Tag Archives: Lee County Florida home sales

Summer Vacation

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Historically summer is the best selling season for single family homes in SW Florida.  This is defined by the number of sales that occur in the summer months.  Lately we’ve seen a decline in the overall sales numbers, and this is directly attributable to the recovering real estate market and the lack of foreclosed properties on the market.

SW Florida Single Family Home sales by Qtr
Lee County Single Family Home Sales

Of particular note from the official sales numbers that were just released shows a decline in median sales prices down to $127,000 from $132,000 the month prior.  The $127,000 price was still 8.45% higher than last year’s number.  If you look at the last 4 years of sales prices you’ll notice a gradual trend for decreasing prices starting about May or June.  It will be interesting to watch what happens with next month’s report.  In each case however numbers either flattened out or rebounded nicely by the end of the year.

Median Home Sale Prices in SW Florida
Greater Fort Myers/Cape Coral Area Sales Prices

2012 is also an election year, and typically in election years people hold off a bit until there is more certainty in the business climate.  This year’s presidential election is far from certain.  We doubt the election will hold many people back this year simply for the fact that this year is different in that we have a limited supply of homes on the market.

We also think that the median price is being dictated by the supply, not the demand.  The demand has been pretty steady.  You can’t buy a $50,000 foreclosure if it doesn’t exist, just as you can’t buy a beachfront home for $500,000 if it doesn’t exist.  The supply has changed so much over the past few years buyers have been stuck buying what little they can.

Supply has affected the quantity of sales and also the price.  We are expecting to see some more foreclosures come to the market as they work their way through the legal system, and the market has proven time and again its appetite is more than healthy.

Interest rates are at historical lows so purchasing power for the buyer has never been greater.  Buyers are chomping at the bit to buy anything nice in their price range.  As we go to the higher price ranges there is more selection, so sellers cannot overprice.

Banks are just about ready to lift the declining market tag on our market which will help with lending.  We almost met the standard last month but a rise in foreclosures coupled with a decline in price spoiled the fun, but if we would happen to get a nice rise next month it might be enough to lift that tag.

If you’ve got a house to sell now may be a good time to look at the market in certain price ranges.  If you’re looking to buy a home, you really can’t afford to miss these interest rates.  We don’t know how long they’ll last.  All we can do is enjoy them while they do.  If rates were to double they’d still be ok, but not great.  It would knock many buyers out of the market though and drop the price of the home they could afford.

I guess what we’re saying is if rates go up significantly, a buyer will be able to afford a much less desirable home than today.  This will affect a buyer significantly.  It will also affect sellers, because as rates rise, the buyer pool shrinks like a Shrinky Dink.

In the meantime, we’ll keep an eye on the market with particular attention to upcoming distressed sales, inventory levels, and of course how the Presidential candidates might affect taxation and the overall economy.

Good luck and happy house hunting!  If you need real estate assistance please don’t hesitate to call the Ellis Team at RE/MAX Realty Group 239-489-4042

 

SW Florida 1st Qtr Home Sales 2nd Highest on Record

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Most people refer to 2005 as the boom times for SW Florida real estate, and ask when we’re going to return to those days. I guess the partial answer is we’ve not only returned top those days, but we’ve far surpassed the boom times, at least in terms of transactions.

2009 was our busiest year on record followed closely by 2010, not the year 2005 as many people would guess. 2005 produced 12,273 single family home sales compared to 15,205 in 2010 and 16,260 in 2009. In the 1st quarter of 2011 we had 3,819. As you can see by the attached chart, 2nd qtr almost always produces the highest sales volume, followed by quarters 3 and 4. Most people mistakenly believe that season results in the highest number of sales.

Lee County Florida Single Family Home Sales Chart
SW Florida Homes Sales By Qtr

Season may lead to some of the sales that result in the 2nd quarter, but that wouldn’t explain the strong 3rd quarter sales. Remembering back to the 1980’s our biggest closing months were generally in the summer. We usually found a lot of lookers in the season and many of those would come back and purchase in the summer. Additionally a lot of locals had more time to shop and buy in the off-season.

SW Florida real estate isn’t as seasonal as many would think, although condos do still lend themselves to more seasonal traffic, especially 2nd home purchases.

Depending on inventory, 2011 is on pace to place in the top 3 for all-time sales. Prices have risen 15.14% since January, and Lee County is one of the few markets actually gaining in price. It could be that Lee County was hit so hard due to high concentrations of investor homes that banks liquidated so much in the early years, and prices fell too far and too fast. Prices have fallen so far below replacement cost that virtually all building has ceased, and that’s a sign that the market has been artificially too low.

As the rest of the nation enters a housing pullback, SW Florida is showing signs of bucking that trend. Will it last? That answer ultimately depends on jobs and the economy, as well as future foreclosure inventory that may come to the market.

Foreclosure inventory can appear in two ways. First off we have a backlog of homes that began the process but were held up due to legal concerns in the foreclosure process. A few large foreclosure mills were processing foreclosures and collecting big sums of monies from the banks without doing the proper paperwork, and banks have had to start all over again on those proceedings.

Secondly, Florida is a tort state, or what is referred to as a lien theory state, so it takes longer to foreclose than other states. As the economy has deepened, it has affected more people who weren’t investors, but got caught up in the bad economy and perhaps lost a job, had trouble collecting money from people who owed them money, etc. Because Florida has high unemployment, it’s natural to believe it will have higher foreclosures than other states.

The big wave of foreclosure has already occurred, and Florida has largely worked through this, except for perhaps South Florida in the Miami/Ft Lauderdale areas.

The wild card will be how many foreclosures hit the market. Right now we’re not seeing many and its forcing prices higher. At our current sales pace, we will eventually run out of inventory. The question and always has been, how many more listings will we see when banks are able to release inventory, and how many would be sellers will sell once prices reach the point where they can afford to sell. Inventory and the economy will drive this market, and nobody knows the answer to both these issues. As soon as these issued become apparent, so will the height and velocity of our market. Stay tuned and we’ll watch it together.

2nd Qtr SW Florida Real Estate Sales 2nd Best on Record

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As we’ve been telling you in these articles, we expect sales to trend downward once official numbers were released, and that is the case.  We still have some pretty good numbers though, and as you can see by the chart, the 2nd quarter of 2010 is the 2nd highest on record.  2009 was the highest on record.  We’re still topping 2005 levels by a large margin. 

SW Florida Single Family Home Sales by Quarter
Lee County Single Family Home Sales

Home sales fell 12% in June over last year, down from 1,705 last year to 1,501 this year.  Last month sales were 1,460, so we actually picked up a few sales.  Single family home prices were also up about 10% over last year.  Median price this year is $96,600 in June compared to $87,900 last year.  Prices were roughly even in May 2010, so prices pretty much held steady. 

Condo prices also held steady, holding at $131,400.  They were $131,900 in May, and $125,300 last June.  Condo sales were up 11.11% 

So what does all this mean?  We have seen an increase in phone calls lately and an increase in buyer activity in the higher price ranges.  This is a departure from last year when buyers only wanted the bargain basement homes.  Buyers in the higher price ranges still want value and are not willing to overpay by any means, but at least activity is picking up.  This can be attributed to the higher priced homes coming down in value and entering the buyer’s radar screen on where they perceive values should be. 

Buyers don’t always have a realistic view of what properties are worth, just as many sellers don’t.  The exciting time in the market is when buyers and sellers perception become closely aligned.  It is precisely then that transactions can occur. 

We would have more transactions occurring if more sellers could afford to sell.  Many sellers just owe too much to sell at these bargain prices.  Of course, if more sellers could afford to sell it would add inventory, so the market has a way of balancing itself out. 

We don’t think prices are going back to 2005 levels any time soon, but at least prices are on the rise, and home sales are faring well.  I’ve spoken with a few lenders who have said mortgage applications are down.  This is true in SW Florida and nationwide.  We have seen an influx of cash buyers again as banks are sometimes stingy with the money.  We have seen some lenders loosening some of their lender requirements.  There are some 100% financing loans out there and interest rates are down to about 4.25% 

Some buyers have backed off because they lost out on the $8,000 tax credit.  The interesting thing is, rates were 5.5% back when this program was in effect, so by waiting, a buyer would now save $54,612 in interest on a $200,000 loan.  Not bad for waiting just a few months. 

Will we ever see interest rates this low again?  Will we ever see home prices this low again?  Will we ever see them this low again together?  I think the answer may be No to questions 1 & 2, and definitely NO to #3.  Never before have we seen this much buying power in the market, and perhaps this is why home sales are still hanging tough.  If you‘re a buyer, their really isn’t a better time to buy than now, and that is a fact!

2009: Housing Bust or Housing Boom in Sw Florida?

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2009: Housing Bust or Housing Boom

Its official, the 2nd Qtr of 2009 set the All-Time record for single family home sales, eclipsing the 2nd Qtr of 2005 by a wide margin.  Many people don’t realize that the 1st Qtr of 2009 also set the All-Time home sales record, and the 4th Qtr of 2008 was nearly a record.  Home sales in June were up 137% over 2008, a trend we’re seeing regularly throughout SW Florida.

 

Fort Myers and Cape Coral Single Family Homes sales by Quarter
Fort Myers and Cape Coral Single Family Homes sales by Quarter

The reasons sales are up are numerous.  SW Florida has received much International attention which has drawn interest to the area.  We’ve sold many more homes this year to Canadians who can now afford to buy some sunshine at affordable prices.  We’re also selling more homes to people from up north to use as a second vacation home, another encouraging sign.  Perhaps the two largest segments of buyers right now are the 1st-time home buyers and investors.

 

First-time home buyers are trying to cash in on the chance at the American dream with low interest rates, a potential $8,000 first-time home buyer tax credit, and affordable pricing we haven’t seen in years.  Most of these buyers were priced out of the market in years past, and now is their chance to live in their own home, cut their own grass, and have their chance at building wealth.   That chance is alive and well, as home sale prices today are well below replacement costs, so builders can’t even afford to build at these bargain prices.  No builder is willing to lose money right now when a buyer can buy for less that the cost to build.  This trend will end when there is no more inventory, and as you can see by last week’s graph, inventory levels are shrinking.

 

Lastly we come to the investor.  Today’s investor is much different than the speculators we saw in 2004-2006.  Many of today’s investors are paying cash vs. the over-leveraged speculators who leveraged everything and didn’t qualify for anything but maybe their own personal residence.  Today’s investor isn’t looking for the quick flip, although we have seen a few successful flip transactions.  Today’s investor recognizes bargains, and they’re buying up properties, rehabbing when necessary, and renting them out for cash flow.  In the future, each investor will decide on their own whether they want to sell at normal pricing, or keep the property for positive cash flow.  Positive cash flow is a term we never really used to hear much about in SW Florida because it was so hard to accomplish, even before the so called Boom of the 2000’s.

 

But was the Boom of the 2000’s really the boom?  We can say with certainty that prices went up for awhile, before they came crashing back down, giving up all the gains and then some.  Some people made money, and a lot of people lost money, including the banks, tax payers, etc. The opportunity to make money was limited to when you could get the new construction completed, and the demand was false.  All that happened was the supply side sped up, bringing needed housing to market much sooner than the demand.  So today we have more supply than demand, however that will change in time.

Today’s buyer has more opportunities for success going forward than any buyer did in 2005.  Sales are stronger in 2009 than they were in 2005.  Prices are more affordable, interest rates are low, and there are tax incentives in place now.  In fact, we’re hearing that if the economy hasn’t picked up by October, Congress may extend the 1st time home buyer tax credit scheduled to expire Dec 1, and some are saying it should be opened up to move-up buyers as well. We would argue the market in many ways is much healthier today than it was in 2005.  Many might ask, how could anyone say this market is healthy?  The truth is even with the foreclosures, the market has been cleansing itself for the last 4 years.  It may not be healthy today, but would you rather buy a home today or one back in 2005?  We would say it would be healthier to buy one today than back then, and most people call back then the Boom.

 

We think we should change the conversation.  2005 was not the Boom.  It was not healthy.  There was little to any chance of making money, and first-time buyers couldn’t afford to live here.  Nothing was good about the 2005 market, it was all false.  So let’s stop calling it the Boom. I don’t know if 2009 is the Boom, but if your definition is record sales, affordable housing, Real opportunities to make money in the future, and healthier lending standards, then this is all true today.  It just seems more sensible to call 2009 the Boom than 2005.

 

If you’re a seller or facing financial difficulty, Boom may not excite you.  We’re just saying the last so-called Boom is what started the pain and misery, and it’s going to be real estate that pulls the nation out of recession going forward.  Real estate recovery leads to eventual job creation.  We may be a few years away from construction jobs coming back to SW Florida, however the market has been well on it’s way to healing itself for years now, and we at least have those painful years in our rear view mirror.  I’d much rather be sitting here in 2009 and think of the market as the Boom than back in 2005 thinking everyone was going to make money on their next Flip.  Today is the Boom, 2005 was the Bust.

 

As appeared in Fort Myers News Press August 8, 2009

Ellis Team SW Florida Real Estate July 2008 Current Market Index Levels off

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The Ellis Team SW Florida real estate Current Market Index leveled off in July to a 7.51 mark, up slightly from the 7.23 numbers in June.  The lower the index the better it is for sellers, and the higher the index the better it is for buyers.  We witnessed 5 straight months of decline before this leveling off.

 

SW Florida Current Market Index July 2008 Ellis Team RE/MAX

Single family listings in Lee County Florida rose slightly from 15,634 to 15,668, while pending sales dipped slightly from 1,697 to 1,574.  Both factors contributed to the slight uptick in the CMI index.  This could be somewhat seasonal.  We’ve also noticed a surge in investors swooping in to buy distressed bank foreclosures in recent weeks, which could be a positive sign.  Investors tend to be less emotional and more analytical about the numbers, and their comfort level with today’s prices speaks volumes.  It is important to note that these pending sales have been translating into significant increases in closing volume of 2007 levels.  Home sales in Lee County were up 43% in June over last year’s numbers, following up on a big increase in May as well.  Prices are down and volume is up.

The CMI index in Fort Myers actually improved, while Cape Coral softened just a bit.  Listing inventory of single family homes declined in Fort Myers from 2,528 to 2,489, while inventory in Cape Coral rose from 5,092 to 5,104.  Pending sales dipped slightly in the Cape while they held steady in Fort Myers