go inside the official numbers and give additional background as to what drove the numbers and how 2011 ended compared to previous years. Going forward we are seeing a robust selling season as many have realized our median prices have been on the rise and the bargains may be running out. If rising pending sales, rising median sale prices and decreased inventory are any indication heading into season, the next few months could be interesting to watch.

Setting realistic expectations is key for buyers and sellers in this market. Realistically, prices have room to rise especially as the economy improves. Nobody is predicting a return to 2005 prices anytime soon, so if you read prices are rising and you’re waiting 6 months to put your home on the market so you can get what you paid back in 2005, you might want to reset your expectations.

We are back to healthy growth, and if we somehow miraculously escalated back to 2005 prices, it would be as unhealthy now as it was back then. Slow and steady might just be what the doctor ordered, and who knows, that might just be what we’ll get.

 

 

Important Tax News Could Save You Thousands

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Prior to 2007 homeowners who had a short sale or foreclosure were subject to pay income taxes on any amount of forgiven debt. So let’s say a homeowner in 2006 had a mortgage of $400,000 and decided to sale as a short sale for $200,000, that homeowner would have had income of approximately $200,000 according to the IRS. Assuming this put that homeowner in the 25% tax bracket, this homeowner would owe an additional $50,000 taxes to the US government. Keep in mind, perhaps none of this money went into the pocket of the homeowner, it was simply forgiven debt. The same would be true for a bank foreclosure.

Important Tax News Could Save You Thousands
Important Tax News Could Save You Thousands

Back in 2007 the US government signed into law the Mortgage Relief Act which provided homeowners who used their home as a primary residence relief up to $2 million for married couples and $1 million for individuals from any shortage being treated as income by the IRS. In the previous example above, the $200,000 would be free from being treated as income as long as it was their primary residence. The lender must formally forgive the loan.

The US government is giving homeowners until December 31, 2012 to complete a short sale or foreclosure. Starting January 1, 2013 any debt forgiven, even on a primary residence, will be treated as income by the IRS and subject to taxes.

A homeowner doesn’t always control when the bank will take back a home or when the bank will complete the foreclosure transaction, so they cannot guarantee they’ll make the December 31 deadline.

A distressed homeowner does control to a greater extent the execution and timing of a short sale. While there is no guarantee the bank will agree to a short sale, or that the buyer will wait around long enough for the lender to agree, it is generally known the seller has more control over their fate in a short sale than a foreclosure.

Time is running out for many sellers as we have 11 ½ months to complete the short sale. Some short sales go smooth, and others are a bit trickier. Sometimes we have to sell it 2 or 3 times if buyers walk. The bank may respond right away, or it could take several months for the banks to complete their analysis depending on who the lender is, whether there is a 2nd mortgage or equity line involved, and especially if mortgage insurance is involved.

Most people just think the banks are slow, which is true. However, the process can be more complicated as the 1st lender may be due money back on certain losses by a private mortgage insurance company. This takes time for all to evaluate, and it must go in steps.

Some loans are guaranteed by FNMA or Freddie Mac, and there are governmental programs in place the lender must follow. A popular program you may have heard of is HAFA (Home Affordable Foreclsoures Alternative) Program. If the home falls under this program, certain procedures and timelines must be followed. Sometimes it takes time just to see if the loans qualify for this program. There are other programs as well.

This is why a seller should decide soon if they may need to sell their home due to hardship. The decision today could save thousands in taxes for years to come. Waiting too long could cost a seller big time.

A bankruptcy may be a solution to avoid such taxation after 2012, so we wouldn’t be surprised to see bankruptcies rise next year from sellers who miss this deadline.

The good news is lenders have beefed up their short sale department staffs the last few years and are equipped to handle more sales today than they were 5 years ago. We’ve had much success completing short sales, although the buyer must be educated that the bank will take some time, and they may counter the accepted price with the seller a bit higher.

No short sale is complete until the lender(s) sign off and everybody agrees to the terms. Short sales are a way to bring otherwise underwater overpriced property to the market at today’s lower prices. Education is the key for everyone involved. The agents involved, both buyer agent and seller agent must be competent in handling complex short sale transactions as both buyer and seller must be educated about the process.

Sales are already heating up this season, so 2012 could be an interesting ride. We’ll keep you posted on news affecting buyers and sellers in the SW Florida real estate market.