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
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
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.
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
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.
As you can see from the enclosed chart, short sale listings account for 53% of all active Cape Coral listings, 55% of Lehigh Acres listings, 35% of Fort Myers listings, and 40% of Lee County listings. While foreclosures account for more of the completed sales in Lee County, there are far less of them listed and they tend to go very fast. Short sales on the other hand tend to take much longer, and their sale is not certain at all. So we want to inform people of some of the things they should know about short sales.
Chart of Homes for Sale-All listings Vs Short Sales
A trend we see developing is many banks are requiring sellers to participate in the loss and pay money at closing, or agree to a promissory note that the bank will collect on. Sellers should be very cautious not to list the property too low or the bank will reject the offer outright if it’s not within reasonable value, and they are coming back on the sellers regardless of whether it’s a homesteaded property or investment property. Banks may not file a 1099 to the IRS on a homesteaded property, but they are in many cases on investment properties. The forgiven debt has always been treated as income to the IRS, so if you take a loss on an investment property, prepare to pay taxes on the forgiven debt regardless of your ability to repay.
This is another reason why selecting an agent with experience in short sales is critical. Not only must the agent understand what the banks want to see in the total package, they must also understand what the banks are doing today and their implications to their clients. Agents are not tax advisors; however agents can pass along valuable experience before you go through such an ordeal.
Buyers are very wary of buying short sales, as are buyer agents. Buyer agents typically only show listed short sale properties when they know the listing agent has a firm grasp on All the details needed to get the short sale through.
A listing agent should also make sure there is a title search done. If you miss a potential lien on property and do not list it on the estimated net sheet the bank requires, it will not be part of the accepted short sale and the seller or buyer must pay the difference at closing. It definitely pays to know all the back fees and penalties from HOA’s, utility companies, etc. upfront versus finding out later on and having the short sale deal blowup at closing.
You’ll usually want an estoppel letter from the homeowners association showing all back fees, because in a short sale they will need to be paid off. In a foreclosure the HOA may only be entitled to recover 6 months of back fees. This is one reason HOA’s should be more cooperative in providing this data. Many homeowners associations don’t realize their management companies are charging large sums simply to provide an official amount the owner may owe.
We also recommend sellers pay their HOA fee even if they are delinquent on their mortgage. Time is valuable in a short sale, and the HOA could actually file foreclosure papers much sooner than the bank might. When the clock is up, the short sale is dead. I can’t tell you how many homes we’ve seen listed as a foreclosure after the banks supposedly agreed to a short sale.
The bank(s) should only see one accepted offer from a seller. If a bank sees multiple offers it gums up the works, and sometimes leads the bank to believe it is a Hot property and should sell for more. Nevertheless, it increases the time it takes the bank to respond as it is much more work, and we should do nothing to increase that time. Furthermore, there is a legal risk by accepting more than one offer. The offer is between buyer and seller. The bank cannot agree to a short sale unless seller agrees with a buyer. The bank can only tell you what they’ll do if you have a sale. A seller could have legal problems if more than one buyer believes they have a valid contract with the seller.
We also don’t believe in sending in fake contracts to get the ball rolling with the bank. When banks discover this tactic they are less likely to work with you. Additionally, there is no such thing as an accepted short sale price. If you lose a deal, typically you have to start all over and the terms usually change.
There is a test program that is an exception to this rule on HUD properties, but that price is set upfront and has nothing to do with previously accepted contracts. There are many other things a buyer and seller should know. To view a video segment on HOA’s and management companies, visit segment 2 of last week’s Future of Real Estate Show. http://bit.ly/8pfMMf or you can visit http://www.youtube.com/brettellisfl for many real estate related videos.
May 2009 Ellis Team SW Florida Real Estate Current Market Index
The Ellis Team May 2009 SW Florida Real Estate Current Market Index shows relative stability. We switched the way we compile the data for this report, and it looks like the index held steady at 3.99, up slightly from 3.72 the month prior. All signs point to big sales ini April once they are released. We are tracking over 1,400 single family home sales in April, which far exceeds sales from last year.
In the coming days we will be releasing a Fort Myers-Cape Coral inventory chart which will show available inventory in just those areas, as well as pending sales activity. Lee County overall single family inventory stands at 12,579 which is up slightly from last months number of 12,356. Again, we switched data compilation sources and we now feel we’ll pick up a few extra listings by making the change, so it’s possible inventory didn’t really increase at all.
First time home buyers hoping to take advantage of the $8,000 tax credit are competing with investors trying to scoop up bank foreclosure bargains. Pending sales currently are running high, and might even be higher if we weren’t running out of foreclosure inventory. The lack of foreclosure inventory may lead to reduced sales going forward if foreclosures do not pick back up again soon. Some think the banks will be taking possession of more foreclosures soon as they work through the process, but less are being filed each month.
Single family home sales in Fort Myers and Cape Coral MSA were up 192% in March 2009 over March 2008. The Fort Myers and Cape Coral MSA encompasses Lee County Florida. Home sales totalled 1,464 this year as compared to 501 last year. Statewide sales were up 30% and median prices were down 30% from last year. Fort Myers and Cape Coral is definitley leading the state in transaction increases. Miami was next in line with a 101% increase in sales transactions. For a complete chart of transactions by city and median prices, check out Florida Sales Report March 2009 Existing Single Family Homes. We’ve included a chart that shows home sales from 2005-2009 in SW Florida.
Condo prices in Fort Myers and Cape Coral were down 36% from last year to a median price of $126,200, down from $196,400 last year. Sales were up 53% this year as buyers reacted to the tremendous bargains in the market. Many buyers have sensed the market has or is close to bottom and they better act soon. See Condo Florida Sales Report.
Buyers have also responded to the $8,000 tax credit that essentially gives first time home buyers, or anyone who has not owned a home that was their primary residence in the last 3 years, a tax credit of 10% of sale price up to a limit of $8,000 Essentially the government is making the down payment for buyers, and buyers who put less than 10% down pocket the difference. There are some income requirements. See First-Time Home Buyer Tax Credit-What You Need to Know or watch our video explaining the First Time Home Buyer Tax Credit.
NBC Nightly News recently did a report “Is Now the Time To Buy a Home” which can be fouond directly on our webpage. there are some particularly good deal deals in Fort Myers real estate right now as pointed out in the NBC Report.
Current Market Index-SW Florida Real Estate-March 2009
The March 2009 Ellis Team SW Florida real estate Current Market Index covering Fort Myers, Cape Coral, Bonita Springs, Estero, Ft Myers Beach, Sanibel and Captiva Islands, and Lehigh Acres Florida improved again as sales activity has really taken off in the past 6 months. The Index now stands at 4.41 for Cape Coral and Fort Myers, and stands at 5.07 for the entire Lee County Florida.
Inventory levels countywide hade dropped to just slightly over 13,000 while pending sales have shot up to 2,567, and increase of 22.53% since last month. The market is absorbing new inventory. This 2009 season has been as good as predicted. remember, the Current Market Index is a forward looking indicator, and home sales have been bearing that out each and every month as we’ve been reporting.
Cape Coral again leads the way. The CMI numbers for Cape Coral are 3.45, the best in SW Florida. Condo numbers were down to 10.90, down from 13.08 in February, another positive sign. We do see some serious trouble on the horizon for the condo market in SW Florida we’ll be reporting on later.
The 2009 Ellis Team annual SW Florida State of the Market Report will be released February 18, 2009 at the general meeting of the Southwest Florida Investment Association. It is located at Island Park Bridge Club – 16520 S Tamiami Trl # 16 Fort Myers, FL 33908
The format has changed from last year’s format. This year we’ll address the following topics:
Sales Trends by Area
Pricing Trends by Area
Lee County Pricing Trends by Month
Lee County Sales Trends by Month
Median Prices Vs. Avg Prices
$ Volume of Sales by Area
Find Out Which Areas are Selling
Identify Where the Deals Are
How Will Recent Lending Changes Affect Investors
How Will Recent Guidelines Affect Condo Sales
Don’t Follow the Herd-Be the First to Know How This Market is Changing and Capitalize
Get the Facts-Don’t believe Everything You Read
Find out How the Stimulus Package Could Affect Our Market
What Does the Latest Current market Index Predict for our Market
Should you be Positive or Negative in 2009
Ask Questions-Only Even of it’s Kind Where You can ask the Experts Questions
Compare areas such as Fort Myers, Cape Coral, Estero, Bonita Springs, Lehigh Acres, Sanibel-Captiva, Pine Island and see how your area is doing.
This year we’ve compiled two independent sets of data. The first is the most exhaustive set ever compiled. We tool MLS data from multiple sources, compared for duplicates, and deleted, and scrubbed the data for known errors. We used this data to compile a comprehensive database. Secondly, Jeff Tumbarello has compiled the area’s finest foreclosure database. This year we have analysed both sets of data and we’ll be able to compare and contrast the two independent empirical sets. Foreclosures have affected the real estate market, and by analysing the two together we’ll be better able to illustrate past trends, future trends, and show how the cause and effect is influencing the other. We look forward to demonstrating the lagging and leading indicators in this market, and how you can plan to take advantage of this knowledge.
SW Florida International Airport, serving Fort Myers, Cape Coral, Bonita Springs, Naples, and all of SW Florida received more visitirs in February 2007 than any other month in its history, marking over 841,000 passengers for the month.
AirTran had the most passengers with 101,261, followed by Us Airways and Delta. SW Florida continues to a nice vacation spot, and as more people move to SW Florida, airline traffic increases as residents take business trips, and friends come to visit.
It’s always been said, just move to Florida and you’ll find out how many friends you have.
SW Florida real estate has on average bottomed out. That’s not to say there won’t be tough times in isolated areas, but overall prices have steadied for the past three months and buyer activity has really picked up in the last two weeks.
Buyers will look back and say they should have bought in April or May of 2006 as inventory levels were excellent for the buyers and mortgage rates were at their lowest. Prices have also come down around $40,000-50,000 since their highs in some market price ranges.
We’ve had pent-up demand from buyers who have been afraid to buy because they thought if they just waited a month or two, prices would be lower in the future, and they would have been correct up until now. We’ve seen prices level out. Buyers need re-assurance that it’s OK to buy, and they haven’t had that. This changed about two weeks ago as buyers started buying again. When the word gets out to other buyers, they’ll all turn on, like fire ants. Fire ants seem to bite all at once. They’re there, everybody knows they’re there, and when the decide to bite everybody will know they’re biting. The same is true with buyers of real estate.
Fort Myers real estate is rebounding nicely, followed by Cape Coral and Naples. Naples probably had the furthest to fall as it was the most ahead of itself. Cape Coral still has loads of inventory, and that will take time to work itself through.
Thye wild card is rising interest rates and rising insurance costs. If insurance costs goes up $100/mo it reduces the buying power of a buyer by about $16,000. Rising interest rates, insurance, and property taxes all work the same way, and could limit the price increases we’ll see down the road.
The good news is overall the market has stabilized and is near bottom. Expect the market to level where it is while buyers eat up inventory, and eventually rise about 5% per year once inventory levels have come down.
Home appreciation could have been in the 7-9% range and may be limited by rising home ownership costs described above. It’s possible the market will just stay level the rest of the year and not appreciate too much as we work through this inventory. Buyers should buy now though because rates are expected to rise throughout the year, and waiting may increase the payments.
Just a quarter percent rise in rates costs the buyer several thousands of dolalrs in buying power. For these reasons, this is why I say that buyers will look back on May 2006 as the best time to have bought real estate in SW Florida
