Real estate showings were up tremendously in SW Florida, doubling December’s figures.  We expect February and March figures to increase further and sales to pick up as we enter the heart of the real estate selling season in SW Florida, especially for condos.

January 2007 Statistics:

December Statistics:

November Statistics:

October Statistics:

It will be interesting to see the January

Predictions:

Showings have picked up considerably, and buyers are making offers with increased confidence.  We believe by mid-year 2007 the single family home market may bottom.  We’ll look for inventory to stop increasing, and pending sales to pick up (See Pg 7).  Combine these trends with further month over month price increases as seen on Pg 12 in the report, and we’ll have a pretty good idea we’ve hit bottom.

Once we can officially call a bottom to the single family home market, we think buyers will jump into the market even more than they are now with renewed confidence.  There is pent-up demand.  We would caution buyers not to wait too long though, because we can usually only pronounce a bottom only after we’ve already hit it and we start back up.  Once this happens, it’s too late to perfectly time a bottom as you’ve already missed it.

As a buyer, if you believe we’ve very close to the bottom, it’s probably best to buy now while interest rates are still low, and just before all the other buyers jump on the bandwagon and start competing with you for the best value properties.  We know buyers tend to jump at once, in unison, so you might wish to beat that crowd.  Even if prices have slightly lower to go, the bottom will quickly bounce right back up, so there’s little risk in moving now.  The risk may be in waiting for the absolute bottom you’re sure to miss, because procrastinators always miss the absolute bottom.

Condos on the other hand are another story.  Because we have a 3 year supply of condos on the market right now in Lee County Florida, and because condo owners haven’t lowered prices to the extent single family home owners already have, we believe there could be more future price pressure on the condo market. 

We also know that 66% of condos sell in the first 6 months of the year.  We expect many unhappy condo owners to lower asking prices, tired of paying increased condo fees and insurance costs, once season ends and their unit isn’t sold.  And for the tower condo owners, we’re even less optimistic as tower units tend to be the most expensive, and the least end-user owned.  Without end users, condo sales just aren’t sustainable at these lofty prices.

Many condo owners will grow weary of the increased carrying costs.  They also will not be able to cash flow an expensive condo unit to come anywhere close to the actual carrying costs each month.  Quite simply, some unit owners will either sell at sacrifice prices, or face foreclosure.  Even financially able unit owners of expensive condos will grow weary of high carrying costs with little hope of recouping costs via higher asking prices anytime in the near future.  The future just doesn’t look bright for some condo owners.

Additional in-depth analysis:

Builders have stopped buying finished lots like they did in 2004-2005.  Because builders have stopped buying lots, and because investors (Flippers) have stopped speculating on lots, prices on lots have been falling monthly (See Pg 16).  Lot prices give an indication of where the overall market is headed.  Builders have also felt pressure on pricing in the final sale price to consumers, and have been forced to pay less for lots, or not buy at all.

On that note, builders have slowed down tremendously their building of speculation homes as many builders have been caught with finished homes from investors who refused to close on contracted pre-construction homes because they could no longer flip the home and make a profit.  In many cases it was cheaper for the investor to forfeit the escrow deposit than consummate the sale and take the loss on resale.  Builders have been forced to resale these homes at lesser prices, hence their reluctance to build new spec homes into a price sensitive market.  Don’t also forget that impact fees have risen dramatically too.

Because builders have slacked off building more homes, it will eventually help the resale market and this is why we’re forecasting a bottom mid 2007.  Be careful not to focus on the exact date, as we’ll describe later.

We know that Lee County is adding about 13,000 jobs each year, and about 30,000 people are moving to Lee County each year.  They’ll all need housing.  Because building has backed off, it leads nowhere else but to the resale market.  Buyers don’t have to wait for a house to be built, and they can get better deals in the resale market now that builders have unloaded most of their inventory at lower prices.  There is hope for single family home sellers in the future.

The bottom of the resale market looks fairly flat from here.  If we’re not there today, we’re fairly close.  Once we bounce, don’t look for dramatic price increases after that until possibly 2009.  This is why you shouldn’t worry what date we actually hit absolute bottom.

We also know that there is a market at the right price.  Some sellers will need to reduce prices, but not sellers who are already priced where the buyers are.  Only the sellers priced above where the buyers are need reduce asking prices, which lead us to an interesting dilemma.  What would happen if all sellers (not realistic) reduced their prices down to where the buyers are at same time?

Either sales would hit all-time records, or we’d see additional price declines, or both.  Because we don’t believe the latter, the average list price may come down whereas the average sale price may not move much as only sellers who are priced where the buyers can buy are actually selling.  Because these are the only sales, they are the only ones affecting the average sale price, and because of this we don’t expect much pricing pressure to occur.  It is an interesting economics question though, and food for thought.

Be sure to tune into The Future of Real Estate, a weekly radio show dedicated to talking about the SW Florida real estate market.

Brett Ellis

The Ellis Team at RE/MAX Realty Group

Fort Myers, FL

Today we are releasing our annual SW Florida real estate 2007 State of the Market Report. 

 Click on the link to the actual report itself, along with analysis and predictions that did not make it into the report.  The report is approximately double in size from last year, and quite frankly we couldn’t fit everything we wanted to say in it.  It is packed with powerful information that will help you understand the local SW Florida real estate market.

If you’re buying or selling real estate in SW Florida, you won’t want to miss this report.

The Ellis Team at RE/MAX Realty Group is hiring experienced buyer agents who are aggressive and customer oriented to join our growing team.  We have leads, and we’re looking for someone to help us who exemplifies what we stand for. We’re looking for agents with experience in SW Florida, so if you’re looking to move here we’re not interested.

If you think you’ve got what it takes to become an Ellis Team Buyer Specialist, please contact us. 

Florida’s existing home sales were down 28% in December 2006 Vs 2005 levels, and median prices were down 2% statewide for the same period.  Prices actually held fairly steady compared to November 2006 single family home price levels.

Condo sales were down 30% statewide in December, and median prices were down 2%, mirroring the single family homes report.

In SW Florida, Lee County December single family home sales were down 45% in 2006 Vs December 2005.  Prices were down 19% compared to year ago levels, but were actually up against November levels, a positive sign.

We’ve included a line chart which illustrates sales by month for the past 5 years so you can view how sales are doing compared to years past.

Home sales nationally were down .8% in December, and 2006 saw the biggest drop since 1989.  USA Today Article

In a sign the home building sector may be gaining strength after a rocky 2006, new home sales reported by the Commerce Department showed Sales of new homes rose 4.8% in December and prices climbed 1.2%, signalling the market may be rebounding nationwide heading into 2007.

As the chart clearly indicates, January has seen a surge in listing inventory which has added to the growing months supply of inventory.  Sales numbers are due out tomorrow, and our internal Current Market Index suggests that sales for December will be off significantly from December 2005 levels, however prices should be up from November 2006 levels.  The media will probably run with the story that prices will be down against December 2005 levels, however that is to be expected as prices already dropped earlier in the year and are actually on their way up, at least on a median price level.  Does this mean we’re out of the woods on prices going forward in 2007? 

We don’t think so.  Stay tuned and we’ll provide our analysis once numbers are actually released, and also in our 2007 State of the Market Report.

The Florida legislature completed their special session today and voted on a comprehensive insurance reform package aimed at lowering property insurance premiums for Florida homeowners. According to this San Angelo auto insurance says increasing property insurance costs, as well as increased property taxes has weighed heavily on the pocketbooks of many SW Florida real estate homeowners and investors, making it less appealing to live in Florida.

Anything the government can do is a positive sign for the SW Florida real estate market and would help to improve things as the total cost of ownership has become prohibitive for many buyers in our market.  When you increase cost of taxes and insurance, it puts a cap on what people can afford to pay in price for a home.

We’ll provide links to several sources.  Many are happy, including Florida Governor Crist, and some groups are not.  Feel free to post your comments as to how you feel about the governments performance in handling property insurance reform.

We just might read your comment on the air on our weekly radio show, so here’s your chance to voice your opinion.

We’ve just completed downloading statistics for this years annual State of the Market Report for SW Florida real estate.  We’ve found some interesting statistics we look forward to sharing with you, and some more surprises.

We’ve also been busy attending seminars and presentations from industry experts and economists.  Our report will provide some interesting insight, and may or may not agree with all aspects the many experts you’ll hear explaining the SW Florida real estate market.

We look forward to presenting a clear and concise picture of what is happening in today’s real estate market, provide some history and perspective, and provide a glimpse into the future.

Our report will provide everything you need to know and nothing you don’t.  We are expanding the report in several key areas, and we’ll provide our expert insight as to what it all means when we can.

Much of the data makes perfect sense, and it will become clear when you see it.  Some, quite frankly, is startling and difficult to explain what the true implications mean for the future.  In any event, we’ll lay it out there and let you decide.

It will be released online and to the media at the same time, so please don’t ask for advanced copies.  The data has been compiled, but the report has not, so we couldn’t provide a report today anyway, even though we have some insight as to what the findings are.

Stay tuned and we’ll announce the official release date for the report.  This is the One Report all year you won’t want to miss.  If you are considering buying or selling real estate in SW Florida, you’ll definitely want to read this report.

U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities according to a news story released by Rueters.

"American workers are really not gaining ground and they’re so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.

This is exaclty why The Ellis Team recommended mid 2006 that buyers begin thinking of purchasing real estate again in SW Florida.  Even in a declining market, affordability becomes an issue when interest rates are rising.  We pointed out in earlier articles that even if a home eventually dips in price later on and you wait to buy it at the market low, that same home may cost you more becuase the payment will be higher as rates rise.

One thing we know is that prices have come down substantially in the past year.  Nobody knows for sure where the bottom is, but many have argued we’re close.  We do know it’s almost impossible to time the market perfectly.  In fact, we have some analysis that suggests it’s already happened in certain segments, and other data that suggests we have more to go.

Most real estate experts will say because prices have fallen, and because rates are unexpectedly low, now is a good time to buy.  Selection is available, prices are down, and rates are low, a perfect Trifecta.

Real estate is always a good investment.  Not only does it provide shelter, it’s a great way to gain equity over time.  Real estate may be risky for short term investors who wish to gain from a quick flip, it’s always good for long term investors and people who plan to live in the home.  It’s almost impossible to save up enough money each year to keep pace with inflation, so the sooner you buy that first home the quicker you’ll be keeping pace, and it will make it easier to trade-up to that next home instead of constantly trying to save the downpayment for that higher priced home.

Michael Timmerman, managing director for Hanley Wood, a national company that collects and analyzes data for home builders, spoke at the REIS (Real Estate Investment Society) luncheon on Tuesday and told the audience he sees sales picking up in 2007 at the expense of price.

We will have more sales in 2007, I will guarantee you that," said Timmerman.  Timmerman said the market will be toughest for the mid-range homes that were heavily speculated by investors as prices rose sharply in 2004 and 2005.  "What’s doing well is the low and high ends of the market."

Timmerman, and agents from the audience all agreed, it’s a good time to be a buyer as selection is good, rates are low, and prices have come down considerably.

The Ellis Team at RE/MAX agrees largely with Michael Tmmerman reported.  Sellers who have reacted and priced accordingly are selling in the SW Florida real estate market.  Foreclosures are rising a bit as some sellers cannot afford to sell at the new prices because they financed 100% at the top of the market in 2005, and they cannot afford the payments.  Those sellers are in for a rough time.

Sellers who bought before 2005 are in better shape, they just can’t expect the profits they would have received on paper had they sold sooner.  Many believe the market is bottoming out in some segments.  We’ll explore this in further detail in our upcoming 2007 State of the Market Report for SW Florida.  Meanwhile, excellent statistics on the local housing market can be found at our Housing Statistics page at Topagent.com