Tag Archives: Cape Coral real estate

The Bear Went Over the Mountain

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To see what he could see. We’ve all heard this particular children’s song and it’s probably playing in your head right now. I thought this headline was appropriate because our year end sales numbers graph looks like home prices went up the side of a mountain through 2005 then fell off a cliff until 2009 before rebounding the past few years.

SW Florida Real Estate Year End Prices
Year End Prices Fort Myers-Cape Coral Florida Metro Area

Official sales numbers were just released this past week for the state of Florida and the SW Florida real estate market. Year end sale prices were up 14.67% from $93,400 in 2010 to $107,100 in 2011 The year end graph isn’t where prices finished the year but rather an average of what they were all year long. For instance, November median single family home prices in Lee County was $106,300 and December’s was $123,400, a whopping 16.09% jump over the previous month and a 36.05% jump over year ago December figures.

2011 was the 3rd best year on record for numbers of sales. Inventory declined throughout the first 3 quarters of 2011 or we very well could have sold many more. To put things in perspective, 2011 outsold 2005 by almost 2,000 homes. Everyone speaks about 2005 being the height of the market, but it is the 4th best year on record in terms of units sold. 2009, 2010, 2011 respectively were 1-3.

Quarterly Home Sales for SW Florida 200-2012
Lee County Quarterly Single Family Home Sales

While prices rise it’s quite natural volume will go down. It’s simple supply and demand. If we had more inventory than our market could handle, our prices would be lower and not rising. It’s always difficult to predict a top or bottom, but hindsight always provides crystal clear clarity. The reason is you can have a false bottom whereby prices bounce back for a few months only to retreat again later. On Wall Street it’s termed a dead cat bounce when the market does that.

With several years in the books it appears we can safely say the market bottomed in 2009. If the market would go lower in the future it would be a new market, not a continuing drop. We don’t see the market going lower year over year going forward; although monthly price swings are not out of the question as closings are dependant on what inventory there is and what’s actually closing in a given month.

We have no problem listing and selling properties. The skill is really getting them closed today. The regulatory and operating environment has never been so tricky as there are so many new regulations pertaining to new mortgages. If the lenders initial disclosure is off by a little bit, it requires by law to re-disclose everything and a new waiting period goes into effect.

Combine new lending rules with negotiations with HOA’s and condo association over fees, title issues, appraisal issues, inspection issues, and challenges with short sales and you can quickly see nobody can guarantee closing dates, and scheduled closings in one month can easily pop over into subsequent months.

All these challenges affect the real estate market and can push high end or low end closings from one month to another, ultimately effecting month end numbers. In the end, these numbers all work out in the wash, so we like to look at year end numbers or a moving average throughout the year. So many people focus on one point in time when the market is always in flux and needs constant attention to understand what’s going on.

That’s what we’re here for, to keep you updated with unbiased information good or bad. We’re in the midst of season, and as predicted season started early and seems to be going well. I guess we’ll know in April or May for sure. In the meantime, stay tuned.

Watch our January 2012 Market Report

 

SW Florida Future of Real Estate Market Report January 2012-New Year\’s Resolutions

Grey Saturday

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We sincerely hope everyone had a wonderful Thanksgiving as we all have so much to be thankful for, even if times seem tough for many across SW Florida.  For those eager shoppers we hope Black Friday was a day to score wonderful bargains.

We were trying to come up with a name for the day after Black Friday this year and we decided on Grey Saturday, because official sales numbers were released for the Florida real estate and market and SW Florida scored mixed results, earning it the Grey Area status.

Fort Myers, Cape Coral Single Family Home Listing Inventory
SW Florida Listing Inventory

Last month we reported a change in direction in listing inventory and said we wanted to keep an eye on those numbers going forward.  For the 2nd straight month, listing inventory rose.  The numbers aren’t staggering as we’re talking about a difference of 231 homes, but it is a recent trend nonetheless.

Fort Myers, Cape Coral Florida Home Prices
Greater Fort Myers- Cape Coral Home Prices

Single family home prices were up 15% over last year, but they are down 7.69% from last month.  We are in a volatile market because agents can’t count on which closings will actually close in a given month.  Transactions are becoming trickier to count on as governmental regulations are holding up closings, causing delays, and wreaking havoc on the market.  It’s not uncommon for buyers to receive approval on their short sale and then walk from the deal because of the length of time, or because they became impatient and went for another deal more likely to close.

Banks have told us the foreclosure backlog was coming and we are starting to see more assignments in the 4th quarter.  Another large bank has told us to watch out for 1st quarter 2012 for even more.  These bank foreclosures may be just what the doctor ordered for our market though because in certain submarkets there is a feeding frenzy to buy.  We have short sales, and some traditional sales of which not all are priced at market value, which is typical in any market, up, down, or sideways.  We’ve had a lack of foreclosure properties as banks were stymied with the legal debacle of the robo-signing issue that caused them to go back and evaluate if they had legal standing to foreclose and the paperwork to prove it.

We’re starting to see rising inventory and it’s not because of foreclosures.  We are entering season which is a time when properties are gobbled up like a Thanksgiving turkey, so we’d expect to see inventory decline in the next few months even if the banks do release more foreclosure inventory.  SW Florida’s appetite when it comes to a bargain is insatiable, much like a Black Friday sale.

Last month we had Trick or Treat Day, so we’d like to see a solid direction in the market.  The past few months have brought ups and downs in median prices.  Combining the recent up and down price swings, rising inventory, predicted rising foreclosure activity, and tempering that with the upcoming season means we have a market to keep our eyes on.

We really believe we’re going to have a good season.  What good is a bargain basement sale to a shopper in an empty store?  Shoppers want inventory, and this year may be one of the last good years to get the bargain.  Even after a downward price drop of 7.69%, prices are still up 15% over last year’s prices.  The absolute statistical bottom of the market may have been last year, and we may look back on 2011 in years to come as a time when buyers say to themselves, “I wish I would have hung in there and bought that bargain.”

When the economy improves and lending standards get back to normal, we’ll all look back at 2010 and 2011 and say “I wish I would have bought more.”

Good luck and good hunting!

 

SW Florida Real Estate Sales Rose in June

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Unofficial numbers show SW Florida real estate sales rose in June. Official numbers will be reported July 20, so as we are writing this article early in the week we have to go with internal numbers that show sales rose in June even as inventory numbers fell once again.  We lost another 230 units of single family home inventory as many have been questioning where are the foreclosures banks said were coming.

From the beginning we questioned how many foreclosures would hit SW Florida as the distressed inventory directly impacts our market.  Nobody seems to have a firm answer other than to say more are coming, and we don’t doubt that.  The question is to what degree.

SW Florida Real Estate Sales
SW Florida Single Family Real Estate Sales

While sales rose in June, pending sales are down as we simply don’t have as much inventory to sell. Foreclosure sales in Fort Myers rose by 16 homes while Cape Coral foreclosures fell by 19 homes.  Lehigh Acres foreclosure sales rose by 7.

This past week we were assigned 3 more foreclosure listings, so perhaps this is the beginning of the banks being able to release inventory.  Banks have been hamstrung as legal proceedings have shown many of the banks didn’t follow proper legal procedures to foreclose on certain mortgages in certain states, and it’s caused banks to go back and start many foreclosures over and cancel hearings on others until they sort out where the mistakes were made and correct them.

In light of this legal situation, banks have increasingly been more diligent at handling and agreeing to short sales as it may take much longer for the bank/investor to be paid back partial principal if the home is tied up for months or years in foreclosure.  We feel there is no advantage to holding back inventory and the sooner we sell all distressed inventory the sooner our market can recover.  Others feel by holding back you can prop up prices.  We believe in an attempt to prop up prices you ultimately prolong the recovery and keep prices down for longer than if you just take the medicine and deal with it.

Listing Inventory in Cape Coral, Fort Myers Florida
SW Florida real Estate Single Family Home Inventory

Without naming names, we have seen some entities holding back, but this may also be that they can only show so many losses at a time on the balance sheet..  For the most part, most banks are bringing inventory to the market as quickly as they legally can.

As of today, foreclosure listing inventory is up over last month.  Fort Myers has 35 more units on the market, Cape Coral has 22 more units on the market, and Lehigh Acres has 15 more units.  This could be a sign that banks are releasing.  One month doesn’t make a trend, but it is a reversal in direction and July 2011 could be the beginning of that last wave to hit the market.

We’ve just added a new Cape Coral Real Estate Blog in German for our German readers. Be sure to check back for timely real estate information and videos in German. Sharyl Leifeld is a buyer specialist on the Ellis Team who speaks German and promotes education to German’s about the SW Florida real estate market.

 

 

Entering the Summer Real Estate Market in SW Florida

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Now that the 4th of July has passed, we’re entering the summer real estate market in SW Florida.  Aside from showing properties in the rain, traditionally the summer has been very good with many of the locals moving up, down, or sideways when they have more time after a busy tourist season.

Of course, the past few years the locals haven’t been making nearly as many moves as many are upside down on their current mortgage, or just flat out don’t like today’s prices.  There is no doubt today’s prices are too low, in fact artificially too low, but nonetheless in real estate today is all we have to work with.

Summer Real Estate Market in SW Florida
SW Florida Real Estate Sales Prices

Because foreclosures have dropped dramatically due to a number of legal reasons, there has been less pressure on the lower end of the market, thus raising median prices.  We’ve included another graph to put prices in perspective.

Many times we like to look at velocity of the market and measure the volume, much like Wall Street does with stocks.  Volume has been excellent, and would be much higher if we had more inventory to sell.  Lack of inventory will cut down on the number of transactions, and we’ve already felt it.

Agents are all too well aware that many properties receive multiple offers.  Buyers on the other hand are skeptical when their agent tells them they need to come in at or over asking price on many properties.  In all markets there will always be some properties that are over priced, and a buyer need not ask over asking price if the property is over priced as chances are another buyer isn’t going to come along and scoop it up, unless it’s a one of a kind property, and even then it may not sell.

All too often agents tell me their buyer isn’t listening to them.  This past week two agents lost out on two of our listings because we had multiple offers and one of the buyers didn’t realize what they needed to do until it was too late.  One of the properties had been on the market a little while so I’m sure the buyer figured their agent was just giving them a song and dance to try and get a sale, but as the listing agent I can assure this was not the case.

Even though this property had been on the market perhaps a few months, the property got hot when all other inventory like it had disappeared and this became the best thing on the market in its location and price range.

All real estate is local, and just because you hear nationally or a particular state is a little slow doesn’t mean everywhere is.  In fact, our market was getting crushed when the rest of the country was still prospering.  While our market isn’t fully healed, we are seeing price increases when much of the rest of the country has just been going into a slump, which is further evidence that all real estate is local.

Over the July 4th weekend we had several showings and several offers come in on our properties, which is encouraging for the balance of the summer.  Again, these past few years have been anything but traditional, but it’s nice to know that local temperatures aren’t the only thing that’s hot right now.  Buyers are here.  What’s lacking has been property to sell, and inventory will probably tell the story going forward for the balance of the year.  We’ll keep watching, and keep reporting.

 

SW Florida Real Estate Numbers Released Today

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Look for prices to be up in SW Florida about 17% and single family home sales up about 3% over last year. Condo prices in April 2011 will show a 4% rise and condo sales rose 8%.

Look for a detailed report in next week’s article.

Watch our May SW Florida real estate video update

Watch NBC 2 Report on Fort Myers – Cape Coral numbers up versus National prices down

Fort Myers Cape Coral Florida Real Estate Update Video May 2011

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The Ellis Team has just released it’s Fort Myers Cape Coral Florida Real Estate Update Video May 2011 covering the Fort Myers Florida and Cape Coral Florida areas. Prices are up over 15%, inventory is down, pending sales are up, and distressed sales are down. The video includes charts and analysis to bring you up to date on exactly what is happening today in the SW Florida real estate market.

 

SW Florida April Real Estate Breakdown

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The past few weeks we’ve laid out in detail how prices have increased and some reasons that would explain why. This week we thought we’d illustrate how the distressed market is faring versus the traditional or normal resale’s and look at how that impacts prices.

Breakdown of Distressed Sales Versus Normal Sales SW Florida
SW FLorida Distressed Sales Breakdown

As you can see from the chart, distressed sales are down about 4% in 2011 versus 2010. We all know distressed sales have weighed down the SW Florida real estate market for several years. Prices didn’t just fall in half, they fell in some cases to about 25% of what they were back in 2005 or early 2006.

We’ve often said sale prices have fallen artificially too low and the only thing holding them that low was a flood of continuing foreclosures entering the market to keep the prices down. For the most part, investors and 1st time buyers bought every foreclosure they could and prices stayed low because there were new foreclosures coming on to satisfy buyers appetite.

The foreclosure machine hit a snag in late 2010 due to legal concerns in Florida and 10 other states; however we expect that foreclosures will return in the 2nd qtr of 2011. The question is how many more are left, and how long will it take the banks to work through them. I guess the other question is how long will the economy be stagnant further forcing teetering homeowners over the brink?

Assuming we’re in the 7th inning of the foreclosure crisis and that any wave of future foreclosures won’t be as robust as past waves, prices should continue to rise. Official numbers for March won’t be released for about 3 weeks, but preliminarily we’re seeing median prices rising about 3.45% over last year and mean average prices rising about 16%. Stats were pulled as of March 29, and it does take several days for all sales to be entered into MLS, so these are very raw and preliminary numbers, but they do coincide with what we’ve been seeing and predicting the last several months.

As prices rise, more and more sellers will qualify to sell without being a short sale or foreclosure, which will also change the charts. Nobody should expect an overnight turn around as our market is still healing, and even though we’re in the latter stages of the correction, healing can be painful. Sellers expecting a return to 2005 prices might be waiting years or a decade or more.

We’ll also be anticipating Congress submitting and passing a budget. Many do not realize that last year’s Congress didn’t do that, so we haven’t had a budget in 2 years. They’ve kicked the can down the road and left it for others to do. Because Congress didn’t do their job last year, it’s making it tougher this year, and everyone knows we need steep budget cuts. Inflation will rise as we cannot continue deficit spending. This throws the capital markets off and interest rates could rise, which could also affect real estate prices as increased rates dig into buying power for buyers. When rates go higher, buyers have to offer less for homes in many cases to afford the property. Increased interest rates are like a hidden tax on real estate, so we’d hope for our country to get it’s spending in order for a lot of reasons.

Stay tuned and we’ll watch together how these forces play out and affect our market. Nothing is as simple as one variable dictating prices. We have several variables at work, and time will tell.

Watch our April 2011 SW Florida Real Estate Market Update

Prices on the Move in SW Florida

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As expected, SW Florida median single family home sale prices rose in February, up 4.1% over last year’s numbers and up 3.39% from this January’s numbers. Sales volume was down 12% from last year and up 3.17% from this January.

SW Florida Real Estate Sales Prices
Single Family Home Prices in SW Florida

These sales numbers were not unexpected as we’ve definitely seen an uptick in 2nd home buyers from up North looking to secure their piece of paradise before prices go back up. Banks have also lowered inventory due to legal issues with the foreclosures which has dried up inventory at the lower end. Investors are finding it more difficult to find lower priced homes to flip. We’ve entered a period where the short term investor is being squeezed out and we’re left with long term investors who can purchase and rent the property with a positive cash flow, but can’t flip right now and make a guaranteed home run.

Actually the market is healthier and more balanced in this period than it has been since 2005. It’s always dangerous to buy something with the immediate expectation of a flip. This is all well and good when it works, but too many speculators didn’t have a plan B if the market turned, which it obviously did. Back in 2005 prices a property wouldn’t cash flow, so when the flip didn’t work, neither did the rent for cash flow. Today investors truly should focus on long term. Prices are still well below replacement cost and artificially too low, so there is automatic built-in price increases on the way, it’s just a matter of time.

Positive cash flow buys time, and a great investment provides cash flow and long term appreciation, not to mention possible tax benefits. For regular homeowners we always recommend buying a home that suits your needs and you can be happy in. Long term, a home is usually a good investment, but why suffer with a home that doesn’t meet your needs in the meantime? In the end the numbers work themselves out but you have to live with the home. You might rent a home you’re not crazy about, but why buy something you don’t like just because it appears to be a good investment?

Home affordability is high, although inventory selection has been declining. Unless banks start listing foreclosures again, we should see another decline in inventory levels this month as sales have been strong. The perfect opportunity for a buyer was probably between April 2009 when prices were at their lowest and December of 2009 when inventory was it its highest. Since then prices are higher by 7.02% and inventory countywide is down 8.70%

We’ve been hearing from banks and Fannie Mae that they could start releasing inventory again in the next month or two. We’ve seen listings trickle in, and we expect more in the coming months.

The market has always had a thirst for more inventory, so that won’t be an issue. The lack thereof will create price increases, so the true test will be how much more bank owned inventory is on the way compared to market thirst. The answer is prices will rise; the question is how high and how fast. We’ll be keeping an eye out for the inventory as that will be the leading indicator for the answer to how high and how fast.

Jumping to Conclusions

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One of two things will happen, and possibly both. Banks may start releasing more inventory in the coming months, and home prices could begin to rise as inventory levels drop off.

Listing Inventory
SW Florida Residential Single Family Home Listing Inventory

We’ve been noticing a distinct pattern the past few months. Inventory levels have been dropping just as pending sales have been increasing. We can thank the banks for this as they’ve withheld inventory due to legal concerns over title and the foreclosure process. We’ve also seen an increase in closed short sales. Lastly, we’ve seen a rise in regular sales, all leading to a decline in inventory levels. County-wide levels were down 4.32% from last month, and yet we’re seeing sharper declines like Cape Coral which had a 7.18% drop, or Lehigh Acres which experienced a 10.22% drop in available listings.

Combine this with season and buyers from up North scooping up bargains and it would be easy to jump to the conclusion that home prices have to rise. In fact, we predict they already are. Last month’s numbers showed a drop in prices, but we’re not too concerned with that. Next week official numbers will be released and we believe they will be higher. Sales may be down from last year because the inventory isn’t there, but prices could very well be up. We wouldn’t be surprised to see prices gain close to 10% from last year’s numbers.

If you read this article weekly, or our blog, you know that we’ve been predicting a decline in sales transactions combined with price increases at some point in the future. That point could be now. We would say definitively, however there are still some external wildcards that can influence transaction volume and prices in the short term.

Those wildcards are banks releasing backlogged inventory once the title issues are worked out, and every indication is banks will start releasing again in the next month or so. The question is how much do they have left in SW Florida. We believe nationwide there is much left, however nobody knows about SW Florida as we’ve been in this crisis the better part of 4 years now. Possibly we’ll emerge as the rest of the country deepens, but something tells me we still have more to work through as well.

Other wildcards include the US economy, oil, and Mideast stabilization as it pertains to energy. If the Mideast settles down and oil returns to normalcy, there are signs the US economy is headed for a modest recovery. Combine all this with the fact we believe we’re in about the 7th inning of the SW Florida foreclosure crisis, and we could be on our way to higher prices. We’re not predicting a return to 2005 prices, but rather a sustainable march to replacement cost prices. Once we reach replacement cost, builders will start building again, which will further fuel our local economy.

Should the governor be successful in landing some companies to relocate to Florida, this could be a wildcard on the positive side. Bottom line is many factors are at play, but for the past year or so investors and Northern friends have realized Florida is on sale, and they’re buying.

If we don’t see the negative wildcards, prices almost certainly have to rise. The reason we don’t believe they’ll double or triple anytime soon is because appraisals won’t support that, consumer spending may not support that, and we have hidden inventory that may enter the market. No, we’re not talking about the shadow inventory of banks, but rather shadow inventory of regular sellers who would sell if they could, but can’t because they’re currently upside down on their mortgage and do not want to suffer financial implications of a short sale. Once prices rise, we could see more sellers test the waters and attempt to sell.

That’s a lot of variables influencing the market, and the most likely outcome we believe will be modestly rising prices, at a sustainable and healthy level. Once this becomes well known, more buyers will line up because they will have seen we’ve hit bottom and bounced back up. They will have missed the bottom, but this will be close enough to make them feel good and jump back in.

We also believe banks will loosen credit standards this year. They’ve been too tight with the money looking for any reason not to lend, and this will change in 2011. Combine this with buyers realizing the bottom has passed, and we the conclusion we jump to is modestly rising prices. Let’s watch for the numbers next week. What conclusion do you reach?

Single Family Home Median Sales Prices Drop Unexpectedly in SW Florida

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The Florida Association of Realtors released official numbers, and as expected the number of sales were down, but fairly steady with last year. We predicted in last week’s article they’d be right where they are. We also said last week that we didn’t study the sales prices, but that we wouldn’t be surprised if we saw them rise again in January. Perhaps we should have studied those numbers because they did not rise, they actually fell 3.86% from last year’s numbers and fell 4.32% from December’s numbers.

Median Sale Prices SW Florida Homes
SW Florida Single Family Home Median Sale Prices 2009-2011

We can’t put too much emphasis on one month’s numbers, especially January numbers because there was a flurry of activity in December to get homes closed by the end of the year. Many sales have stalled or pulled due to title issues. We’re just now getting a few listings back from the banks in the higher priced end that were stalled due to this, so this can have an impact on closings and prices temporarily.

Just the same, we half expected prices to rise again as we believed fewer sales would equate to rising prices. Because more of the foreclosure sales in the past have been in the lower price points, fewer foreclosure sales means the median sales prices gets pulled up from the top and pushed up from the bottom. This evidently did not occur. It is possible that as more short sales went through they were in the lower price points.

It is season now and we have pent-up sales and rising pending sales, so again going forward we will not be surprised to see rising prices. In fact last year this happened as evidenced by the chart.

This past week we attended the News Press Market Watch National Association of Realtors Chief Economist Lawrence Yun gave some insightful statistics that may impact the US and SW Florida markets. He expects interest rates to hit 6% by the end of the year and 6.5% sometime in 2012 as rising deficits lead to inflation.

Mr Yun still believes we will see 50-60% distressed sales in the SW Florida real estate market this year, and we have 2-3 years total before all foreclosures are worked out of the system. If President Obama enacted an elimination of the mortgage interest deduction it would have an immediate effect of lowering prices nationwide by 15%, and our economy doesn’t need another big hit from real estate.

Lawrence Yun, Chief Economist NAR and Brett Ellis

He expects about 3% GDP growth and unemployment to be around 9% in 2011 returning to a normal 6% by 2015. Businesses are making money, but they’re afraid to hire due to uncertainties with new health care costs and banks aren’t willing to lend to businesses due to blank pages written into new banking rules. By blank pages he referred to pages that state a future committee will determine actual rules, so banks are hoarding cash and not lending.

Mr Yun says Washington DC is to blame for businesses not hiring due to uncertainty. If we could give certainty back, business may hire more quickly, and this would speed up time lines for recovery dramatically. For instance, we’ve lost 8 million jobs since Obama took office, and in 2010 we created 1 million jobs. 1 million jobs is pretty good, but nothing compared to what we lost. At this rate we’ll create 2 million jobs in next 2 years, but we’re still way down from levels just 2 years ago. If we could speed up businesses hiring, we could speed up the recovery, which would help real estate. Wall Street is doing OK as we’re seeing record profits, but no motivation to hire due to Washington.

Sales are near record levels. To put this in perspective, in 2001 we had 376 single family home sales. We had 443 in 2002. In 2011 we had 1,072, down slightly from 1,115 in 2010. Our sales are on fire. Our prices leave a little bit to be desired, unless you’re the buyer. Buyers realize SW Florida is on sale and they’re buying as fast as they can. We can see light at the end of the tunnel, and prices should increase going forward. Just don’t expect 2005 pricing to come roaring back anytime soon. We’re looking for modest gains, and as Dr. Yun says, cities like Las Vegas and Fort Myers might even see some occasional surprises on the upside of pricing going forward.