Building permits for residential construction was off 17% from March, and down 69% from a year ago, and may be just what the doctor ordered.

A study released this past Monday shows that inventory levels of vacant houses in SW Florida started to fall in 2007 while the number of homes under construction declined sharply.  Because we have such an oversupply of homes on the market, we really needed for construction of new homes to slow until the market can catch up.

Investors forced builders to speed up production faster than they normally would have.  When the market topped out, builders were left with unsold inventory they thought was previously sold as investors backed out of deals.  This left us with a trtemendous oversupply of homes in Southwest Florida, and demand is back to normal 2001 levels.

Many people realize that a falling real estate economy leads to job layoffs and fallout throughout the business community.  Many builders have laid off employees, and some have had a hard time paying subcontractors because investors have backed out of sales contracts.  The builder is stuck with paying the bills.  This business model works when most of the buyers actually close on the property they contracted to purchase.  The breakdown has been when scores of buyers have backed out; some at the very last minute without warning.  Some of the buyers have very clever schemes designed to back out of contracts, leaving the builder in the lurch.

We’ve all seen the reporting on the First Homes scandal, and alleged misrepresentations by their Broker D’Alessandro & Woodyard Commercial Realtors.  We are not the judge or jury in this case, and we believe the truth will eventually work itself out regarding mortgage fraud, securities fraud, inflated appraisals, and representations in general.  Nobody knows the "Real Truth", and we may not for some time until the entire investigation is over.

The story that hasn’t been told though is the story of local builders who have been harmed, have had a difficult time paying employees and subcontractors, and large carrying costs associated with financing of land, property taxes, and construction.

In a follow-up Blog article we’ll focus on a few builders and the struggles they’ve encountered in this very difficult market.  We may produce this article in conjunction with the News Press.

Home sales spiked 50% in March of February, and condo sales spiked 48%.  Prices were up too.  The media noticed, as the Fort Myers News Press, Naples Daily News, and Bonita Daily News all ran stories on the latest numbers.  Home sale prices were up 4 out of the last 5 months in Lee County.  Buyers are gaining confidence in the market.  The Ellis Team has noticed a spike in home sales in the last 30 days, as has RE/MAX Realty Group in Fort Myers.

As predicted, March turned in some stellar numbers.  Single family home sales in Fort Myers Cape Coral MSA posted a 50.35% rise in sales from February 2007, and median home prices were up 4.65% to $268,000 in March.

Condominium sales in Fort Myers and Cape Coral MSA were up 48.32% from February 2007 numbers, and the median sales price for a condo in SW Florida rose 1.29% to $250,800.

Pending sales are on the upswing.  Buyers in SW Florida have discovered that now is one of the best opportunities they will have in a long time.  Buyers are in control with excellent selection due to an over-supply of homes and condos on the market.  Buyers also enjoy low interest rates, decreasing cost of insurance, and housing affordability as prices are down substantially from 2005 levels.  Buyers may never be able to enjoy all factors working at once in their favor for a long time.

In cycles past, traditionally high supplies of inventory were caused by rising inflation and high interest rates.  This is not the case as this over-supply of homes came from speculators and investors who sped up supply.  They also created a false sense of demand, and once that demand quit, we were left with real over-supply and normal demand.

Just because prices appear to have bottomed does not mean there won’t be more price reductions for some sellers.  We know where the buyers are, and the sellers who price their homes where the buyers are at are selling.  These sellers don’t need to reduce any further.  The market appears pretty well set in many segments. 

The sellers who are not priced where the buyers are need to adjust their price, or take their home off the market as it is essentially off the market anyway.  If a home is not priced "At the Market" is is "Off the Market."  Buyers will not overpay for a home that isn’t priced at today’s prices.

Buyers will jump at properties that are priced correctly.  Buyers are gaining confidence again in this market.  By mid-year we expect home sale prices to be even with prices from 2006.  This market has followed our predictions very well since 2005 when we predicted 2006 would be a year of transition to lower prices.  Last year we predicted prices would bottom out 4th quarter of 2006 and remain flat until 2nd qtr of 2007, then begin a slow rise throughout the year.  It does appear that median home prices bottomed out October of 2006, and have begun a slow ascent back up.

Home prices are up 4 out of the last 5 months and are up about 7.5% from the lows last October.The Florida Association of Realtors released sales statistics today for single family home sales and condo sales.  See How Lee County staks up this year Vs. last year, and how every district in the state did.

WINK Radio inadvertently aired the 1st half of last weeks show in place of the first half of this weeks show.  It was unfortunate for two reasons.  In the first half of last weeks show we talked about the Relay For Life Event that took place last week, and invited people to come out and participate.  That was last week’s news.

Secondly, in the first of this weeks show, we interviewed a top attorney in SW Florida about Foreclosures and Bankruptcy.  Listeners completely missed the first half of what the attorney said in the first half, so the second half didn’t have the context it should.

Most likely we’ll replay the entire show from this past week’s show next week so listeners get the benefit of what the attorney said.  It was a fantastic show.

We apologize for the onconvenience.

For Better or Worse, seems like we hear that everyday.  Latest numbers pulled from the MLS shows our market is no better, nor any worse than back in January 2007.  There have been some changes though, and we’ll discuss them here.

The Ellis Team at RE/MAX Realty Group in Fort Myers Florida long ago developed a system that accurately gauges market activity relative to Supply levels, and we deemd this index the Current Market Index.  We developed this index because it helps tell the story of where we are today, not just where we’ve been with closed sales reports.  The higher the CMI Index, the more supply we have relative to demand.

Since January 2007 we also changed the MLS reporting system, as the MLS of Greater Fort Myers and the Beach became part of a larger system called MLS Alliance.  Local Boards no longer data share with each other, but rather this new entity.  We’ve tried to align the fields up accuratley to reflect the same data, even though each Board reports slightly differently.  We have no less than 6 Boards that post Lee County properties into this database, so it is broad based and very useful.