As the Market Churns

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This is the time of year agents are busy selling properties.  If you look at the last two years, historically you will see that sales begin to build each month heading into summer.  The last two years are fairly typical as to how our local market works.  April and May closed sales are results of deals put together in March.  There is typically about a one month lag from contract to closing.  Some closings occur in the same month, and some take longer, especially short sales. 

We think everyone who possibly can buy is attempting to right now for several reasons.  Interest rates are headed higher.  The Treasury Department’s phase-out of buying mortgage backed securities on FNMA and Freddie Mac expires this month.  The last time this happened rates shot up about ¾% in a week or so, so we’re keeping our eye on rates in April and what if anything the government does when they shoot back up. 

We also have the Home Buyer tax credit in place for sales through April 30.  Buyers have a few months after that to actually close these sales, but essentially it allows first time home buyers a credit of up to $8,000 and repeat home buyers a credit up to $6,500.  This is real money, and buyers are acting to receive this money. 

Single Family Home Sales by Month Lee County Florida
Single Family Home Sales by Month Lee County Florida

Additionally, inventory in certain price ranges is drying up, and prices are low.  Buyers from near and far and reaching to scoop up these bargains.  Because these homes are so far below replacement cost, these prices won’t last once the economy improves and builders start building again.  Many of these homes are 40-50% below cost, so there’s a built-in profit for buyers willing to buy now and hold until market improves. 

We know why the market is Hot, but let’s go behind the scenes and explain some things that are affecting the market many people might not know about.   The first major obstacle is appraisals.  Appraisals have been coming up short up to 30% of the time as appraisers not familiar with the neighborhoods are using comparables that are not the best for the subject property.  They are not taking the time to discern if the two neighborhoods are similar, or if the comparables condition is similar.  We’ve seen appraisers use comparables from other neighborhoods that just don’t measure up while ignoring a good comp 2 doors down that closed last week.  We’ve also seen appraisers only use the foreclosures, but they don’t tell the whole picture.  The foreclosures can need lots of work and be in poor condition, and if the appraiser wants to use them as a comp, they need to research its actual condition when property sold. 

The next big issue is we often have multiple offers on each property, and buyers are bidding against each other.  Cash is king, and buyers wishing to finance have a hard time competing with cash buyers.  The seller doesn’t have to worry whether the buyer will get financing when a cash buyer is involved, nor worry about a bad appraisal.  Many of these properties are selling well over asking price, and many buyers are frustrated no matter what they do they can’t land a property.

We also have out of town buyers who believe they can bargain down these homes, and wonder why they lose home after home when the sellers accept someone else’s offer.  Many buyers have said they don’t pay full sticker price, and yet they’re downright frustrated when the seller accepts another buyer’s offer.  Agents I speak with say they are educating buyers right upfront about our market, but buyers often times have to try for themselves.  A buyer can find out the hard way and miss out on their first 6 choices or take their agent’s advice and have a chance at getting choices 1-3.  Even if you offer $10,000 over asking price all cash, there’s no guarantee you’ll get the home, but at least your chances are better.  It pays to study each submarket and determine how each home fits in that puzzle. 

Lastly, title can be an issue.  If you’re buying a foreclosed home, it’s not uncommon for a title issue to creep up and extend the closing out.  Banks don’t always complete the full title process until a contract is secured, and that’s when it could be discovered some outstanding liens, or homeowner associations trying to collect more than the law allows to issue an estoppel letter.  We’ve even experienced a home that needed to be re-foreclosed as it wasn’t done properly the first time. 

If our market wasn’t so challenging, we’d see even higher sales reported.  This market is more complex than ever, but at least it keeps people on their toes and moving.  That’s often little solace to those caught up in a deal when things are going wrong, but I guess it beats having a dead market.  There’s nothing dead about the SW Florida real estate market.

Insights on Foreclosures and Short Sales in SW Florida

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Recently we attended a class with the Five Star Institute which is the premiere resource for educating bank asset managers and real estate agents on effectively handling bank foreclosure transactions.  The class we attended was the REO/Short Sale Summit which focused on bank foreclosures and the short sale process.  The Five Star Institute brought in asset managers for us to talk to, appraisers, banks, and 3rd party asset management companies so we could gain a thorough understanding on how to best deal with foreclosures and short sales, and insight into the back-end servicing agreements that control what the banks can and cannot do on behalf of the investor when approving a short sale or placing a foreclosure.

Short Sales and Bank Foreclosures in Cape Coral, Fort Myers, Lehigh Acres
Short Sales and Bank Foreclosures in Cape Coral, Fort Myers, Lehigh Acres

We learned that the Treasury Dept has agreed that mortgage modifications are not working, and most loan modifications and workouts still end in default.  It was further agreed that 2009 was a year of home retention intended to keep people in their properties, and 2010 will be a year banks collect money, either through a short sale or a foreclosure and re-sale.

Nationwide it is estimated there is 33 months of foreclosed inventory that has not been released.  Dave Liniger, founder of RE/MAX International told a group of banks a few weeks ago to release the inventory as holding it back is only harming the markets.  In the most distressed markets like Las Vegas, Phoenix, and SW Florida, there is actually a shortage of properties and holding back inventory only prolongs the recovery time of the market.

In many markets such as Florida, it takes over 1 year to get through the foreclosure process, and 2010 will see many begin this process if short sales don’t succeed.  All agreed that politicians’ running for office like to tell voters they’ll keep them in their homes, but this is actually harming the system instead of helping.  Most blamed president Obama’s initiatives as short sided and designed to score points with voters, but largely ineffective contributing to the problem.  The entire panel feared that politicians running for office this year may further try to prolong the inevitable in hopes of scoring points with voters, but that would further exacerbate the problems today.

In the last few months we’ve been able to help sellers sell through the short sale process, and from what we’ve heard we may see more of that in 2010 as banks pursue a simultaneous sale; short sale and foreclosure process.  Banks are stepping up their efforts by hiring more people, and moving their platforms online so agents, appraisers, banks, investors, attorneys, etc. can all work on the file together and streamline the process.

We expect to see more short sales in 2010, and more foreclosures in 2011, depending on how successful the 2010 short sales are.  Agents increasingly are becoming better trained, either from getting their CDPE (Certified Distressed Property Expert) designation or their Five Star designation to handle foreclosures for the banks.  The process has become very complicated.  Even an agent that never wants to list a short sale or do all the required work an REO agent does to sell a property would benefit by taking these courses as it educates agents on what is truly involved in the sale, and it will help them represent their buyers better by helping their buyers structure their offer better so the bank is more likely to accept.  Of course, sellers should select someone strong in this arena, as success with the bank is determined by the seller meeting certain criteria, and the agent properly presenting that criterion.

Only about 25% of all short sales actually sell, and yet this number can be increased substantially with education.  We are all for the industry getting better educated and increasing this closing ratio, which will help more sellers, help more buyers, and relieve frustrations by all.  The short sale process isn’t for everyone, but for those willing to be patient and properly work the system, the rewards are there.  And we’re for the banks improving their processes to make communication better.  We would actually be for loan modifications and home retention if they actually worked, but unless the banks and government will consider loan reductions instead of short term rate and term modification, we think this is a waste of time and is further harming everyone involved.

Inventory by Price Range

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Last week we focused on the overall State of the Lee County real estate market, and this week we’ll continue with that theme, but zero in a little bit on how certain price ranges are doing. 

Much of our inventory has decreased in the last year as buyers have been scooping up properties faster than the system can bring them to the market. This is the reason inventory levels in certain price ranges have shifted to a seller’s market.  Last year at this time inventory level in the 0-$100k range was 20.26 months.  Today that number is down to 4.23 months.  Last year we talked about market equilibrium being somewhere in the neighborhood of 6-9 months.  6 Months seems about right to us.  As you can see, this price range has fallen from nearly 2 years to less than 6 months illustrating it has swung from a buyer’s market to a seller’s market. 

 

Home Inventory by Price Range 2009
Home Inventory by Price Range 2009

Buyers many times read national headlines and don’t realize they’re competing with other buyers for the best properties, and most of these properties are on the market only a few short days.  Practically any property in the 0-$100k range will have multiple offers and sell at or above asking price.  In fact, last year 8,051 single family homes sold at or above asking price.  That’s simply an amazing statistic. 

The next hot price range is of course $100-200k. Last year we had 12.06 months supply of inventory.  This was the hottest price range last year, and it’s still hot this year.  Today it stands at 6.23 months, almost half of last year.  As you can see, the 0-$200k range is on fire.  Last year we had a lot of Canadians coming down and buying properties in SW Florida.  In the 2nd half of 2009 we noticed more interest from Americans from up north, and this season we’re already seeing many baby boomers arriving and seeking out their piece of paradise.  Combining that with the brutal winter our northern friends are experiencing and we think this season stands a chance to eat into the $200k+ price ranges going forward. 

Last year the $200-300k range stood at 15.33 months, and this year it’s down to 10.03 months.  The $300-400k range last year stood at 18.05 and this year it’s at 15.65, so its better, but the changes aren’t improving as much the higher we go.  The $400-500k range improved by 3 months, down from 24.17 last year to 21.3 this year. 

What’s interesting to look at in this hot market is the $500-1 Million price range, and the $1million+ range.  Inventory levels actually went up in both ranges, and up dramatically in the $1 million price range.  This suggests to us a few things.  Sellers in the higher ends of the market have held out longer than most as the affluent have had the means to ride out a poor economy longer.  However, the drag on the economy may be catching up even to the highest of income earners.  Secondly, there are fewer buyers in the higher ranges, with lots of inventory to choose from. 

To put this in perspective, in the 0-$100k range, there are 3,530 active listings on the market, but there were 10,021 sales last year in that range.  In the $1 Million+ range there are 697 active listings, but only 124 sales all last year. 

Top end sellers may “Need” more out of their home, but as we’ve seen with the foreclosure crisis, what a seller needs is irrelevant to what buyers will pay.  Higher end sellers may not qualify for a short sale because they have other assets, so they may not be motivated to take losses and are testing the market.  Oh, they surely may wish to sell, but not motivated to sell where the buyers are.  Affluent sellers may have the ability to wait the market out longer, even if a property is draining them financially. 

So, $500k+ buyers are in the driver’s seat and can buy the best value properties, and buyers in the lower price ranges are competing against each other to snap up today’s lower prices.  Prices across the county have begun to rise, and buyers are responding by studying the market and moving off the fence.  2010 should be an exciting year to watch.  Download the entire 2010 State of the Market Report free at http://www.topagent.com/

New Videos on State of SW Florida Real Estate Market

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How would you like to view videos complete with graphs and analysis breaking down the overall Lee County Florida housing market, as well as many of the sub-markets throughout SW Florida?  Now you can.  The Ellis Team at RE/MAX Realty Group in Fort Myers Florida recently released its annual State of the Market Report, and this year they’ve produced videos explaining in detail what it all means for the future of the local housing market.

State of the Market Video 1 This video gives an overview of how the Lee County real estate market fared in 2009 vs. 2008 and provides many graphs and analysis on what foreces are influencing the market

State of the Market Video 2 Continued discussion of the overall SW Florida real estate market

State of Market Video 3 Analysis of submarkets Fort Myers Beach, Lehigh Acres, East Ft Myers, North Fort Myers, Sanibel Island

State of the Market Video 4 Analysis of  submarkets SE Fort Myers, SW Fort Myers, Central Ft Myers, Bonita Springs, and Estero Florida markets

State of the Market Video 5 Analysis of Cape Coral submarket, broken down into 3 areas, Cape Coral North, Cape Coral Central, Cape Coral South

Feel free to share this report and videos with your friends who may have interest in the SW Florida housing market

2010 State of the Market Report

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It’s that time of year again.  Final sales numbers are in, and we can accurately reflect on where we’ve been and where the market may be headed in 2010.  Each year we release the most comprehensive statistical report on SW Florida residential real estate, and this year’s report uncovers some interesting observations. 

Single Family Home Sale Prices in SW FLorida 2008-2009
Single Family Home Sale Prices in SW FLorida 2008-2009

Last year we said we really need jobs and employment to fix housing and that is partially true.  A bottom seemed to form even without jobs and housing as investors came in and competed with first time home buyers for the best bargains.  Never before have sale prices been so low as compared to rents as to cash flow for investors like we’re seeing now.  This investor boom is much healthier now than back in 2005 as investors are helping to clear the foreclosure inventory, clean up the neighborhoods, and provide stability and capital until employment returns to the local economy.  The underlying investment makes sense at today’s numbers, and in fact still has some room for price gains going forward as well.

 We also talked about the true test of a bottom last year.  “Sales volume increases, inventory levels stabilize, and prices stabilize.”  2008 saw 2 out of 3 so we speculated that 2009 might bring all 3 into alignment, and this is what occurred.  2009 saw all 3 factors come together and in fact median home prices really firmed up the 2nd half of 2009. 

Sales in 2010 were up 92.11%, month’s supply of inventory fell from 17.53 months last year to 7.11 months this year, and both the median price and mean average sale price for single family homes rose in the 2nd half of 2009.  All 3 signs point to a bottom that was reached in 2009. 

Is every bottom firm?  Just look around and you’ll see the answer is no, but we think the real estate bottom should be, as investors seem to have set the floor by scooping up everything they can because it makes financial sense.  The phrase financial sense is a far cry from the speculators we saw in 2005.

 So let’s give out some interesting facts from this year’s data: Last year we reported 9,207 sales.  This year we report 10,021 sales that sold at $100,000 or less alone, and 4,651 sold from $100-$200k.

 8,051 homes sold at or above full price last year.  That’s almost as many homes as sold in all of 2008.   Anyone who bought or tried to buy real estate in SW Florida last year knows this, as offers on properties were fast and furious.  That equates to over 45% of the homes selling at full price or better.

 So how did the county do on prices?  We’re down in price, but most of those declines were 1st half of the year vs. 1st half of 2008 numbers.  Much of the declines were year over year, and we believe prices could start showing gains year over year in 2010.  Countywide we’re reporting median prices down 38.82% and average price down 40.23%  This won’t make sellers happy, or government that relies on taxes to pay for services, but government better get ready for less very soon, because when the Lee County property appraiser comes out with their numbers later this year, it won’t be a gain.

 So which area of the county fared the best?  Our data shows Sanibel/Captiva fared the best, with a 18.51% price drop in media price and 19.45% drop in average price.  Sales were up 28.97% last year in Sanibel/Captiva. 

The headlines will read market is down close to 40% in price, but that’s not the real story here.  That was year over year data, and is primarily affected by 1st half sales.  2nd half of the year sales firmed up in price, and going forward there’s an excellent chance we’ll see some price gains year over year.  It really depends on future foreclosure activity, jobs, and the economy.  So don’t get hung up on the -40%.  Look at the trend of prices for all of 2009 and we think the data speaks for itself.  We’ll post a price graph from the report illustrating 2008-2009. 

Download your free copy of the State of the Market Report. You can look up all parts of the county, as we know, all real estate is local.  This is just a snippet of data contained in the report.

Ellis Team Adds Video to SW Florida Real Estate Market

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Recently the Ellis Team has added videos on it’s YouTube channel by broadcasting The Future of Real Estate Show in video. For years the Ellis Team aired this show on radio and recently made the switch to video in January 2010.  The Ellis Team YouTube channel already has over 24,000 views and is growing rapidly.  We just released our annual State of the Market Report, and we’ll be providing videos in the coming days on the State of the SW Florida Real Estate market and provide even more in-depth knowledge and analysis.

Each week the show provides real estate news and analysis you won’t find anywhere else, and we also bring a featured Hot Properties of the Week segment as well.  Be sure to subscribe to our channel and watch for brand new videos to be uploaded shortly.

What Are Buyers Looking For Today?

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We’ve been compiling our annual State of the Market Report which will be released soon and this year more than any other some interesting trends are developing.  Full time agents tend to get caught up in the deals they’re working on and could miss some of the major trends developing in the overall market.  It is always so interesting to analyze the overall Lee County real estate market, and then dissect down to the smaller sub-markets and see what story the data conveys. 

This past week I asked several full time agents who work with a lot of buyers if they could tell me what they’re seeing on a day to day basis.  I then compared what they said with the data we’re compiling to see what they story is. 

A few themes developed from their stories.  The first theme is many buyers have heard Florida is on sale, so they come down here with unrealistic expectations about what they can buy.  Agents are receiving unrealistic requests for things like gulf front homes or condominiums 1 block from the beach with a garage, built in the 2000’s for $100,000 or less, or waterfront gulf access homes, 3 bedrooms, 2 baths, built in the 2000’s for $150,000 or less.  The stories go on and on.

 

Year End Prices 1993-2009
Year End Prices 1993-2009

Many buyers want to look at bank foreclosures, but they don’t want to do any work if it needs repair.  They expect all homes should sell at the bank foreclosure prices regardless of whether they need work or not.  Many buyers feel the foreclosures set the prices in the neighborhood even though they may be missing a kitchen and needs tens of thousands in work.  Buyers are quite often dissatisfied with the condition of the distressed properties, but they don’t want to look at a regular home that is all fixed up because it is not a perceived bargain. 

You could take two identical homes next door to each other, one being a foreclosure and needing $15,000 in repairs and another being a normal sale and in excellent condition.  The bank foreclosure might be priced $15,000 below the normal home, but when the buyer sees it they’re turned off.  They’re also turned off by the price of the normal home because they feel it should be priced $15,000 lower.  Many times there is a reason a foreclosure is less money.  It takes money to fix them up, not to mention time and effort.  Not everybody wants to do that. 

Another theme is buyers have no idea homes are selling as quickly as they are.  Many buyers are looking around and because there is some inventory believe they have time.  Many are not motivated to pull the trigger because they believe that home, or one just like it will be on the market in 6 months or next year.  Buyers do not believe these homes are receiving multiple offers and being scooped up by investors who can actually cash flow them at these low prices. 

The emotional buyers are seeing fault with the homes and are afraid to buy.  The studious investor is beating the regular buyers to the punch because they know these homes will be selling for more in the future, and they can actually rent them out and make more return on their money than other investment vehicles.  These homes make financial sense to investors on both ends of the spectrum. 

The regular buyer is operating out of fear and lack of knowledge about the local market.  After they miss out on several properties to higher bidders it becomes apparent to them this market is much more active than they actually thought. 

The SW Florida real estate market is on sale, but it’s the old herd mentality buyers follow.  Buyers tend to be most motivated when everyone else is buying, usually at the height of the market.  It’s true in the stock market, and real estate market.  Back in 2004 and 2005 people couldn’t buy fast enough, sometimes buying groups of homes.  Would you say buying a home back in 2005 was a better investment than buying one in 2010?  And yet the motivations were higher back in 2005 because people weren’t afraid, when they should have been.  2010 is a far greater opportunity, and the people who study the market realize it. 

Later this week we hope to release our State of the Market Report at www.Topagent.com  so you can analyze what properties are selling the best right now, analyze where the inventory is, and what prices are doing on a monthly basis.  Being informed will help you make a better buying or selling decision.  It makes no sense to miss out on opportunities because of lack of local market knowledge just as it makes little sense to overpay, or list at the wrong price either.  If you list too high your property won’t sell, and if you list too low you’ll be giving equity away to someone else who is more informed than you.

Inside the Numbers

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We’re still analyzing data for our annual State of the Market Report which will be released soon.  It’s always interesting to pull the stats and look at the story the numbers tell us, without a preconception of what they should tell us.  Because we are in the business full-time and experience real estate on a day to day basis, it’s impossible not to have some assumptions about what the data may contain.  That’s probably normal and healthy, however we really try to step back and let the data tell the story. 

Let’s start out by telling you what’s involved in getting this data.  We pull data from two MLS’s, Sunshine MLS and the Realtor Association of Greater Fort Myers and the Beach.  Sunshine contains a lot of data for Bonita Springs, Estero, and some in San Carlos, while Greater Fort Myers primarily serves all of Lee County.  Companies and agents can belong to one or more MLS’s and enter listings and sold data into either, or both.  We find this data more useful and even more comprehensive than official numbers that are reported, but getting this data is cumbersome and time consuming.  After it is acquired, it must be scrubbed because there can be duplicates by agents who enter into both boards.  We also identified a few listings that were reported as closed but never recorded with the county, so we discard that sale.  It’s also amazing to see how listings can be two different prices in the various MLS’s, so we check those against official public records.  When we’re done, we believe we have the most tight and comprehensive data available. 

Each year we publish the annual State of the Market Report.  We try to deliver this in an easy to understand format and explain what is really happening in the market.  We cannot publish all the data as it would be too large and not understandable, so we break it down to make it easy to read and informative. 

We’re not done analyzing this data, but we can report a few facts that stand out.  If you read this article on a regular basis, you know that we’ve been reporting sales are at record levels and many are selling at or above full price.  We know this from our personal experience, but we were astonished to learn how prevalent this is statistically.  In 2009, 8,051 homes sold at or above Full Price. That is almost 48% of all homes sold in MLS selling at full price or better, which is simply mind boggling. 

Lee County Florida Distressed Sales Chart
Lee County Florida Distressed Sales Chart

The reason homes are selling at full price or more is because so many are distressed sales, a new phenomenon to SW Florida in the last few years.  In fact, in December of 2009, 63.78% of all home sales in Lee County were distressed sales.  We’ve added a chart that shows the percentages of distressed sales for the last 3 months by area.  As you can see, Lehigh Acres leads the way in distressed sales followed by Cape Coral, then Fort Myers.  Distressed sales percentages are falling, which is good news. 

Each month you hear that home prices are down vs. last year.  We believe that is about to change.  Soon you may start hearing that prices are up over last year.  Prices fell somewhat in 2009 but began rising the 2nd half of the year and are close to where they were at the beginning of 2009.  Barring unforeseen circumstances, headlines should read price gains going forward. 

Banks tell us to get ready for more rounds of foreclosures coming to the market.  How many remains to be seen, but the banks we deal with directly say they are coming.  The good news is our market to date has proved its ability to absorb this inventory.  If it’s a deal, the market is ready.  What happens when distressed inventory dries up and it’s no longer a deal?  Stay tuned and watch for the annual State of the Market Report which will be released soon at www.topagent.com which may help answer some of these questions.

One For The Books

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Final year end official stats are in and as expected, 2009 set all kinds of records.  Every single quarter of 2009 was a transaction record, so it’s no surprise that the entire year set a transaction record as well.  2009 saw 16,260 single family home sales compared to 8,272 last year for a whopping 97% increase over last year.  2005 saw 12,123 home sales, so 2009 eclipsed that lofty mark as well, but this time it was done in a more healthy way, if you can believe that. 

Lee County Single Family Home Sales by Qtr
Lee County Single Family Home Sales by Qtr

2005 sales were fueled by regular home sales and builder sales from previous years that took until 2005 to complete and close.  We’re not seeing any builder sales, pent-up or otherwise because today’s home prices are well below replacement cost, so builders cannot afford to build today as they would lose money on each deal.  So what’s different about 2009 vs. 2005? 

The main thing is housing affordability.  At the height of the market single family home prices were about $322,000 and now they’re at $94,500.  This makes it much more affordable for families that still have jobs.  Obviously if you’ve been affected by the economy and a job loss, almost any mortgage payment is too much, so when we mention affordability we’re speaking to people who are blessed with a job.  We also have low interest rates which positively affect affordability. 

Property taxes are lower which greatly reduces the monthly payment as well, further adding to affordability.  We still have a home buyer tax credit which is up to $8,000 for first time home buyers and $6,500 for existing buyers.  Nationwide December sales slumped because Congress waited until end of November to extend and expand this credit, but we expect sales nationwide to pick up again.  Locally sales were up 40% over 2008, so the tax credit expiration didn’t affect us much as everyone is trying to get in on these rock bottom prices. 

First time home buyers are in steep competition with investors for the best buys as well.  For years we would tell investors property in SW Florida just won’t cash flow unless you put a bunch down.  This isn’t true anymore, so investors are coming in and scooping up these artificially low values and either renting them out for a positive cash flow or flipping them for a generous profit. Cash flow is the rent or income earned minus expenses, like debt service, property taxes, repairs, vacancy and collection losses, etc. In preparation for our annual State of the Market Report I started flagging several home sales that were flipped in 2009, sometimes a few times. 

Today’s prices are too low, especially at the bottom end of the market, and 2009 saw 5 of the last 6 months with rising median prices.  We hear from our sources that there are more foreclosures on the way.  Banks study default rates and can predict how many will foreclose in the future; because once a homeowner gets behind, statistically they don’t catch up very often.  While the worst may be behind us, we believe we may have more to go.  This fact and the job market should keep prices relatively stable until the economy turns around.  We may see escalating prices going forward, and if so it will be because we are undervalued on a cash flow basis no matter what the job market is, but we believe true price appreciation will occur once the job market stabilizes. 

The commercial market is currently experiencing an adjustment similar to what the residential market has gone through in years past, as commercial tends to lag residential.  This could put pressure on some banks, so 2010 may be a year to watch the banking sector for mounting losses on the commercial side.  In the next few weeks we’ll have detailed analysis in out State of the Market report.  You can view last year’s report at www.Topagent.com in the Housing Statistics section.  We have additional graphs you can view there as well. We’ll be unveiling this year’s report online and on The Future of Real Estate show broadcast also on the website. 

Sales are off to a boom in 2010 with many sales contracts happening right now, so 2010 will be another fun year to track.

Stimulus Funds Available In Lee County

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We have all questioned what happened to the stimulus funds only to find that there are monies available from the package in Lee County here and now.  The word needs to get out. It is imperative that those who qualify and have a desire to own a home apply for the assistance. Getting people in homes as a result of this funding will inadvertently benefit the market in all price ranges and all sectors.  We will cover that aspect later.

There are currently two programs with funds available: 

HOME DOWN PAYMENT ASSISTANCE   Qualified persons or families can receive up to 20% (not to exceed $20,000) of the purchase price for a single family home.  The single family home must be located in unincorporated Lee County and could be a condo or PUD (Planned Unit Development) or even a double wide mobile home 1976 or newer provided the land is owned underneath the mobile home. The home cannot be a duplex, have an attached or detached mother in law quarters or have a swimming pool.   If all of the funds are not utilized as either down payment or closing costs the balance of the funds will pay down the principal balance.  The funds cannot pay debts or collections, home inspection fees or home repairs. 

The homebuyers household income must meet HUD guidelines. The income for all members of the household will be considered.  Non occupying coborrowers will be considered on a case by case basis.  The home must be affordable for the occupants so the income of the non occupying coborrower will not change the mortgage amount  or sales price.  The coborrower may enhance the credit worthiness.  All assets (including interest income)  will be considered when calculating annual income such as checking/savings accounts, IRA’s, CD’s, cash value of life insurance, etc.. 

Income Limits-HUD Guidelines for Down Payment Assistance
Income Limits-HUD Guidelines for Down Payment Assistance

HUD guidelines 

A ten year second mortgage will be placed on the property.  No interest will be charged and there are no monthly payments.  At the end of the ten years and if the property has been occupied and homesteaded each year a satisfaction of mortgage will be given and the second mortgage will not have to be repaid.  However if the property is sold or leased during the ten year term or not owner occupied or homesteaded, then the prorated balance of the second mortgage will be due and payable.   The second mortgage is self amortizing and will reduce 10% per year.  Does anybody check?  We are told this criteria will be verified. 

The property must pass Lee County’s minimum housing quality standards inspection.  The inspection will be performed by the Department of Human Services inspector.  The house must not exceed HUD guidelines for the number of persons allowed per bedroom.  The property must be existing and have had a certificate of occupancy for at least one year.  It cannot be occupied by tenants that are not purchasing the home. 

There are other rules and regulations all of which make sense and are easy to work with.  Funds are available on a first come first ready basis.  It would make sense to this writer that you get yourself in position to receive the assistance if at all possible. 

The lender applies for the assistance from Lee County on the borrowers behalf.  The lender completes the lender referral form and several required documents including a fully accepted purchase contract.  There is a $50 charge which can be paid by cashier’s check or money order from the purchaser.  Make this non refundable application fee payable to Lee County BoCC. 

NEIGHBORHOOD STABILIZATION PROGRAM 

Lee County is now in the business of buying and rehabilitating foreclosed homes in targeted areas and then selling them to buyers at prices less than what was paid for them.  This is all possible due to the $18 million infusion of stimulus funds.  First of all, the county purchases properties below the appraised value.  Professional contractors go to work on them making the properties very good buys in price and condition.  The county will not raise the price of the homes as the economy improves.  These homes will stay affordable. Some of the target areas include Lehigh Acres, San Carlos Park, East Ft Myers, North Ft Myers, South ft Myers, Pine Manor and Page Park.  Go to nsp.leegov.com to view maps of the target areas. 

The incredible part is that the county will provide a silent second to the home buyer which means that the county may have purchased a home for $60,000 and then spend $$$ fixing it up and sell it for $30,000.  The buyer is paying on the $30,000 mortgage.  If the buyer stays in the home 15 years the silent second is forgiven.  If the buyer decided to sell, rent or refinance before the 15 years have passed the buyer may be obligated to repay the subsidy partially or in full. 

This program is not for investors or second home buyers and only for the buyer’s primary homesteaded residence.  The NSP program is not restricted to first time home buyers but the buyer cannot currently own a home and must be a resident of the United States.  Buyers accepted into the program must complete an 8 hour homebuyer education class. 

Take a look at the income guidelines for a pleasant surprise. 

Down Payment assistance From the County
Down Payment assistance From the County

The NSP program looks at the income of the buyer from a low, moderate or middle range. The low income buyer can get up to 50% of the sales price as a silent second subsidy.  The moderate income buyer will qualify up to 40% of the price of the home and the middle income buyer at 30%.