Current Market Index Predicts the Future of SW Florida Real Estate

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About 8 years ago the Ellis Team created a market index that accurately predicts the SW Florida real estate market. It helped us in 2005 warn the public that the local real estate market was about to turn.  Later in the fourth quarter and on into 2006 people began to realize the train had run out of steam.  We named it the Ellis Team SW Florida Current Market Index.  Since unveiling this index, the National Association of realtors came out with a similiar index called the NAR Pending Home Sales Index, which also predicts future closing activity, but it doesn’t measure the overall health of the market.  

Current Market Index SW Florida Real Estate by the Ellis Team
Current Market Index SW Florida Real Estate by the Ellis Team

 Our local index measures pending sales, but also takes into account listing inventory and measures the overall health of one against the other.  It tells us if properties are moving relative to overall supply.  This is important because in a good market, it may actually be more of a seller’s market than people realize.  In a hot market, sales are held back by the supply, meaning if there were more supply, chances are, there would have been more sales. 

 

The CMI Index numbers peaked out in January of 2008, and back then we started telling the public sales were about to pick up and inventory would start declining.  Sure enough, that’s exactly what happened throughout 2008 and into 2009.  Our Index was at it’s lowest in April of 2005 and at it’s highest in January of 2008.  The higher the index number, the more of a buyer’s market it is and the lower the number, the more of a seller’s market we have.  Back in July of 2005, the overall Lee County Index stood at only 1.07.  As we know all too well, that was about to change drastically.  The numbers shot up to 2.11 by September 2005, and 3.44 by October.   

So what do the numbers tell us today?  Our index hit 3.72 in April and stands at 3.80 in July of 2009.  This tells us inventory levels have been decreasing as predicted and pending sales have been increasing, as predicted.  In fact, last month we sounded the alarm that June sales could reach record levels, and they did.  July’s numbers when released should be strong as well.  Don’t confuse this with rising prices just yet.  The market is strong in sales volume, but we’re in a new market that has reset, and prices aren’t going back to 2005 levels.  We are starting all over from scratch and 2009 is the new baseline, and as the market heals, the baseline will have room for future price appreciation, with moderation. 

We update this graph each month on our Blog, blog.topagent.com and we look forward to providing this insight to News Press readers in the months to come.  Its one thing to have a Feeling about what the market is doing, however really studying the actual facts and charting trends helps to better understand what the market is actually doing, and where it may be headed.  Nobody can know with absolute certainty what will happen in the future, so we look to statistics to give us our best guidance.  Statistics are our radar so to speak.   

We really try to look at the data with an unbiased eye, meaning we’ll let the data speak for itself and tell the story, as opposed to hypothesizing what the story should be and trying to prove it.  We’ve been right, and we’ve been wrong, and the point is we’re not attached to the outcome of our predictions.  We simply lay it out there and let you decide based upon the best facts we have at the time. 

We’ll be running a new batch of numbers soon, but the July Index appears to show a strong market going forward for the next few months.  It looks like July and August sales numbers should be in good, and we look forward to the release of official numbers on August 21.  We won’t be surprised if July’s numbers are big, perhaps up as much as 100% or so, but down slightly from June’s record numbers.

As printed in the Fort Myers News Press August 15, 2009

 

 

 

 

 

2009: Housing Bust or Housing Boom in Sw Florida?

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2009: Housing Bust or Housing Boom

Its official, the 2nd Qtr of 2009 set the All-Time record for single family home sales, eclipsing the 2nd Qtr of 2005 by a wide margin.  Many people don’t realize that the 1st Qtr of 2009 also set the All-Time home sales record, and the 4th Qtr of 2008 was nearly a record.  Home sales in June were up 137% over 2008, a trend we’re seeing regularly throughout SW Florida.

 

Fort Myers and Cape Coral Single Family Homes sales by Quarter
Fort Myers and Cape Coral Single Family Homes sales by Quarter

The reasons sales are up are numerous.  SW Florida has received much International attention which has drawn interest to the area.  We’ve sold many more homes this year to Canadians who can now afford to buy some sunshine at affordable prices.  We’re also selling more homes to people from up north to use as a second vacation home, another encouraging sign.  Perhaps the two largest segments of buyers right now are the 1st-time home buyers and investors.

 

First-time home buyers are trying to cash in on the chance at the American dream with low interest rates, a potential $8,000 first-time home buyer tax credit, and affordable pricing we haven’t seen in years.  Most of these buyers were priced out of the market in years past, and now is their chance to live in their own home, cut their own grass, and have their chance at building wealth.   That chance is alive and well, as home sale prices today are well below replacement costs, so builders can’t even afford to build at these bargain prices.  No builder is willing to lose money right now when a buyer can buy for less that the cost to build.  This trend will end when there is no more inventory, and as you can see by last week’s graph, inventory levels are shrinking.

 

Lastly we come to the investor.  Today’s investor is much different than the speculators we saw in 2004-2006.  Many of today’s investors are paying cash vs. the over-leveraged speculators who leveraged everything and didn’t qualify for anything but maybe their own personal residence.  Today’s investor isn’t looking for the quick flip, although we have seen a few successful flip transactions.  Today’s investor recognizes bargains, and they’re buying up properties, rehabbing when necessary, and renting them out for cash flow.  In the future, each investor will decide on their own whether they want to sell at normal pricing, or keep the property for positive cash flow.  Positive cash flow is a term we never really used to hear much about in SW Florida because it was so hard to accomplish, even before the so called Boom of the 2000’s.

 

But was the Boom of the 2000’s really the boom?  We can say with certainty that prices went up for awhile, before they came crashing back down, giving up all the gains and then some.  Some people made money, and a lot of people lost money, including the banks, tax payers, etc. The opportunity to make money was limited to when you could get the new construction completed, and the demand was false.  All that happened was the supply side sped up, bringing needed housing to market much sooner than the demand.  So today we have more supply than demand, however that will change in time.

Today’s buyer has more opportunities for success going forward than any buyer did in 2005.  Sales are stronger in 2009 than they were in 2005.  Prices are more affordable, interest rates are low, and there are tax incentives in place now.  In fact, we’re hearing that if the economy hasn’t picked up by October, Congress may extend the 1st time home buyer tax credit scheduled to expire Dec 1, and some are saying it should be opened up to move-up buyers as well. We would argue the market in many ways is much healthier today than it was in 2005.  Many might ask, how could anyone say this market is healthy?  The truth is even with the foreclosures, the market has been cleansing itself for the last 4 years.  It may not be healthy today, but would you rather buy a home today or one back in 2005?  We would say it would be healthier to buy one today than back then, and most people call back then the Boom.

 

We think we should change the conversation.  2005 was not the Boom.  It was not healthy.  There was little to any chance of making money, and first-time buyers couldn’t afford to live here.  Nothing was good about the 2005 market, it was all false.  So let’s stop calling it the Boom. I don’t know if 2009 is the Boom, but if your definition is record sales, affordable housing, Real opportunities to make money in the future, and healthier lending standards, then this is all true today.  It just seems more sensible to call 2009 the Boom than 2005.

 

If you’re a seller or facing financial difficulty, Boom may not excite you.  We’re just saying the last so-called Boom is what started the pain and misery, and it’s going to be real estate that pulls the nation out of recession going forward.  Real estate recovery leads to eventual job creation.  We may be a few years away from construction jobs coming back to SW Florida, however the market has been well on it’s way to healing itself for years now, and we at least have those painful years in our rear view mirror.  I’d much rather be sitting here in 2009 and think of the market as the Boom than back in 2005 thinking everyone was going to make money on their next Flip.  Today is the Boom, 2005 was the Bust.

 

As appeared in Fort Myers News Press August 8, 2009

Ellis Team is Hiring Agents in SW Florida

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The Ellis Team has so many leads we need to hire experienced agents.  SW Florida is experiencing record sales numbers, and buyers more than ever are looking to purchase real estate in SW Florida now that it’s affordable again, interest rates are low, and of course the First Time Home Buyers Tax Credit.

The Ellis Team at RE/MAX Realty Group in Fort myers has not cut back on advertising, but rather has refocused on advertising that actually works.  In some cases we’ve increased our advertising, as is the case with The News Press and NBC.  We’ve continued our radio show for 9 years, our Yellow Pages ads, and we’ve increased marketing in other areas.  We’ve eliminated a few advertising venues that didn’t prove to work, and we’ve recently added a few opportunities that we’re really excited about.

We’ve changed our office staff and we’ve never been stronger.  This is the market to hire key people and march forward, and we’re doing that.  Average isn’t good enough anymore, and it’s never been good enough for us.  This market ha given everyone an opportunity to evaluate what’s working and improve upon it, and eliminate what’s not working.  We’ve improved our personnel tremendously and getting much more accomplished.  We’ve never felt better about our team, and we’re excited about opportunities moving forward.

We recently attended the Star Power Convention in Denver and listened to the Leaders of RE/MAX, Coldwell Banker, Prudential, and Keller Williams.  All four had interesting things to say about where the real estate industry is going in the next 5 years, and all agreed that mediochre won’t cut it in today’s market.  You can’t just give average effort, or you’ll end up going backwards.  You’re either evolving or dissolving according to larry Kendall, owner of Kendall Real Estate and author of Ninja Selling.

Our advertising and systems are working.  We’re creating more leads than we can handle.  We’ve sold more properties than last year.  We’re handling foreclosure accounts, getting short sales through, and helping regular sellers sell in this market.  We need good quality agents to help handle the leads and sell.  We have the administrative team to handle the details for our agents, which frees them up to work with more customers.

If you’re an agent struggling in this market, check us out.  We’re growing, and we’re looking for a few good agents to grow with us.  Let our 20+ years of selling and training experience put you on a path to success, no matter what the market does.  Call us for an interview.

SW Florida Real Estate Update-Listing Inventory Levels Down

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SW Florida Listing Inventory Down

This week we’ll focus on the amount of single family home inventory in Lee County and
compare that with pending sales activity from a historical perspective so that we might be
able to draw some conclusions as to what’s happening today in the SW Florida real estate
market, and where the market may be headed.

Fort Myers and Cape Coral Real Estate Listing Inventory
Fort Myers and Cape Coral Real Estate Listing Inventory

As you can see from the chart which shows Fort Myers and Cape Coral single family
home inventory levels since December, 2004, inventory began rising in the 3rd Qtr of
2005, which was a precursor of what was to come.  The overall Lee County graph looks
similar, only larger numbers. Because new construction contracts were still in effect and
building was in its height at that time, the public really didn’t understand what was about
to happen.  Simultaneous to the rising inventory levels, you can see that pending sales
started to drop off as well.  Combine that with the flood of new construction homes that
continued to flood the market, and you can see very quickly what was about to happen. 
Having this information in real-time back in 2005 would have saved some investors some
money.

Fast forward to the 1st Qtr 2008.  As you can see, pending sales started to increase, and
listing inventory started to decrease. All the foreclosures entering market were quickly
absorbed, and then some.  2008 4th Qtr sales were close to an all-time record, and 1st Qtr
2009 was an all-time record.  In fact, we’re seeing more sales now than we saw at the
height of the Boom back in 2005.  So why isn’t everyone reporting this as the Boom?

2005 was filled with euphoria, rising prices, banks lending money like drunken sailors,
and just generally reckless abandon.  People just didn’t think it would end.  They ignored
the warning signs.  The market was not sustainable, but just try telling that at a cocktail
party with 6 of your closest friends who were flipping houses and making money. 
Nobody wanted it to end, and yet it could not continue.  It was phantom demand, and
over-supply. 

Today we have more sales than the Boom, but consumer confidence is low,
unemployment is high, oil is still high compared to 2005, and home sale prices are low. 
Homeowners are having a hard time making payments as incomes are down, and few
people feel great about their financial matters.  This is why nobody is calling 2009 a
Boom, and perhaps they should.  The opportunities for a buyer today are far greater than
they ever were in 2005.  2005 was a false market as nothing was what it appeared. 
Today’s market is real, and the bargains are there.  In fact, sale prices are so far below
replacement cost there is no building inventory entering the market in the foreseeable
future.

When the job market and the economy begin to recover, we may actually have difficulty
finding properties for buyers.  The builders have not been building, and many sellers
cannot afford to sell at today’s prices.  Banks have been forced to “short-sale” or
foreclose, and the foreclosures may start drying up by next year.  Some speculate there is
another wave coming due to resets in the ARM schedules in 2011; however we feel that
in SW Florida, most of those buyers have already walked because they were the
speculators who long ago realized they could never make a profit, so they chose not to
carry the costs.  If all this is true, we may have a period of diminishing inventory to sell
until the market sorts it out.

Many Realtors who study the market  were sounding the warning signs back in 2005, and
yet the public didn’t get the message.  Many of those same Realtors are recognizing that
2009 is a Boom, and yet not all of the public is getting that message either for reasons
outlined above.

Our goal is to provide you with meaningful data so that you can see what is really
happening in today’s market.  These first several weeks we’ll be providing a baseline of
where we’ve been and how that relates to where we’re headed.  We seek to provide
unbiased insight you might not have received anywhere else.  We seek to make sense of
what’s happening, and prove it with facts.  We can say that home sales have exploded
since 2008, and listing inventory is declining.  We’ll watch this market together, and
we’ll do our best to explain what’s happening.  We’re not tied to the outcome, as markets
go up and they go down.  Our job is to explain what it’s doing today, and offer our
insights as to where it may be going in the future, so you can make informed decisions. 
Remember, all real estate is local, even in SW Florida.  Just because we report something
is going on in the Cape or Fort Myers doesn’t necessarily mean the entire market is
affected the exact same way.

We are seeing a shift from Cape Coral, which has been on fire, over to Lehigh Acres, as
Lehigh is the affordable hot spot right now.  It’s the same shift we saw in the height when
prices in the Cape got carried away and buyers shifted to Lehigh.  Funny how life repeats
itself.  Stay tuned each week and we’ll present more insights.

Florida Lieutenant Governor Jeff Kottkamp This Week’s Guest on the Future of Real Estate

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Florida Lieutenant Governor Jeff Kottkamp is this week’s guest on the Future of Real Estate which is broadcast on Saturdays at 11:00 AM on WINK AM 1240 in Lee and Charlotte Counties and AM 1270 in Collier County.  You can listen to this special show Online Now   

We ask the Lieutenant Gov the following topics:

  • Update on Foreclosure Task Force (Hope Now)
  • SW Florida’s chances on landing another Major League Baseball Team
  • State Farm Insurance situation
  • Health Insurance-Obama’s plan and it’s effect on Florida
  • Cover Florida Insurance Plan
  • State Rights Vs US Rights
  • Private property rights
  • Space Florida
  • Cuba and Tourism
  • Attorney General Race
  • Drug Control
  • Port Security
  • Governor race-Crist Vs Rubio
  • Adoptions in Florida

It really is a great show and the Lieutenant Gov answered all questions.  Tune in now.

SW Florida Social Media Update

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Last week we tested a social media experiment.  Our goal was to create a few Facebook Fan Pages for various parts of the SW Florida real estate market and see if we could drive 100 fans to each.  If we could do that, we could signup for Facebook unique URL’s.  We’re happy to report that not only did we hit our goal of 100 fans, we far surpassed it in only a week.  Currently we’re over 400 users on our Ellis Team site, and close to that on others.

The advantage of signing up on one of these pages is that we post timely news pertaining to each area, specific to that geographic location, or in the case of The Ellis Team site, about real estate marketing in general.  We provide discussion boards, Blog posts, nes paper articles, video updates, photos, and much more.

Our new goal is to hit 1,000 users by the end of the month.  Can we do it, who knows?  There’s no magic reason we picked this number, it just sounds fun.  We’ll post the web links here for Facebook users to follow us, and our Twitter addresses too for our Twitter users.

Facebook Pages

Ellis Team at RE/MAX Realty Group currently at 408 Fans

Cape Coral Real Estate                     currently at 244 Fans

SW Florida Real Estate                      currently at 342 Fans

Fort Myers Real Estate                      currently at 280 Fans

Future of Real Estate                        currently at 354 Fans

Twitter Followers can follow us at:

@swfltopagents   Ellis Team

@brettellis_swfl   Brett Ellis

We look forward to connecting with you on many levels.  We still do business the old fashioned way, and we still advertise in traditional methods like newspaper, TV, and radio.  We are however expanding our reach into the Social Media markets to better serve our customers, and we look forward to seeing you online.

This Week’s Future of Real Estate Radio Show is Broadcast in Video

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We’re doing something new this week for the Future of Real Estate Radio Show here in SW Florida.  This week’s special guest is Lee County Property Appraiser Ken Wilkinson, and this week we video taped the show as it was being broadcast and we’ve decided to bring it to you in video format as a test.  We’ve separated the broadcast into 6 parts so you can watch any and all parts that interest you.

Ken Wilkinson Property Appraiser Lee County Florida
Ken Wilkinson Property Appraiser Lee County Florida

Future of Real Estate July 4, 2009 Part 1

  • Cape Coral water and sewer assessments effect on valuations
  • Mass appraisal system Vs. Fee appraisal system
  • Property Appraiser must assess 604,000 properties annually
  • Chinese Drywall and it’s effect on value
  • Mold and it’s effect on value
  • Functional Obsolesence
  • Economic Obsolesence
  • Cost to cure
  • Property Appraiser assessment Vs. Property Taxes

Future of Real Estate Part 2

  • Property Appraiser assessment Vs. Property Taxes Continued
  • 92 Taxing Authorities countywide
  • Property Appraiser’s office provides analysis of market January 1 to each taxing authority
  • Taxing authorities set their tax rates
  • Truth in Millage (Trim)
  • Rollback Millage
  • Gut feeling of what politicians will do with tax rates
  • Federal stimulous money effect on taxes
  • County budget’s being evaluated
  • Property appraiser’s office being defended by County Attorney’s office beginning July 1,2009 to save money

Future of Real Estate July 4, 2009 Pt 3

  • New Technology at Property Appraiser’s office
  • AVM-Automated Valuation Models
  • Multiple Regression Analysis
  • 2D 3D Line of Sight Model
  • View and Floor Height’s effect on value

Future of Real Estate Pt 4

  • Assessed Values down in 2008
  • Pockets of fluctuation
  • North Cape and Lehigh Acres went down fastest
  • Countywide average down over 25%
  • $27 Billion Less taxable value From $110 Billion to $83 Billion
  • Lehigh Acres Ground Zero
  • 80% of sales in some neighborhoods short sales or after foreclosures sales
  • 2009 taxes reflect 2008 sales
  • Weighted sales-4th quarter
  • Department of Revenue

Future of Real Estate Pt 5

  • Tax Referendum
  • Governor Crist
  • Property tax ammendments Nov 2010
  • Recapture
  • 3% or CPI, whichever is Less
  • 2008 recapture rate .1%

Future of Real Estate Pt 6

  • Bill signing Tallahassee Florida
  • Aerial Technology to substitute visiting each property (Desktop Review)
  • Electronic Permits
  • Lee County Lowest Cost per parcel in Florida

Ellis Team SW Florida Real Estate Current Market Index for June 2009 Released

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The Ellis Team SW Florida Real Estate Current Market Index for June 2009 shows another slight improvement, down from 3.99 to 3.92  Remember, the lower the Index number, the better for sellers, and if you’ve followed this index for any length of time you’ll discover that it’s been very accurate forecasting the foreward movement of the Fort Myers real estate market and the Cape Coral real estate market.

Ellis Team SW Florida Real Estate Current Market Index June 2009
Ellis Team SW Florida Real Estate Current Market Index June 2009

 

Inventory fell from 12,579 last month to under 12,000 for the first time in a long time.  Inventory levels have been falling for awhile and pending sales have remained relatively stable, helping to draw down inventory levels.  Cape Coral inventory levels are very low, but so is Lehigh Acres copared to the pending sales.  Lehigh Acres has traditionally followed Cape Coral, and as the Cape’s prices have gone up in the entry level home market, Lehigh Acres demand has increased, just like in the run-up of the roaring 2000’s.

The Ellis Team are Top agents at RE/MAX Realty Group in Fort Myers Florida and study the SW Florida real estate market in great detail.

Attention Facebook Users – Social Media Experiment

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We’re conducting a social media experiment.  We’re seeking to add 100 users to our Fan Pages in the next several days.  If you are a Facebook user, simply go to the following pages and select Become a Fan.  Once we’re at 100 users we’ll announce the Facebook URL assigned to us.

Fort Myers Real Estate   Click to Become a Fan

SW Florida Real Estate  Click to Become a Fan

The Future of Real Estate  Click to Become a Fan

 

We’ll repport back and let everyone know how long it took to reach this goal, and the effects of viral marketing online via Social Networking.  Thanks for particpating Facebook users.

Fort Myers Cape Coral Real Estate Sales Soared to Another New Record in May

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SW Florida real estate sales in Fort Myers and Cape Coral Florida set new records again in May with single family home sales in Cape Coral and Fort Myers totalling 1,417 sales, eclipsing the May 2005 sales record of 1,309.  See SW Florida Real Estate Homes Closed 2005-2009 chart illustrating home sales by month since 2005.  Median sales prices for single family homes in Cape Coral and Fort Myers was up 3.51% from April median home prices, up to $88,500.  For a complete look at median single family home sale prices in Fort Myers Cape Coral since 2005, see the SW Florida Real Estate Sales Prices 2005-2009 graph.

Prices are still falling in the mid to upper levels of the SW Florida real estate market, while prices seemed to have stabilized in the entry level market.  First time home buyers are buying as fast as they can as they compete with investors for the best bargains.  Short sales are picking up as banks cut through the red tape of approving short sales, although time frames are still long.  Canadians are buying properties in SW Florida due to the favorable exchange rate, and the fact that Florida is on sale.

Fort Myers Cape Coral Real Estate Sales Soared

Condo sales for May in Cape Coral and Fort Myers were up 41% Vs. the State of Florida which was up 21%.  Median sales prices for condos in SW Florida were down 35% year over year, as opposed to the statewide average of down 38%.  See the Florida Sales Report May 2009 Existing Condos graph.

It looks like the 2nd Qtr is shaping up to be another record setting quarter for home sales.  The 1st Qtr home sales in Lee County Florida sure was.  We won’t know for another month when June sales are officially released.

Shortly we’ll be releasing the latest Current Market Index for Fort Myers and Cape Coral for June which should explain where our market is headed.