Category Archives: Southwest Florida Real Estate

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

Jumping to Conclusions

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One of two things will happen, and possibly both. Banks may start releasing more inventory in the coming months, and home prices could begin to rise as inventory levels drop off.

Listing Inventory
SW Florida Residential Single Family Home Listing Inventory

We’ve been noticing a distinct pattern the past few months. Inventory levels have been dropping just as pending sales have been increasing. We can thank the banks for this as they’ve withheld inventory due to legal concerns over title and the foreclosure process. We’ve also seen an increase in closed short sales. Lastly, we’ve seen a rise in regular sales, all leading to a decline in inventory levels. County-wide levels were down 4.32% from last month, and yet we’re seeing sharper declines like Cape Coral which had a 7.18% drop, or Lehigh Acres which experienced a 10.22% drop in available listings.

Combine this with season and buyers from up North scooping up bargains and it would be easy to jump to the conclusion that home prices have to rise. In fact, we predict they already are. Last month’s numbers showed a drop in prices, but we’re not too concerned with that. Next week official numbers will be released and we believe they will be higher. Sales may be down from last year because the inventory isn’t there, but prices could very well be up. We wouldn’t be surprised to see prices gain close to 10% from last year’s numbers.

If you read this article weekly, or our blog, you know that we’ve been predicting a decline in sales transactions combined with price increases at some point in the future. That point could be now. We would say definitively, however there are still some external wildcards that can influence transaction volume and prices in the short term.

Those wildcards are banks releasing backlogged inventory once the title issues are worked out, and every indication is banks will start releasing again in the next month or so. The question is how much do they have left in SW Florida. We believe nationwide there is much left, however nobody knows about SW Florida as we’ve been in this crisis the better part of 4 years now. Possibly we’ll emerge as the rest of the country deepens, but something tells me we still have more to work through as well.

Other wildcards include the US economy, oil, and Mideast stabilization as it pertains to energy. If the Mideast settles down and oil returns to normalcy, there are signs the US economy is headed for a modest recovery. Combine all this with the fact we believe we’re in about the 7th inning of the SW Florida foreclosure crisis, and we could be on our way to higher prices. We’re not predicting a return to 2005 prices, but rather a sustainable march to replacement cost prices. Once we reach replacement cost, builders will start building again, which will further fuel our local economy.

Should the governor be successful in landing some companies to relocate to Florida, this could be a wildcard on the positive side. Bottom line is many factors are at play, but for the past year or so investors and Northern friends have realized Florida is on sale, and they’re buying.

If we don’t see the negative wildcards, prices almost certainly have to rise. The reason we don’t believe they’ll double or triple anytime soon is because appraisals won’t support that, consumer spending may not support that, and we have hidden inventory that may enter the market. No, we’re not talking about the shadow inventory of banks, but rather shadow inventory of regular sellers who would sell if they could, but can’t because they’re currently upside down on their mortgage and do not want to suffer financial implications of a short sale. Once prices rise, we could see more sellers test the waters and attempt to sell.

That’s a lot of variables influencing the market, and the most likely outcome we believe will be modestly rising prices, at a sustainable and healthy level. Once this becomes well known, more buyers will line up because they will have seen we’ve hit bottom and bounced back up. They will have missed the bottom, but this will be close enough to make them feel good and jump back in.

We also believe banks will loosen credit standards this year. They’ve been too tight with the money looking for any reason not to lend, and this will change in 2011. Combine this with buyers realizing the bottom has passed, and we the conclusion we jump to is modestly rising prices. Let’s watch for the numbers next week. What conclusion do you reach?

Big Changes Coming in Mortgage Market

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On April 17 rates are going up. How do we know the date? We know because that’s the date fees change under guidelines designed to attract private money into the lending system and reduce or eliminate FNMA, GNMA, and Freddie Mac, the three quasi-governmental agencies that insure mortgages and bundle them for securitization. They’re not really governmental, but they might as well be as the government has funded them until now. They are private companies that pay investors profit, but tax payer funded when they lose money, so something had to change.

Big Changes Coming in Mortgage Market

Big Changes Coming in Mortgage Market
Interest Rates Will Rise in April

So what is changing? First off, rates are going up. This will increase yields, which will attract banks, hedge funds, and other large sources of capital into the market. Large companies will actually compete to make more of this money. A lot of money has been bottled up sitting on the sidelines and this may be the conduit to free up that money.

When rates go up, home prices usually go down. Not so fast! In this case, prices could eventually rise. Many ask how this could be. The answer is complicated, but noteworthy, so we’ll do our best to explain.

Under the new guidelines to get the best priced loans, borrowers will have to put more down. The old 20% down will now be 30% down. However, credit scores will also be lowered for qualifying. Imagine many of those people that sold via short sale being told they wouldn’t qualify by FNMA for 5 years. It turns out they may be eligible after just 12 months under certain conditions.

While rates may go from 4 7/8% today to possibly 6.5% in April, more people will qualify. We still have FHA for low down payment options. Some people are predicting another real estate boom coming sooner than later nationwide as pent-up demand for housing intensifies, and more borrowers being eligible to purchase.

Imagine having a 540 credit score and being able to purchase a home. Those days may be coming again, if you can scrape together a down payment. Home prices are artificially too low in SW Florida and are in fact below replacement cost. This has caused multiple bidding situations for prestigious properties in short supply even in the upper price ranges in certain parts. Naples and Bonita have experienced a resurgence in prices, and many feel this is bleeding north up into Estero and Fort Myers. We are currently being driven by 2nd home buyers looking for deals.

As prices get closer to replacement cost, building will begin to pickup, which will bring jobs. As the SW Florida economy grows, the real estate market could gain traction very quickly, especially with Snow Birds and existing residents qualifying sooner than expected for their next mortgage.

Keep in mind 7,000-10,000 people are retiring or entering the social security income stream everyday. Florida stands to gain from the Baby Boom generation relocating or buying 2nd homes.

Many on Wall Street are anxious to cash in on the looming change to the capital markets coming in April. In fact, Wall St is waiting like a tiger to pounce. Some are predicting a feeding frenzy for housing and rapid price gains.

Some people believe the change to FNMA and Freddie Mac will damage the markets by increasing borrowing costs and raising down payment requirements. Others believe borrowing was next to impossible anyway the last few years and banks only lent to those who really didn’t need it. I don’t know who is right, but I will say if we open the door for more people to buy, the market could recover quicker than most expect.

2011 could really be a year to watch and keep an eye on the financing markets. If Wall Street gets greedy like last time, it could be a boom for real estate. The difference is, FNMA and Freddie Mac, and the US taxpayer won’t bail out bad loans, only systemic losses due to financial meltdowns. Hopefully we’ll enjoy the next boom with no meltdown, and higher down payments will help with that. If our markets stabilize like we think they will, even low down payments won’t affect the market because the market won’t be in freefall, and we’ll be adding jobs to the economy versus losing 8 million like we’ve done the past 3 years.

Bottom line, keep an eye out for sunny days ahead in the real estate market and we just might see them sooner rather than later. And mark your calendars for April 17. This will be the beginning of something. Time will judge the ending.

Underwater Mortgages in SW Florida

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A recent study by Core Logic reports that over half of the mortgages in SW Florida are underwater, meaning people owe more than the property is worth.  WINK News interviewed Brett Ellis of the Ellis Team at RE/MAX Realty Group in Fort Myers about these properties in the Cape Coral and Fort Myers area.

 

Emotional Roller Coaster

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It seems on every appointment we go or every speaking presentation people want to know if our market has stabilized and finally headed up.  The answer is it seems that way, but our market is still in the process of healing.  The more complete answer is we are headed for better days; it’s just a question of where we are in the process.

Sales Prices in Fort Myers Cape Coral Florrida
Sales Prices and # of Sales in SW Florida

To illustrate where we are, we made a new chart that shows a timeline of median sales prices compared to sales volume, or # of transactions.  Sometimes as prices go up or down it can affect transaction volume, so we thought we’d study that and show you.  We’ve also included a graph of the Emotional Housing Cycle we brought to you in a State of the Market Report several years ago.

Emotional Housing Cycle
Emotional Housing Cycle

When we first presented this concept we were illustrating that our market needed to go through a healing process and there would be pain ahead. Back in January 2006 when prices peaked we were in the Euphoria stage.  We went on TV in October 2005 telling people this market had run its course and wasn’t going to sustain price increases and people had better start looking at the fundamentals of the market.  We pulled investors from new opportunities.

We bring all this up because back then it was a herd mentality, and we weren’t afraid to alert the market to a forthcoming change.  People of course made fun of us and said this market was a run away train and we couldn’t stop it, as if we were trying to.  Fast forward to 5 years later and you’ll find that we’ve gone through the painful process and we’re probably past Desperation and approaching Hope.

I know if you’re home is in foreclosure or has been foreclosed and times are desperate, you might not be feeling the hope.  From an overall market perspective, there is hope.  A few weeks ago at the CCIM Outlook a question came from the crowd asking where we are in the foreclosure crisis.  I answered I think we’re at about the 7th inning.  We do see more foreclosures coming, but they are not at the pace and intensity we’ve seen in years past.   Once we get to the point of fewer foreclosures, and fewer short sales, prices can increase rapidly.  We’re not there yet.

We’ll also keep an eye out for signs the overall economy is improving, and of course we always need to pay attention to wildcards like foreign oil supplies, interest rates, and financing availability.  Fannie Mae and Freddie Mac may be privatized and lower down payment options may dwindle to FHA and VA loans.

2009 was a record year for sales.  If you look at the graph, even though prices are down from last months numbers, transaction volume is higher than 2009.  2009 pumped out foreclosures at a record pace, so we probably will see less volume in 2011 simply because we’re seeing fewer foreclosures.  Short sales are still a tricky proposition and not guaranteed to close in a timely fashion, if at all.  Someday we’ll write a book on all the shenanigans we’ve seen banks play with short sales.  We have sold several, we’re just saying don’t always count on banks to do the logical thing or what’s in the best interests of even the bank.

We wouldn’t be surprised to see a rise in median prices next month and good sales volume as we are seeing a backlog in pending sales.  We’ll be releasing our 2011 State of the Market Report soon which will cover some of these trends.

 

Single Family Home Median Sales Prices Drop Unexpectedly in SW Florida

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The Florida Association of Realtors released official numbers, and as expected the number of sales were down, but fairly steady with last year. We predicted in last week’s article they’d be right where they are. We also said last week that we didn’t study the sales prices, but that we wouldn’t be surprised if we saw them rise again in January. Perhaps we should have studied those numbers because they did not rise, they actually fell 3.86% from last year’s numbers and fell 4.32% from December’s numbers.

Median Sale Prices SW Florida Homes
SW Florida Single Family Home Median Sale Prices 2009-2011

We can’t put too much emphasis on one month’s numbers, especially January numbers because there was a flurry of activity in December to get homes closed by the end of the year. Many sales have stalled or pulled due to title issues. We’re just now getting a few listings back from the banks in the higher priced end that were stalled due to this, so this can have an impact on closings and prices temporarily.

Just the same, we half expected prices to rise again as we believed fewer sales would equate to rising prices. Because more of the foreclosure sales in the past have been in the lower price points, fewer foreclosure sales means the median sales prices gets pulled up from the top and pushed up from the bottom. This evidently did not occur. It is possible that as more short sales went through they were in the lower price points.

It is season now and we have pent-up sales and rising pending sales, so again going forward we will not be surprised to see rising prices. In fact last year this happened as evidenced by the chart.

This past week we attended the News Press Market Watch National Association of Realtors Chief Economist Lawrence Yun gave some insightful statistics that may impact the US and SW Florida markets. He expects interest rates to hit 6% by the end of the year and 6.5% sometime in 2012 as rising deficits lead to inflation.

Mr Yun still believes we will see 50-60% distressed sales in the SW Florida real estate market this year, and we have 2-3 years total before all foreclosures are worked out of the system. If President Obama enacted an elimination of the mortgage interest deduction it would have an immediate effect of lowering prices nationwide by 15%, and our economy doesn’t need another big hit from real estate.

Lawrence Yun, Chief Economist NAR and Brett Ellis

He expects about 3% GDP growth and unemployment to be around 9% in 2011 returning to a normal 6% by 2015. Businesses are making money, but they’re afraid to hire due to uncertainties with new health care costs and banks aren’t willing to lend to businesses due to blank pages written into new banking rules. By blank pages he referred to pages that state a future committee will determine actual rules, so banks are hoarding cash and not lending.

Mr Yun says Washington DC is to blame for businesses not hiring due to uncertainty. If we could give certainty back, business may hire more quickly, and this would speed up time lines for recovery dramatically. For instance, we’ve lost 8 million jobs since Obama took office, and in 2010 we created 1 million jobs. 1 million jobs is pretty good, but nothing compared to what we lost. At this rate we’ll create 2 million jobs in next 2 years, but we’re still way down from levels just 2 years ago. If we could speed up businesses hiring, we could speed up the recovery, which would help real estate. Wall Street is doing OK as we’re seeing record profits, but no motivation to hire due to Washington.

Sales are near record levels. To put this in perspective, in 2001 we had 376 single family home sales. We had 443 in 2002. In 2011 we had 1,072, down slightly from 1,115 in 2010. Our sales are on fire. Our prices leave a little bit to be desired, unless you’re the buyer. Buyers realize SW Florida is on sale and they’re buying as fast as they can. We can see light at the end of the tunnel, and prices should increase going forward. Just don’t expect 2005 pricing to come roaring back anytime soon. We’re looking for modest gains, and as Dr. Yun says, cities like Las Vegas and Fort Myers might even see some occasional surprises on the upside of pricing going forward.

January 2011 Sales Mirror 2010

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Take a good look at the graph. Headlines next week when official numbers are released may report that sales were down versus December numbers, and this would be true. However, preliminary sales numbers we track indicate January 2011 sales mirror very closely January 2010 sales, and pending sales are on the rise again. Last year’s graph showed rising sales peaking in March and holding fairly steady through June. This seems entirely plausible as Southwest Florida typically experiences seasonality in the market, and the pending sales bear witness to potential closings going forward.

2010-2011 SW Florida Home Sales Chart
Single Family Home Sales SW Florida 2010-2011

Pending sales countywide in February aren’t quite at 2010 levels but they’re close. Currently we have 2,704 pending sales in the Greater Fort Myers and Bonita-Estero Association of Realtors MLS compared to 2,758. Pending sales in just Fort Myers and Cape Coral are off a little bit more, but in any event we expect to see rising closing numbers as we go through season.

In fact, our Current Market Index now stands at 4.18, down from 4.66 last month. We developed this index to measure pending sales activity against inventory levels to determine strength or weakness in the market. In years past, sometimes sales were down simply because there were few homes on the market, not because the buyers weren’t ready willing and able. We account for this in our index.

Current Market Index-SW Florida Real Estate
SW Florida Current Market Index

Listing inventory is down slightly in both single family homes and condominiums. Prices last month rose about 3% and we wouldn’t be surprised to see them rise again, although we didn’t specifically study prices for this report. As foreclosure sales fell 12.50% this past month, it’s natural to assume less low end homes sold which would help push the median price up. Additionally, short sales fell 7.45%

Banks have pulled many foreclosures from the docket until they have more time to check their paperwork; Most of these homes will eventually come back to the market. In a perfect world we’d like to see the banks increase their efforts in selling via short sale. Citi Mortgage and Bank of America have done this and are promising faster turnaround times. We have noticed a distinct difference in the turnaround times at Bank of America and Citi has a new program rolling out now.

We’re keeping an eye on some interesting trends. Lehigh Acres distressed sales are continuing to rise to 73.85% of all Lehigh sales, while Fort Myers remained steady at 56.64%, down slightly from 57.19% the previous month. Cape Coral distressed sales were at 66.27% in January, up from 61.13% in December.

We expect Season to be very strong again this year. The national economy is picking up a bit. It will be interesting to see how the economy, interest rates, and bank owned inventory affects the market in the 2nd half of 2011. The first half’s course is pretty well set.

Topagent.com QR Code
QR Code Topagent.com

New Ways to Market Real Estate Using QR Codes

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Marketing real estate has definitely changed over the years. We like to say it has evolved to meet the changing ways consumers react to seeking information. Some media are effective at reaching actual buyers and some not so much. When evaluating a marketing idea, we must first look at the target market, and whether its use will be effective in reaching that market.

TopAgent.com QR Code
Visit our Website TopAgent.com

We’ve been sitting on a piece of technology for over a year we’ve been pretty excited about. We didn’t start using it until recently because we felt its application wouldn’t be realized by the masses, until now. As an agent we can be Leading Edge or Bleeding Edge. Last year would have been Bleeding Edge, so why introduce something until the public is ready?

This new tool is called a QR Code. It’s basically a barscan format that allows a Smartphone to read a code and do something with it. The typical uses of a QR code are to direct someone to a website, to text message, call a phone number, or just text information.

Google has promoted QR Codes so business can place a code in their store window, in print advertising, or on flyers or billboards so consumers can get detailed maps and directions to the business from their phone, store hours, and basic information about the business. Google even places QR codes now on Google Places accounts.

QR Code Virtual Tour Pine Island Waterfront Home
Virtual Tour of Waterfront Home in Pine Island

We’ve been placing QR codes in our newspaper ad directing people to our website, our Google Places account, and to our Virtual Tours of our properties. Agents can even place QR codes on their sign so prospective buyers can obtain much more information right on their phone, instantaneously. Anywhere you can print or display a QR code becomes potential business.

The more information you place inside a QR code, the larger and denser it becomes, which means it will take up more print space. Certain readers have a hard time reading dense codes, so we encourage you to keep them short and to the point. Every technology has a purpose, and must not be overused in ways it wasn’t designed. A QR Code is best for someone who’s visited your business, at a property, or sees your message online. Its use is to provide information to a mobile user in a mobile world.

Did you know that over 200 million people access Facebook via their mobile phone? Did you know 6.1 trillion text messages were sent in 2010. Did you know the mobile market is more than doubling every year? The mobile Internet is growing fast and will overtake the PC as the most popular way to access the web in coming years.

Video Updates on SW Florida Real Estate
SW Florida Real Estate Video Channel YouTube

So the question is, what do you do once you get them to your site? Is the site optimized for the mobile experience, or does it load just like a regular webpage that is hard to read on mobile phone. The people who solve this issue will win in a mobile world.

So take out your phone and have some fun. The next time you see a QR code, you’ll know what to do with it. If you’re interviewing agents, be sure to ask if their utilizing this technology. Next year you’ll see the Yellow Pages incorporate this into their larger ads, and you’ll start seeing this code popup on more websites and more real estate signs.

Make sure your Smartphone has a reader. I recommend Barcode Scanner but there are dozens. It’s fun to price shop at a store with your mobile phone. This is especially neat when the store offers price guarantees. There’s no bigger thrill then when you whip out the scanner and scan the UPC code of the product and find out the store down the street has it for $20 less. The store you’re in will verify and match that price.

Barcode scanner scans UPC codes and QR Codes. If you’ve never heard of a QR Code, or wondered what that funny looking graphic was next to a real estate ad in the paper, now you know. We’ve provided some examples. Good luck, and good scanning.

SW Florida Real Estate Prices Gain Slow Ground in 2010

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Official sales numbers were released both nationally and at the statewide level, and the good news is SW Florida’s real estate median prices rose 3.65% from $90,400 in 2009 to $93,700 in 2010.

SW Florida Real Estate Year End Prices
Year End Prices SW Florida Single Family Homes

Does this mean we’ve experienced the bottom and on our way up?  The answer is possibly, as foreclosure sales have fallen and prices have risen in the lower end of the market.  As this lower end of the market rises, which comprises a large part of the Lee County home sales, it automatically drives the median price up.

Higher priced homes could actually be falling and also raise the media price up.  You might ask yourself, how could this be?  A Median price simply means that half the homes sold over a certain price point and half under.  So in 2010 half the single family homes sold at or below $90,400 and the other half sold at or above this number.

For the sake of illustration, let’s say 20 homes sold in a given month at $400,000.  Now let’s reduce all the $400,000 homes down to $300,000.  Do you think more would sell?  Of course they would.  So now let’s imagine the new bargains at $300,000 generated 60 sales instead of the previous 20.  This could pull the median up from $90,400 to perhaps 93,000.

I know this example is hypothetical.  We also know there are less and less $50,000 homes, so as there are less home sales at the bottom end, and more above the median, the median price gets pulled from the top end and pushed up from the bottom.  It is not however a great indicator of what could be happening at all price points.

We’re not saying the $400,000 market is still falling, although it could be.  What we know for sure is the bottom has firmed up.  It feels like anything priced correctly today at $150,000 or less is firm.  Priced correctly is the key term.  Homes priced at $200,000 today were priced much higher several years ago, and we are noticing these homes selling too.  In fact, we believe this season will produce more sales $150,000-$300,000 than we’ve seen the last several years.

Northerners are just plain tired of the awful weather up north, and they realize home prices are great deals now and they’re becoming increasingly afraid they may miss out on the bargains.

Speaking of inclement weather, this past week we had several buyers place offers from up North and they commented they just couldn’t take it anymore.  Several agents I’ve spoken with shared similar stories, so the bad weather up North may be good for business down here.

As you can see by the graph, SW Florida home prices are at 1997 levels.  This sure is a steep curve on the downside but the worst may be over.  We believe there will be more foreclosures, but it feels like we’re at about the 7th inning.  Most of the investors have already lost their homes, and now we’re down to average people who have lost a job, or lost household income and cannot afford the payments, and they just cannot sell at today’s prices.  How much more of these we see will depend on the national economy and how long the recession persists.  Uncertainty in the Middle East and oil prices will be a wild card, so let’s all hope for Egypt, Tunisia, Jordan, and anywhere else to remain calm and shipping lanes open.

Banks look like they’re bulking up to increase short sale business, although we’ve heard the talk before.  We can say Bank of America has been much better to deal with recently and we’ve gotten several short sales approved and closed.  It would be nice if other banks sped up their processes too.

Inventories actually rose in December despite an increase in distressed closings due to backlogs.  We expect this inventory could go down; however we believe there is much shadow inventory.  Many refer to banks holding back properties from the market as shadow inventory, but the shadow we’re referring to is regular homeowners who would put their home on the market if they could, but they just can’t because they owe too much and can make the payments.  There is now way to measure this, but typically most in SW Florida would move around every 3-5 years, and people just haven’t been doing that these past five years.  The reason:  See Graph.

We’ll be coming out with a new SW Florida Real Estate Video update, but until then you can view our December 2010 Video Update.

SW Florida Home Sales Rise in December

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Official sales numbers haven’t been released yet, so we study inside the numbers to see what the market is doing.  Our analysis shows single family home sales in December shot up 32% over November, and condo sales shot up over 54%.  We’ve been reporting the past few months pending sales have been building which could lead to a surge in closings.  December began that surge.

Single Family Home and Condo Sales in SW Florida
SW Florida Home and Condo Sales

Foreclosure closings in Fort Myers proper almost doubled from 65 to 123.  Short sales climbed from 49 to 68.  57.19% of the Ft Myers single family home market was distressed, up 10% from the previous month.  This tells us banks allowed more short sales to close, and we were finally able to close some of the foreclosure sales that were tied up.

Cape Coral experienced a 35.81% rise in home sales.  All facets of the market rose, foreclosures, short sales, and regular sales.

County wide foreclosure sales were up 55.19%, while short sales were only up 13.33%  So of the 32% increase in overall sales, a large part was due to an increase in foreclosure sales.  Like it or not, foreclosure sales are not only leading the market, they’re almost dictating it.  Distressed sales county wide last month accounted for 59.90 of all single family home sales, and foreclosures accounted for 41%.

So here’s the breakdown.  Traditional sales 40.1% Foreclosure sales 41.3% Short sales 18.6%.  Distressed sales are driving this market, and probably will for some time until employment rises in the area.  Many national news outlets are running with stories that Florida and our area will see further declines.  This is a case where the authors really don’t understand the market.

We’re not ones to fluff up the market.  In fact, we predicted declines in prices, and most would say we’ve been pretty spot on in our price and volume predictions.  While nobody can be perfect about something that hasn’t happened yet (The Future) we believe SW Florida was the first in crisis and our crisis may last longer because it was more widespread, but we’re in the later innings of the foreclosure crisis.

Most of our investors have already folded their cards and ran.  Today we’re left with more foreclosures, but they’re due to people losing jobs and income versus legacy investment choices.  Oh sure, there are some investors still losing their properties, but the debt issues (Resetting Adjustable Rate Mortgages) set to reset later this year isn’t much of a factor here as those investors are already gone.  This will be an issue up North more than here.

I hear people say today’s foreclosures are a result of bad loan decisions.  Again many of the early defaults were, but today’s defaults are more from average people losing one or more incomes.  These loans were a good decision at the time, but things change when unemployment exceeds 14%.

We look for solid sales volume going into season as visitors realize our prices are bargains and they’re trying their best to scoop them up.  A few are going for blood and are realizing they’re not in competition with the bank, but other buyers and they’re losing out in multi-offer situations.

Buyers in this market are wise to listen to local experts rather than national experts who haven’t studied our market and what factors are influencing it right now.  If I had a dime for every buyer who said they should low-ball because our market is going lower I’d probably have more money in my pocket than I do now.  Those same buyers would have a nice home at a nice price and wouldn’t be on the outside looking in wondering how they’re going to buy their little piece of SW Florida paradise.

Sellers are the last to realize a market has topped and buyers are last to realize a market has bottomed.  While all segments of the market may not have bottomed, many have, and the wise buyer will reset their expectations and go get their piece of paradise before someone steals their gem right out from under them.

In case you missed it, be sure to check out our  SW Florida Real Estate December 2010 Video Update

SB 550 What Went Wrong

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SB550 has not been well received in Florida.  That is an understatement.  Some of the published comments regarding the bill affecting septic systems or Onsite Wastewater Treatment Plants were:

“I hope they flush this legislation…”
“Something smells here.”

The most onerous piece of this bill is that many of those  who had an older septic system were required to bring it to code.  Why fix it if isn’t broke?

A coalition comprised of members of the Florida Association of Realtors, the Florida Homebuilders Association, the Florida Chamber of Commerce, Associated Industries of Florida and the Florida Onsite Wastewater Association have been meeting to address the situation.  Repeal or amend SB550 and simultaneously propose legislation addressing the issues of clean water and a good mechanism for wastewater treatment. The hope is to get a sponsor of the new bill at the same time SB550 is repealed.
On Site Wastewater Treatment Plants (septic system) basically treat where generated.  How efficient is that?  The other choice would be to just “sewer the world,” said Bob Himschoot.  Bob is indeed an area expert on the issues.  He has a degree in forestry and is a member of  more than one of the groups in the coalition. Those who know Bob know that he has the credentials.  He ran the family business Gulf Disposal and developed Gulf Coast Landfill before he sold them to Waste Management, Inc..  He is a Rotarian and past president of the Fort Myers Chamber of Commerce.  Bob  formerly served on the board of the National Onsite Wastewater Recycling Association and currently serves the Florida Onsite Wastewater Association.  He is president of Crews Environmental which he acquired 30 years ago.  His son and daughter are involved in the day to day operations.  When Bob isn’t driving to Tallahassee to promote clean water he is actively involved in the management of Crews. He has raised his family here and probably is good to his dog.  I don’t even know if he has a dog.  And, he isn’t running for public office so it doesn’t matter.  The point is that he is a person passionate about clean water in the state of Florida and has spent his adult life in that pursuit.

Bob advocates the onsite wastewater treatment plants. Without septic sytems there would be many more “non buildable” lots in the state of Florida. He says there are many nuances and unintended consequences to “sewering the world’.   His philosophy is “know what you have and maintain it.”  He is not opposed to some sort of requirement to pump and check the system every 5 years.  The cost per homeowner would be something like $500 or $100 per year maintenance.  Those of us on a central water system (sewer) pay at least $350 per year for maintenance of that system.  Look at it this way.  The system is permitted so it must meet the code when it is installed.  The buyer of the property is generally not involved in selecting the system or the workings.  Many move in to the property and expect a “happily ever after” with no thought of maintenance of the system.  Sometimes the septic survey and how a septic system works are never conveyed to the buyer. A buyer of a property with an onsite wastewater treatment plant must don the role of sanitation engineer. There are many measures that will prevent septic failure.

A county health official in the state of Florida has coined a phrase for raw sewage on the bathroom floor.  It is the “Ten Phone Call Failure” and what is better known as the Class I Failure.

Class II Failure is evidenced by raw sewage in the yard.  I recall a property management company giving me a tour of a duplex that the owner wanted me to list.  The backyard could not pass the “sniff” test. I was wearing sandals (I usually am) that day and slipping and sliding in stuff you don’t want to slip and slide in.  I did not know where to step next.  I just wanted to be sure that I did not slide and lose my balance.  When I got to my car I threw my shoes in a bag.  I disposed of the bag at the next receptacle. Adjacent to this wet area in the backyard  was an incredible vegetable garden with some of the best looking greens and plants I have ever seen.  I was so relieved that there was not a vegetable stand at the curb.  When the owner indicated no interest in repairing the septic or disclosing the issue, I did not list the property.  As always, “If you can smell it; you can’t sell it.”

Class III failure has no smell and no excess moisture around the drainfield.
Class IV failure  described as long term, environmental  degradation is the hardest failure to prove as it is determined by computer modeling and may provoke the cynics among us looking for at least some proof.

We should all be aware of things that will plug a septic system sooner. According to the local based plumber contractors, a garbage disposal is hard on any plumbing.  It sends larger pieces through the system.  Grease and even salad oil, coffee grounds, paper towels, cigarette butts are but a few of the items that will clog the system and can damage components if trapped.  Doing all of your laundry in one day might make you feel efficient; but, might be harmful to the system.  The new Energy Star clothes washer is said to use 50% less water than a standard model.

Limiting the amount of water that we use is not only beneficial to the water supply; it limits the amount of water that must be treated.  All Floridians have a responsibility to use our resources sensibly and to pass on a legacy of clean water to our children and grandchildren.

For more information:
www.thesludgereport.org

When the legislature meets again to consider this issue, let’s hope they pay attention to the likes of Bob Himschoot and the various members of the coalition.

Written by Sande Ellis