Florida Insurance Crisis Threatens Home Ownership

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The Florida insurance crisis threatens home ownership by pricing many buyers right out of the market.  Most people do not realize what has happened in the last year, and they are about to find out.  Current homeowners will be affected at policy renewal, or upon policy cancellation.

Florida Insurance Crisis Threatens Home Ownership

Already we have a home affordability crisis. The Florida insurance crisis threatens to make the affordability crisis even worse. Let’s break this down into two areas. Flood insurance and property insurance.

Flood Insurance

The National Flood Insurance Program upgraded their program to Flood 2.0 What this means is properties that were previously in flood zone x and other non-required flood insurance areas have been reclassified.  Flood insurance may now be required.  The other startling fact is most properties that were in X paid an even $677/yr.  We are now seeing X properties with premiums over $3,000.

We have seen some flood zone A policies more than $6,000/yr.  If you already have a NFIP policy, they cannot raise your rates more than 18% per year.  However, after six years you will be maxed out at the new rate.  I just looked up a property that was $677 last year and now it is $6,4000 this year.  That is $533/mo, just for flood insurance. Now we must add in homeowners’ insurance, and we haven’t even gotten to that yet.

We would suggest calling your insurance agent to see if your property has changed.  There are some private flood policies available, but when they fill up, they stop writing policies.  If you have a NFIP policy, do not cancel it without taking to your insurance agent first. It may make your home difficult to sell without it.

Property Insurance

7 insurance companies have recently filed bankruptcy and three others have stopped writing new policies altogether. If you have a tile roof over 20 years old, some are cancelling policies. Others are doing it at 30 years old. Shingle roofs are between 10-20 years. We are losing options. If you are selling a home, you may be required to replace a roof. Even if you’re not selling, you may have to replace your roof.  Insurance for older homes is increasing rapidly as well.

Insurance companies are looking for any reason to not cover the home, and any reason to charge a higher premium. They lost a lot of money, and insurance companies do not like losing money. Insurance companies are risk adverse going forward, so anything that looks like it could have an upcoming claim is being excluded.

They are checking age of water heaters, plumbing valves, air conditioners, roofs, truss tie downs, etc.  Some homeowners are seeing their rates doubling or tripling, while others are being canceled.

 

Triple Whammy

Home buyers are being hit with rising flood and property insurance along with rising rates. It is limiting how much they qualify for. In fact, some buyers on new construction are cancelling contracts because the interest rates are higher now than when they signed contract and they no longer qualify for the loan. Same with the flood insurance on some lots. Homeowners insurance on new homes is still affordable.

Typically rising interest rates curtails prices because it affects affordability. We still have strong demand and a low supply of homes on the market, although it is rising. Listing inventory today is at the highest it has been all year.

Future of Real Estate Prices?

The question is going to be, will the number of people moving to Florida offset or exceed the number of people priced out due to rising rates? The answer to that question will determine the future of real estate prices in Florida. Marketing to out of state markets will be crucial to getting top dollar for your home.

If you have real estate questions, call Sande or Brett Ellis 239-310-6500. Or you can get an instant and Free online home valuation at www.SWFLHomevalues.com Be informed. Rates are expected to climb rapidly in the coming months. The choices you make today could determine your future!

 

Should I buy Real Estate Now or Wait for Prices to Drop?

Forecast 6% Interest Rate Coming to Housing Market According to Experts

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Loan experts forecast 6% interest rate coming to the US housing market in 2022. Currently rates have risen to about 4.75%. We have witnessed the fastest rise in mortgage rates in US history the past 4 weeks.

Forecast 6% Interest Rate Coming
6% interest rates coming in 2022 according to forecasts

Mortgage rates skyrocketed 24% in the past four weeks, and they are not done yet. We have been warning readers that rate hikes were coming.  It is not too late to make a move, but those that begin the process now will benefit over those that wait.

Save Money by Buying Now

Buyers are better off buying now. Even if a buyer believes home prices will fall, mathematically they are still better off buying now at lower rates than waiting.

Home sellers are better off acting now because rising rates dampens buyer enthusiasm, not to mention the amount they can afford to pay for a home.  The real question is, how will rising rates affect homebuyers up North flocking to Florida but needing to sell their home first? This is where we could see an impact. Many of these buyers turn into cash buyers, but if they face a difficult time selling their home up North, it could affect us here in SW Florida.

There is no question people still want to move here. The question is, how much can they afford when they get here, or can they get here? Many locals have tapped out because prices have risen so much and priced them out of the market. Rising rates have already lowered the price point they can afford, so it cuts into demand.

Builders are losing contracts from buyers who no longer qualify for the mortgage since the construction contract was signed. The good news is there are still buyers out there willing to scoop the property up. Builders appreciate the fact they are losing buyers because many of those deals were signed at year ago prices. The builder can now sell to a different buyer at today’s prices.

Rates Affect Affordability

Just the same, rising rates are limiting how much buyers can pay for homes, and when enough buyers are affected, it will affect the overall market. With forecast 6% interest rate coming soon to our market we are watching its effect on home prices.

The other thing we are watching is inventory levels. Daily levels are rising a bit. Overall housing inventory levels are very low in Southwest Florida. It is still a good time to be a seller, but the future becomes a little less settled later in the year.

Most economists are predicting a recession later this year or next. The yield curve has inverted which signals an upcoming recession.  See our article on February 10th at https://blog.topagent.com to read up on how that metric has predicted every recession since the fed began publishing it in 1976.

Rising Rates Will Cost More Than Benefit of Falling Prices

Prices may continue to rise. They could fall back a bit. Nobody knows exactly where prices will go except that we don’t anticipate large swings one way or the other. What we do anticipate are rising rates, and that will not be fun for buyers or sellers. Our team has experience working in up, down, and sideways markets so we will be with you every step of the way with best guidance. Many Realtors have only worked in one cycle and don’t know what to do if the cycle changes.

I remember back in 2005 when I went on TV and told everyone the market was about to change. Many Realtors told me I was crazy and didn’t understand the market we were in.  I am not calling for a change like we saw back in 2006.  I am saying things are about to change. It will not be as fun for a seller as the last 2 years have been, but goals can be accomplished, and we’ll have to work a little harder to find buyers and keep deals together.

If you have questions about the market, call Brett or Sande Ellis 239-310-6500 or visit www.SWFLHomevalues.com to see the value of your home instantly.

Good luck and happy selling!

 

Homeowners Watching Interest Rates Rise

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Current homeowners watching interest rates are contemplating whether to make a move in this market. Potential sellers are worried about where they would move to. They are also worried about financing their next home and how much more it might cost if they wait.

Homeowners Watching Interest Rates

 

We’ve talked a lot recently about how rising interest rates can dampen future prices. Rising rates not only hurt first-time buyers, but they also hurt move-up buyers.  Lateral and move-down buyers are hurt too if they are obtaining a mortgage.

The advice we give is look at your current situation. Do you love your home? Does your current home meet your future needs? If you love your current home and it meets your future needs, moving isn’t necessary. If your current home needs some expensive repair items like roof, air conditioner, water heater, etc. are you prepared mentally and financially to make that investment? Insurance companies are requiring these improvements, so they will not be optional.

6% Rates

Interest rates could increase another 2% or more this year. Waiting might seal your fate in your current home, so asking yourself these important questions are crucial right now. As agents, we are not here to sell you anything or convince you to do anything. These are questions you should ask yourself and answer yourself.

We are here to answer your real estate questions. When a homeowner comes to us with an idea, we help structure a plan to make that idea a reality. Or we point out potential deficiencies in the plan. There is nothing worse than starting a plan and not having it thought through.  We have talked some people out of selling because the back end of the plan didn’t have a realistic end game and we did not want to make the homeowner homeless.

On the other hand, we have helped some sellers devise a plan to accomplish their end goal in ways they didn’t know were possible. For instance, we have some lenders that will lend money at today’s current rates and allow the seller time to sell their existing home, all while only paying one mortgage payment.

Other times we have negotiated lease-back terms favorable to the seller to give them time to make their next move. The point is, there are options current homeowners may not have considered.

We Can Talk

If you are trapped in a home that doesn’t work for you, call Sande or Brett Ellis at 239-310-6500. We can sit down and talk about your situation.  We’ve helped many homeowners in the past because we listen to your situation and provide answers.  Sande and Brett have built their reputation on giving sound advice and not selling outcomes just because we want more sales. When you start with the consumer in mind first, everything just seems to work out the way it should.

Homeowners also like our home valuation website www.swflhomevalues.com because it gives an instant value of your home. It is fun to track the value each month as the system gives you a new number over time, because the market changes. Many homeowners are not aware of how much their home is worth.

Do not make decisions based off a computer number though. The Ellis Team has been selling homes for far more than appraised value lately, so selling it for appraised value in one day might be leaving tens of thousands of dollars on the table. The Ellis Team uses advanced marketing to reach the greatest number of buyers, not just the ones looking at national portal sites. We can target buyers looking for homes locally and from out of the area. Marketing is more complicated than ever. Anybody can sell a home in 1 day in this market. Few can sell for Top Dollar, and that’s where we come in.

Give Sande or Brett Ellis a call. Interest rates are rising in 2022 so this is the time to ask yourself an important question. After that, you know who to call. Sande or Brett Ellis 239-310-6500

Home Affordability Dictates Prices in Real Estate Market

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

Home Affordability Dictates Prices

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

Rising Headwinds

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

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

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

Real Estate Price Driver

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

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

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

We Have a Great Market

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

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

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

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

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

Where are Real Estate Prices Headed?

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

Housing Market Priced Correctly in SW Florida?

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Is the SW Florida housing market priced correctly in 2022?  Let’s take a deep dive and analyze some key statistics.

Housing market Priced Correctly in SW Florida

Keller Williams has been analyzing the national market for years. In their estimation, 4% annual appreciation is the standard.  When the market surpasses the 4% appreciation rate for an extended period, it can get in trouble. Beginning in about 2002 the market began eclipsing 4% cumulative appreciation. It continued to eclipse that rate for 6 years and on the 7th year it corrected to the norm. What happened after 2008 is a result of prolonged riding above the line for an extended period.

We not only rode above the line, but we also rode high above the line. We then proceeded to ride below the line for 12 years.  Had we ridden just a little bit above the line the correction wouldn’t have been so great.

Fast forward to today. 2021 was the first year we exceeded the line. We are expecting price gains in 2022, and if they pan out as anticipated we will once again be above the line, but not by too much.  Again, the line is a guide, and it is OK to go above or below the line.  The chances of being exactly on the line are slim, although for 12 years on this graph we were right at the line.  The line is scary accurate over time.

How long can we ride above the line?  That depends on how high we go above the line.  So far, we haven’t gone over by much. With the Fed expecting to raise interest rates in 2022 combined with rising gas prices, each can work to slow the rise of home prices. Each eats the purchasing power of buyers by eroding their spendable disposable income.

Another factor we like to track is inventory levels. Nationally inventory sits at 2.3 months, and the average line is 5.9 months. Both nationally and locally inventory levels are below where they should be. This tells us it is more fun to be a seller than a buyer. We are closely monitoring inventory levels. When we see a significant rise in levels, we need the upward pricing pressure will abate.

 

So far, we are not seeing that yet. However, we do have headwinds with rising inflation, interest rates, and fuel prices. The market can still rise in price, and most experts are predicting it will.  We are saying there are limiting factors on how much higher they can go, and how fast.

If there would be a future correction, it would not have to be much.  Unlike 2006-2009 here locally, we have not overbuilt relative to demand. In fact, we have graphs showing we are underbuilt, and therefore inventory is lacking.

Builders are doing their best to catch up.  They will not catch up anytime soon. The question becomes, will sellers decide to cash out in enough quantity to affect the market? Nobody knows the answer to that.  Our bet is rising rates will temper the market, but no correction will be necessary, at least not in 2022. We would need to see prices rise substantially to warrant a correction in 2023. If prices rise enough, they could come back to today’s price plus or minus a few percent. If prices rise as expected, perhaps no correction will be necessary.

A lot will depend on how far interest rates rise, how persistent inflation is, and if incomes keep up with inflation.

Politicians talk about inflation being transitory and how inflation will moderate later this year. All we can say is it will have to, because if it doesn’t, Americans will be priced out of their standard of living. Incomes simply cannot keep up, and inflation hurts the little guy the worst.

If you are thinking about selling in the next year, we should talk and come up with a strategy for you. Financial planners meet yearly with their clients. We believe 2022 should be a year you meet with your Realtor to update your plans. We’d love to be your Realtor. Call Sande or Brett Ellis 239-310-6500, or visit www.SWFLhomevalues.com to track your home’s value going forward.

Housing Market Correction Risk Harms Sellers More Than Buyers

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

Housing Market Correction Risk Harms Sellers More Than Buyers

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

Housing Market Correction Risk

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

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

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

Florida in a Good Position

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

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

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

Nobody is Predicting a Crash

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

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

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

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

 

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Inflation Home Affordability Perspective

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Today we’d like to give you an inflation home affordability perspective you may not have thought about. These days everyone is talking about how expensive housing is. But is it really? Yes, home prices have gone up, but that doesn’t tell the whole story.

Inflation Home Affordability Perspective
Inflation Home Affordability Perspective

We are including a graph, and there is a lot going on in this graph. Let’s break it down. In 1989 the Keller Williams research team took the national average price of a car, a home, wages, and the cost of a mortgage for that average home.  They then went back and adjusted each for inflation. Here is what we found.

Of course, all four went up in price. But after adjusting for inflation, the cost of a mortgage, even at today’s prices, went down 24.02% You might ask, how can this be?

The answer is mortgage rates are lower than 1989 which is making housing affordable. We have other graphs that show in 2021 16% of the average home buyer income went to paying their mortgage. Back in 1989 it was 24%, so home affordability is better than it was back in 1989. This suggests there is more room for price appreciation if rates do not rise.

What if Rates Rise?

What happens if rates do rise? That eats into home buyer affordability and can damper price increases.  If they rise enough, it could put negative pressure on home pricing. In the coming weeks we will post another graph that shows where home prices are today compared to where they should be on the curve.

The forecast we pay attention to suggest home prices could rise nationwide about 9% this year. However, home prices are out over their skis and could ultimately bounce back if they expand too much from here. A lot will depend on interest rates. Expect the Fed to raise their rates a qtr. point to half point in March. Most experts now see a qtr. point hike, but I would not be surprised to see the half point rise. Many financial analysts are expecting the economy to pull back the 2nd half of the year. One way or the other, inflation will be pulled back whether through a slowing economy or continued interest rate hikes. Therefore, I believe the Fed may want to act faster now than having to continuously raise rates later.

Nobody knows what the Fed will do. They should have moved sooner and had they we might not have need to raise as much in 2022. Of course, many mistakes have been made not just by the Federal Reserve. A lot of people are responsible for this drastic inflation.

We are not here to assign blame. We are simply here to look at how we got here, how we think they may address it going forward, and what that means for the local real estate market.

Call Us Before Prices Peak

If you are a homeowner and your home is not working for you, you might want to call us 239-310-6500. Do not wait for prices to peak. If timing the market is your goal, you have a 99% chance of not getting that right. You will only know months afterward if you timed it perfectly.  Even if you miss it by a few percent, you are still doing well. Remember this, when word gets out that prices topped and are heading down, buyers turn off.

No buyer wants to buy in a declining market, just like nobody wants to catch a falling knife. Some people must buy, but the ones that don’t will continue to rent and wait for prices to come back down. When this happens, they will have no mercy on sellers. Sellers did not care that they put in 20 offers on homes and got none while prices were going up. When the market reverses, buyers will have no sympathy.

If you’d like to check your value online without speaking to us, you can at www.SWFLhomevalues.com Not only will it give you your home’s value, you can also check to see your value each month and see if it is appreciating or declining.

Always call Sande or Brett Ellis at the Ellis Team at Keller Williams Realty. We look forward to helping you get Top Dollar for your home!

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Cape Coral Pool Home

Cape Coral Pool Home

Record Home Sale Prices Set in January 2022

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January 2022 saw record home sale prices set as we started the year out with a bang. Median home sale prices rose to $413,500 from $327,250 last year. That is a whopping 26.4% increase over last year. Average home sale prices rose to $574,393 from $489,738 last year. That is a 17.3% increase.

Record Home Sale Prices

We did notice a drop in average sale price from December. Last December averages sale prices were $605,784. We do not get too hung up on average sales because a few large sales can skew the average. Therefore, median is most used. For instance, the Ellis Team closed one for about $3.8 million in December that would skew the numbers up on the average.

Inflation and Housing Prices

What effect will rising rates and inflation have on housing prices?  That is what we are going to watch. Typically, the Fed raises rates to slow down the economy.  An overheated economy leads to inflation which hurts the most vulnerable among our population. The Fed is determined to stop rising inflation with a series of rate hikes and elimination of the bond buying program that has infused so much into our economy. This will take money out of the money supply which will serve to slow down the economy and also make rates rise.

Where it gets tricky is the global economy. In the old days the US would raise rates and that would be that. Today we no longer live in a bubble and have to look at how the dollar stacks up against foreign currencies and economies. It could be that foreign governments choose to invest in US Treasuries which would pull rates back down. Keep in mind there is an inverse relationship with prices and yield, so as the price goes up the yield goes down. It will be interesting to watch how much interest rates will go up.

Price of Oil

The other wild card is the price of oil. Rising oil prices can be inflationary. We have a graph that shows key moments in history where when oil reached a certain point it led to recession. We are no super economist, and you know what they say about economists. It just feels like to me if oil were to hit $115/barrel or so it would not be good for our economy. As I write this article West Texas Intermediate crude oil is just above $94. We will be watching this number closely along with the price of the 10-year treasury yield.

Many sellers are holding out for higher prices, and their hunch to this point has been good. Nobody knows how much longer prices will increase. We also do not know how fast or how much interest rates will increase. We would say the cost of borrowing is set to go up. Rates have risen in the last year, and we expect more of that. If your home does not fit your needs, making a move today may be in your best interests. Waiting to make the move when borrowing costs are higher can cost you in two ways.

Interest Rates

If you are getting a mortgage on the next house, your borrowing costs will be higher by waiting. Secondly, all the buyers looking at your home will now qualify for less home when rates rise. For every 1% rise in rates takes away 11% purchasing power from borrowers. This means the pool of buyers for the home you are selling could shrink as well.

The good news is today we have more buyers than sellers. It is always more fun to sell in this environment. In the future we may not have quite the imbalance, which wouldn’t be as fun. Waiting can be a gamble.

If you’d like to discuss your options, call Brett or Sande Ellis 239-310-6500. We can consult and give you answers to your questions. Or visit www.SWFLHomevalues.com to get your home’s value instantly.

Let us know how we can help. We are easy to talk to, so we look forward to hearing from you.

Daily Inventory Levels Down 23.66% Since Dec 8

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Today we are reporting SW Florida single family daily inventory levels down 23.66% since Dec 8th, 2021. In roughly two short months we’ve managed to whittle down single-family inventory by 332 homes in Lee County. Back in December inventory stood at 1,403 homes and today it stands at 1,071.

Daily Inventory Levels Down 23.66% Since Dec 8

Sellers can attract multiple offers if their home is marketed correctly and choose from an array of buyers.  Buyers on the other hand are increasingly frustrated by the lack of inventory. They must compete with other buyers for fewer opportunities.

Dare to be Different

At the Ellis Team at Keller Williams Realty we work a bit differently than most Realtors.  This is why we are able to get our buyers into homes in an increasingly frustrating market. We are also able to get our sellers Top Dollar because we study the market in greater detail.

In a tense, stressful market it pays to work with a team that has been through changing markets before and knows how to operate.  The average Realtor has only been through one cycle. Therefore they do not understand what it truly takes to succeed for their clients in a rapidly changing market.

When the market makes a move, you must spot it quickly.  Our team is working the MLS every day and we track numbers religiously. When the market makes a move, we want our clients to know first.  Speed wins in this market.  You cannot tell where the market is going unless you know where it has been and where it is this minute.

We hope you appreciate us letting you in on some of the statistics we track and what indicators we look at when we give advice to or clients. We appreciate that so many Realtors read our column and share with their clients as well.  You do not want to be caught with week old data in a changing market. Unfortunately, we write this column on Monday or Tuesday before it prints on Saturday so it is the best we can do for readers.

Best Information Wins!

If you are in the market to buy or sell, you will want to call us for the timeliest information available.  We are listing properties one week, and by the time professional photos are taken and the home is ready for MLS we are adjusting. We have added tens of thousands of dollars to our sellers’ pockets by having up to date info on the market.

If we did a market analysis for you several months ago and you are thinking of selling, we need to talk again and update that price for you.  Chances are your home has gone up in value significantly, and the new data may affect your decision.

2nd Opinion

If you have consulted with another Realtor and did not like their opinion, perhaps it is time for a second opinion.  This offer is not an attempt to solicit a listing from any currently listed homeowner. We are simply saying your home may be worth more than you realize.

Our team has had great success already this year bringing several homes to market and getting Top Dollar. It is not uncommon to sell our listings above appraisal value. Buyers will pay above appraisal value even if they are getting a mortgage, and we can show you how.

If you are considering selling if the price is right, call Sande or Brett Ellis today 239-310-6500. We are experts at getting your home sold fast and for Top Dollar. Perhaps this is why the Ellis Team has been voted Best in Real Estate by News Press readers for 7 years in a row.

You can always use our online property value tool at www.SWFLhomevalues.com or search the MLS at www.LeeCounytyOnline.com. To get the timeliest information on what the market is doing and how to capitalize, give Sande or Brett a call 239-310-6500.

 

Good luck and Happy Selling!

Inverted Yield Curve Predicts US Recessions

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I think it is safe to assume nobody studies the numbers for the SW Florida real estate market like we do.  Perhaps it is because I graduated with a degree in Finance that I study the cause and effects of the market.  This week I want to share a leading indicator.  The inverted yield curve predicts upcoming recession and stock market corrections.

Inverted Yield Curve Predicts US Recessions

Because of this we are better able to spot emerging trends that can affect our customers.  We were one of the first to predict the market change back in 2005, and back then everyone said we were crazy.  While we educate our customers first, I like to let readers in some metrics I will be watching going forward.

A lot of sellers are asking us if the market is going to crash.  My answer would be which market, the US market, or the local market?  For the record, I am not saying either is going to crash as the setup for this market is nothing like it was back in 2005. If it were to crash, or even suffer subtle setbacks it would surely mean that interest rates are rising, and the economy is faltering.  We know interest rates are already rising and predicted to go higher as soon as March.

Let’s look at the economy.  There is one leading indicator among others that predicts the economy, and that is the inverted yield curve.  Technically the inverted yield curve refers to the 10-year to 2-year spread.  Right now, the spread stands at .62% It has been falling since March 2021 when it stood at 1.58% difference. You can see it is declining, but it does that.  We will be watching to see if it reaches 0.

Did you know that the inverted yield curve has accurately predicted every single recession in the United States since the Fed has been publishing data on this back in 1976?  It has, and that is a scary accurate leading indicator.

This is why the Fed’s hands may be tied.  We have handled inflation all wrong heading into 2022 and it leaves the Fed with few choices.  They need to stop borrowing money and taper the bond buybacks.  They are doing this, and this program will take trillions out of the economy by end of March.  This will lead to higher rates.  Secondly, they must raise interest rates.  Some say look for 3-6 hikes this year.  But doing so could cause the economy to stall and lead to recession.  Recession is not good especially with such high inflation.

The working men and women in America are being hit the hardest.  Wages cannot keep up with rising cost of living and people are getting further behind.  If recession hits, some could lose their jobs.

Some people say the economy is on fire.  January numbers show 467,000 jobs were created.  Were they really?  We have 10.9 million unfilled jobs in the United States, and they report 467,000 jobs were created.  Perhaps 467,000 people decided to go back to work because they had to. Be careful which headlines you read.  Track your own numbers.

We cannot say what will happen. There are too many wildcards and too many decisions to be made by others.  We can report on what we look at to evaluate.  The inverted yield curve predicts recession before it happens.  It may or may not happen, but it will be fun to know ahead of time if you look at the right tools.

We hope you enjoy reading about how we analyze the market. It may be kind of geeky, but if you are buying or selling, it pays to know a geek.

If you are thinking of selling your home, call Brett or Sande Ellis 239-310-6500. We might be geeks, but we’re easy to talk to and we know our stuff.  Or visit www.SWFLhomevalues.com for an instant and Free home valuation on your home.

Good luck and happy selling!

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