We’ve been talking quite a bit the past several weeks about HAFA (Home Affordable Foreclosure Alternatives) program and other programs designed to make selling a short sale easier. Going forward, these programs should provide some much needed relief for many sellers, and open up the market for more buyers.
We’ve noticed a trend this past year developing in the Lee County SW Florida real estate market. As we’ve reported, sales numbers hit record levels in 2009, and prices look like they may have stabilized. We’ve noticed that total distressed sales are down significantly since last May. Our definition of a distressed sale in either a bank foreclosure where the banks sells the property on the open market after they’ve foreclosed, or a short sale by a seller hoping to avoid foreclosure and protect their credit.
Distressed Sales in SW Florida
Fort Myers is showing the most strength with only 47.83% of sales being distressed in March 2010. Compare that to Cape Coral at 62.0% and Lehigh Acres at 74.19% Lehigh Acres is down from the whopping 88.5% set last June, even though they have leveled off about 75% the past 4 months.
Cape Coral has also declined, down from 78% last May to 62% now. This chart explains why prices have stabilized in Fort Myers and Cape Coral, and why Lehigh Acres is a little shakier at the moment.
Inventory levels are down in all three segments, and sales are up significantly over February in Fort Myers and Cape Coral, and up moderately in Lehigh Acres. Officially sales numbers have not been released at the time this article was written, and we believe going forward we’ll see some median price increases in Lee County, and especially in Fort Myers and Cape Coral.
We’re studying preliminary numbers, and we’re seeing an approximate 28% jump in sales over February numbers for single family homes. There was an increase in distressed sales, but the majority of the increase was regular non-distressed sales, and this is encouraging going forward in 2010.
We’ll be keeping our eye on the market after the home buyer tax credits expire on sales after April 30, and on interest rates which are creeping higher. Nationally consumer confidence is rising, and eventually that should trickle into job growth. SW Florida has been hit hard with high unemployment, and we really want to study these numbers as ultimately employment will be the engine that fuels SW Florida real estate prices in the future.
Always consult a CDPE (Certified Distressed Property Expert).
This week we’ll focus on freshly updated numbers for the distressed segment of the Lee County real estate market. It’s important to study this segment of the market as it has been responsible for a large chunk of sales, and has influenced pricing in the market.
As you can see from the chart, distressed sales in Fort Myers have fallen precipitously in the last 3 months, down from almost 73% in July to 58% in September. Short sales in Fort Myers have increased about 20% and foreclosures have dropped 35% while overall sales have remained relatively constant. This tells us that banks are working to sell properties as short sales in Fort Myers as opposed to acquiring the property through foreclosure and selling later on at much lower prices.
Distressed Proeprties in SW Florida July-Sep 2009
Cape Coral on the other hand has seen about a 15% drop in overall home sales since July. Distressed sales have remained relatively even, hovering around 70% all 3 months. Foreclosure sales have dipped almost 26% since July while short sales have increased 9%. This tells us that the demand in Cape Coral is directly tied to the bargain, meaning as the distressed inventory has fallen in the Cape, so have overall home sales. Statistically, buyers in the Cape are all about the bargain, and as home prices have increased in the Cape, home buyers have moved to Fort Myers and potentially Lehigh Acres for the bargains.
Lehigh Acres has seen a slight fall in distressed sales, down from almost 87% in July to 82% in September. Lehigh Acres is still far and away the distressed capital of Lee County. Overall home sales in Lehigh Acres have fallen almost 13% from July to September. Foreclosure sales in Lehigh Acres are down 18%, while short sales in Lehigh are down 17%. This is why home sales are down overall about 13% as Lehigh Acres, along with Cape Coral are both proving to be price sensitive markets led by first time home buyers and investors.
Fort Myers seems to be much more stable at this point in time. We are seeing a trend towards more expensive properties coming to the market via foreclosure, so it will be interesting to see where these properties are located and how it affects demand and pricing in each of the three major markets in Lee County.
Congress has extended the first-time home buyer tax credit to purchases made through April and closed by July, and added a provision for existing home owners who have owned their home for at least 5 years. Unfortunately, in this sagging market it doesn’t give them much time to sell their home and close on a new one to take advantage of this provision, so only a select few may be able to purchase a new home before selling the older home.
We think Congress could have done a much better job writing this bill. They did add to income eligibility limits, but again the bill limits who can take advantage by July. This may further fuel the bargain end of the market assuming the president signs this bill, which has not been done at the time this article was written.
We’re concerned that this bill won’t fuel a total real estate recovery and will continue to spur demand at the lower end of the market. To pull this economy out of the doldrums, a broad based real estate recovery would have served a better purpose, but I guess we’ll take whatever help we can right now.
We’ll also monitor the trend of banks accepting more short sales. To date banks have been ill equipped to deal with the magnitude of requests. Recently Bank of America adopted a policy to use its online foreclosure system of working with approved real estate agents called Reotrans and opened it up to short sales. This will allow approved agents to more efficiently move Bank of America short sales through the system.
Sellers wishing to sell their home via a short sale should seek out experienced short sale agents who are also familiar with Reotrans. Because they are adding more than just bank REO’s (Real Estate Owned) they are changing the name from Reotrans to Equator. This may revolutionize the way banks handle the massive short sale process and speed up many of these sales. It will also help that they are using agents familiar with the Distressed Sale process.
If you’re a seller considering selling as a short sale, it’s almost impossible to go it alone. We recommend hiring a seasoned professional familiar with the intricacies of a short sale. You might seek out a CDPE (Certified Distressed Property Expert). If you’re a current Bank of America customer, you might also seek out an agent who uses and is approved on Equator. This could be a trend that other banks go to as it will ease the communication stream and handling of the data among various agents, negotiators, and investors. This online system could do for short sales what it has done for bank foreclosures, which was to make an online system whereby many authorized people could all work on a file simultaneously and get things done instead of pushing paper from one desk to the next.
Stay tuned, as the market is always in flux, and we’ll report interesting changes and how they may affect the market.
We’ve been researching and studying the SW Florida real estate market ahead of official releases due out next week, and our preliminary research tells us we expect sales numbers to increase approximately 100% or more over last August sales numbers. The third quarter of 2009 is setting up to be another record quarter, and keep in mind 2008 numbers were near record numbers to begin with.
Lee County single family inventory levels are on the decline again and pending sales are remaining strong. The chart attached shows single family home inventory for Fort Myers and Cape Coral Florida. Listings in Fort Myers and Cape Coral fell by over 100 units as home buyers snapped up more property last month than came to the market. Separately, Lee County levels fell almost 200 units, suggesting buyers are buying faster than sellers and banks are bringing property to the market.
Fort Myers Cape Coral Listing Inventory Chart
In the last several weeks we’ve addressed who is buying these properties, predominantly first time home buyers and long-term investors seeking to rent them out until the market improves. At today’s low prices, properties actually cash flow, and we have lots of renters who have been displaced from properties.
Now for some interesting observations we’re noticing that you won’t see in this chart. We think home sales will be down about 11% from the previous month, which is normal due to seasonality. Again, sales should be up about 100% over last year’s August, and last year’s August was down from July as well due to seasonality of the market, so no big surprises here.
Foreclosure inventory increased 4.14% in the past month and foreclosure sales fell 13.82% We’ve been saying for the past month or so banks are ramping up foreclosures for the next year and we expect double the write-downs banks will take, although because many of these properties will be in the higher price ranges it doesn’t mean we’ll see a doubling of foreclosure inventory. Foreclosure inventory and sales will definitely be something we want to keep an eye on going forward and may tell the story of how our market is doing.
Another trend we’re tracking is short sales to see if banks are cooperating more and agreeing to see short instead of taking back in foreclosure. Even though total sales are down about 11%, and foreclosure sales are down about 13%, short sales are up about 3.76%. This would suggest banks are cooperating more and our experience has been this is true; however it is still a very daunting process and not one a homeowner can reasonably attempt on their own. In fact, it is so daunting that many agents won’t deal with short sales either. If you’re going to attempt to buy or sell a short sale, make sure you’re dealing with an agent with lots of experience, preferably a CDPE (Certified Distressed Property Expert.)
Distressed sales accounted for 70.04% of Lee County home sales in August, up slightly from 68.6% in July. Distressed sales are here to stay for awhile. In Fort Myers, 66.45% of the sales were distressed, while in Cape Coral the number is 68.87% Lehigh Acres has far more distressed sales at 84.27% County wide, distressed sales percentage remained stable over the previous month.
Inventory levels fell in Fort Myers, remained fairly constant in Cape Coral, and increased about 2.35% in Lehigh Acres. So what’s the bottom line? We believe median prices may increase some over time as banks bring higher priced foreclosures to the market. Banks allowing more short sales may also increase the median sales price, but that doesn’t mean all homes are going up in value. If this occurs like we think, it simply would mean the bottom has formed in the lower price range, and we’re still seeing erosion in prices in the mid to upper price ranges, and as they become more affordable buyers switch “on” and buy them.
All real estate is local, and you can’t judge the entire market by a single statistic like median sales price. This is why we take so much time to really study the market and explain what is really happening with hard facts. We’ll keep an eye on the distressed end of the market, as these latest trends will offer us signs as to where the market actually is and where it’s headed.
Until we flush out the distressed properties, normal market assumptions do not apply. Supply and demand still rules, it’s just that it’s hard to get a grasp on supply without having a thorough understanding of what the banks are doing with foreclosures and short sales. Until then we’ll keep tracking it for you and reporting the trends.
Industry experts Brett Ellis of the Ellis Team at RE/MAX Realty Group in Fort Myers Florida and Adrian Jacobs from Countrywide Home Loans in Fort Myers Florida outlines successful strategies in identifying short sale candidates, structuring your offer so the bank can accept it, and compiling the short sale package the way the banks want to see it. We also go into qualifying the seller, getting pre-qualified, and talk about lien searches and why they’re important.
Brett is a CDPE (Certified Distressed Property Expert) and has helped dozens of homeowners sale their properties in SW Florida. Working with a CDPE is a good idea and Brett encourages agents to obtain the accredidation. The more agents with this knowledge the more it helps the entire market. Both the listing and selling agent must have detailed knowledge about the process to make a short sale work. Making mistakes can cost the buyer several months, kill the deal, and the buyer has lost out on many other properties they could have purchased during the time they waited for the failed short sale. The seller faces likely foreclosure in a failed short sale, so the results are tragic on both buyers and sellers. Working with a CDPE helps improve the success rate by only focusing on qualified short sale opportunities and putting together a package that works for the banks.
Watch Tips on Short Sales. We also talk about buying bank foreclosures in SW Florida, Fort Myers, and Cape Coral as well.
The Ellis Team at RE/MAX Realty Group in Fort Myers released the Annual SW Florida State of the Market Report in February. Local TV stations covered the release and here are some of the stories.
Download the State of the Market Report In this report we detail the Fort Myers real estate market, along with updates on the Cape Coral real estate market, Lehigh Acres home sales, Bonita Springs and Estero real estate updates, Sanibel and Captiva, Fort Myers Beach, Pine Island, and all of Lee County Florida.
We also detailed bank foreclosure information, and short sales statistics, distressed property information, and we talked about the CDPE (Certified Distressed Property Expert) designation to help owners keep their homes or sell their homes to protect their credit
We’ll be uploading more video in the coming days, so stay tuned.
