Sales volume has slipped this year primarily because inventory levels are down. However, we have noticed a slight trend in the past few months worth noting.

SW Florida Real Estate sales 2012

Inventory levels actually rose in September for single family homes, albeit only 5 homes which is rather insignificant. Because sales are less, it did raise the standing inventory to a 3.5 month supply, up from 3.4 months the previous month. Both numbers are low.

Another trend we are watching is the median sales price, which has fallen for 2 consecutive months. This is a seasonal trend we see this time of year so we are not alarmed. Heading into season we’re going to need all the inventory this market can muster, and right now it may not be enough. Prices are still much higher than last year.

Fort Myers Cape Coral Media Sale Prices

We would have liked to see home prices rise the past few months, but not for the reasons you might think. Fort Myers, Cape Coral, Naples, and all of SW Florida is considered a declining market by FNMA and Freddie Mac. The appraiser usually notates this on the appraisal report to the lender. According to guidelines, and area must have 3 consecutive quarters of rising prices to break a declining market tag.

Lee County had a strong 4th qtr 2011 and 1st qtr 2012 but came up short in 2nd qtr. This contradicts our data so I’m not sure how they calculate this. I’m hearing whispers that the tag may come off Collier County Florida in January, but we’ll wait and see if that actually happens.

The reason this is important is because it removes additional restrictions and paperwork requirements when the tag is lifted. FNMA is already making loans tougher this November with new guidelines. For instance, self employed borrowers will find it more difficult and cumbersome to receive a mortgage. They will require personal and corporate tax returns for last 2 yrs no matter what. Lenders are just now receiving the new guidelines and sifting through the changes.

September is seasonal, and it’s not uncommon for sales to lighten this time of year. It does feel on the street as though there’s a dichotomy to the market. Agent listings seem to either get a ton of activity and offers or very little. This may change in the next few months as snowbirds tend to scoop up higher priced inventory for second homes and investment.

The upcoming election may have also stifled buyers who are afraid to make a big purchase until the see which leadership will guide the country and what the new economic landscape may look like. We’ve seen on TV many company CEO’s waiting to make hiring and firing decisions until after the election, and it’s quite possible buyers will do the same. If you’re worried about your job, chances are you’re not in the market to change your housing.

Once the election is over, the direction the nation and economy goes in may become clearer, and consumer confidence could rise. If and when that happens we believe SW Florida is poised to take advantage with lots of potential for price appreciation. All signs point to higher once the job outlook improves, and help may be just around the corner.

Good luck and Happy House Hunting!!!


Official sales numbers were released today and median home prices were up 19% over last year, rising from $96,900 in May 2010 to $114,900 May 2011. Prices were down from April 2011 level of $118,900. Transaction volume fell slightly too, down 8% from last year. This is not surprising as inventory levels are down sharply from year ago levels.

Meidan Single Family Home Sale Prices Fort Myers - Cape Coral
SW Florida Real Estate Prices 2009-2011

We have been predicting all year prices would rise, which they have from $88,500 in January 2011. These prices increase are due to lower inventory, and lower priced properties at the bottom end of the spectrum. Median home sale prices are up 29.83% since January, but this doesn’t mean all homes have gone up nearly 30%. It simply means there are fewer homes available at the bottom end of the spectrum.

All through the foreclosure height it was not uncommon to find many $30,000-$50,000 homes in Lehigh acres, and a few in Cape Coral. Last year it became harder to find homes under $70,000 and this year it’s become difficult to find homes under the $90,000-$100,000 mark. When they do become available they are snatched up immediately, or they have significant repairs pending.

A typical $200,000 home, depending on where it is located, may have risen or fallen slightly; however we haven’t seen 30% price swings as the market has stabilized in many sub markets. These price increases are more a function of the definition of media, which is defined as half the sales under and half the sales over a given point. When the lower end disappears it doesn’t necessarily mean there is rise in the moderate to upward end, although it is also possible.

We feel this market will lead from the bottom up. We refer to it as the “Bunching Effect”, a term we came up with several years ago to describe how the real estate market works. The real estate market is not as efficient as the stock market where everyone can look up on the Big Board and see what the value is at any given second. In real estate, market reactions take time, and they don’t always move in unison. One segment may move, and when the market figures out there should be more separation between two segments, another segment will move. Two segments can become too “Bunched” together, and when the market realizes this, it reacts. It is not always done in real time second by second, but it does react just the same.

Buyers look at what they can buy at any given time and they make decisions. For instance, they may be looking in the $150,000 price range and see one home for $145,000 and a much nicer home in same neighborhood for $150,000. In their mind there should be more than a $5,000 difference, so either the $145,000 needs to come down or the $150,000 should be priced higher. There could be multiple offers on the $150,000 home and it may indeed go higher if enough buyers come to same conclusion at same time. If not, the next few homes that come on the market may figure it out. In any event, something has to give. This leads to upward pricing pressure on one or downward pricing pressure on the other until the market finds equilibrium, and so the process repeats itself day after day.

Our job is to watch the market and not focus on any one given sale, but look for trends in the cycle which would indicate movement. Markets can become “Bunched” and they can “Unbunch” This is a natural phenomenon and buyers and sellers can sometimes get too caught up in one sale or one listing on the market and rely on that data as a market trend, when in fact it may just be a single event.

We also need to keep in mind that anyone can list a property for any price. The seller determines the price, but the market determines the value, so be careful not to get caught up on what the neighbor down the street listed one house for.

The market will always speak to you if you’re willing to listen. Under pricing costs a seller equity, and over pricing insures property will sit and may take a lesser price down the road when the listing grows stale. Proper pricing is just as critical to a seller as proper offers are for a buyer. Failure on either end of the spectrum leads to disaster. An over priced home helps sell the competition, and a low ball offer helps another buyer purchase your 1st choice. The real question is, do you want to buy, or do you want to sell. And the answer is, objectively determine what the market really is and go from there.

Happy house hunting or house selling, and don’t be afraid to ask for help. The market is on the move, and figuring out your next move is half the fun.

Tune in and watch our June 2011 SW Florida Real Estate Market Update

Maybe you’ve received the e-mail making the rounds these days which states “Under the new health care bill – did you know that all real estate transactions are now subject to a 3.8% sales tax?”  Of course I was alarmed because a tax on real estate would be just one more blow to the economy, as real estate contributes 32% to our nation’s GDP (Gross Domestic Product).  

Upon searching I discovered this is partially true.  According to “Democratic lawmakers decided on a new 3.8 percent tax on the net investment income of high-income persons.”   They go on to write that the law is misleading, and it would be easy to see why anyone reading it would believe the 3.8% tax applies to everyone that sells a home.  So the circulating e-mails may not have been intentionally misleading or malicious. 

Furthermore, the 3.8% tax won’t apply to everyone.  It will apply only to profit on the sale of a home exceeding $250,000 for a single person or $500,000 for a married couple filing jointly. There are some minimum income requirements too. The tax is not scheduled to go into effect until 2013, after the next election.  We are not tax professionals, so we encourage everyone to consult with their own tax advisor. 

It appears that Congress and the President have snuck in additional capital gains taxes on real estate.  It is easy to see why this fact has not been advertised because it is not very popular with Americans right now.

Home Prices Slip


Median home prices are up over 9% from last year, but they did take a step back in May, down 4.53% from April’s numbers.  The median sales price of a home stands at $96,900, down from $101,500 a month earlier but up from $87,900 last year.  Home sales remained strong in April with 1,460 sales in May, which was up over last year’s 1,417 number. 

Fort Myers & Cape Coral Florida Median Home Sale Prices 2009-2010 - SW Florida Real Estate
Median Home Sale Prices Lee County Florida

We have noticed a drop in pending sales in June. We know that many sales have been delayed or fallen out due to the flood insurance expiration.  Congress has not renewed the National Flood Insurance Program, so essentially it’s impossible to get a mortgage on properties that require flood insurance.  One tactic people are using is buyers assuming the sellers existing flood insurance, if it exists.  You cannot do this with hazard insurance, but it can be done with flood insurance. 

We’ll keep a close eye on the SW Florida real estate market going forward.  Oil has not hit here, and as we wrote last week, there are scientific reasons why it may not ever.  We have lost one sale from a buyer who definitely wanted to buy a waterfront home but is waiting to see what happens with the oil spill.  Between the oil, flood insurance, tax hikes, expiration of tax credits, and the like we’d hope that our government would be more proactive in stimulating real estate activity, because we know real estate sales stimulate the economy.  At the very least, renew the flood insurance program and eliminate tax hikes on sales so people who want to purchase can again.

SW Florida Real Estate Current Market Index April 2009
SW Florida Real Estate Current Market Index April 2009


The Ellis Team at RE/MAX Realty Group released the April 2009 SW Florida Real Estate Current market Index which accurately predicts the local real estate market’s future direction, and once again the index improved. Fort Myers and Cape Coral recorded their lowest numbers since October 2005.  In October 2005 the number stood at 3.44, and the index today stands at 3.72  The lowest on record was July 2005 when the index stood at 1.07.  The lower the number the better the market is for sellers and the higher the number the better the market is for buyers.  The lower numbers are a result of higher transaction volume combined with declining inventory levels.


Lee County Florida index numbers for single family homes stands at 4.26, down from 5.07 in March.  We’re seeing tremendous sales numbers for a variety of reasons. Not only do we have home affordability back in the market, but also the perception that we’ve seen drastic price cuts and the end in price declines may be near.  Buyers do not want to miss out on the possible buying opportunity of a lifetime.   Along with attractive pricing is record low interest rates, declining property taxes, and a decent but dwindling supply of homes to choose from.  Lastly, the government passed a 1st time home buyer tax credit that gives buyers up to $8,000 tax credit to buy a home and if the home is kept for three years does not have to be repaid to the government.


Rarely do all the stars align for a perfect buying opportunity, but that’s just exactly what we have right now.  The SW Florida real estate market has been heating up for some time, and in 2009 we’re seeing some dramatic results on the transaction volume side.  Pricing is a lagging indicator and will follow once inventory is depleted further.  We’ve already seen a 2.74% rise in prices in March over February 2009 numbers.  Total single family home inventory in Lee County fell to 12,356 in April, down from 13,019 in March.


Cape Coral is again leading the way as the CMI index numbers for the Cape stands at 2.88.  Fort Myers CMI numbers stand at 7.26 Inventory is dropping in both Fort Myers and Cape Coral, and pending sales are increasing.  We believe when official sales numbers are released later this month we’ll see record sales for March, and sales activity going forward for April and May looks to be very strong.  Current home prices are so far below replacement cost that builders are not even attempting to build yet.  Once this inventory is depleted prices may begin to rise on a gradual path towards replacement cost, and when that occurs builders will again start building.  We believe we are still some time off from that point; however we are amazed at how quickly homes are selling and how the SW Florida real estate market has heated up.  Once the overall economy improves and businesses start hiring again in force, we believe prices could rise at a quicker pace and approach replacement prices.  Until then, home sales will be great as long as the price is attractive, and we may enter No-Man’s land once we deplete existing inventory and the market absorbs what to do once the bargains are all gone.  The economy and employment will eventually drive home sale prices, and home sales may help drive the economy back to health.


Stay tuned as the market is definitely heating up, and the Current market Index points to more good times ahead.