TOM & SUE DEMOGENES...
"YOUR INFORMED REAL ESTATE COUPLE"
2013 - Best Real Estate Year in Seven Years?
Despite two consecutive double digit appreciation years in Lee County, Economists are predicting 2013 will be the best real estate year since the crash that started in 2006. Based on all the stats available to us, we strongly believe this to be true.
Let's get right to the charts and Monthly Fun Facts:
We have likely seen the end of median home prices below $200,000 in Cape Coral, and we don't expect to ever see $100 average price per square foot again. It's also doubtful that Fort Myers will fall below $250,000. We may see $300,000 median prices in Fort Myers by the end of the year, and the Cape approaching $240,000.
Tom's Monthly Fun Facts
* Foreclosures: Although Florida remains the top foreclosure state in the nation for the 6th straight month, Fort Myers/Cape Coral is no longer in the top 10 foreclosure cities. For a while we were in the top two foreclosure cities in the U. S., competing with Las Vegas. A nice list to be removed from.
* Housing Price Forecast: In March several economists upped their prediction of rising housing values, and some have even doubled their estimates from a few months ago. Economists at B of A and Capital Economics have revised their early year forecast from 4.7% and 5% appreciation up to 8%. They are also predicting a 4 to 6 year span of rising home prices Tom: in Lee County we are already at double digit appreciation for this year, and we are 2 1/2 years into our recovery. I'll be very surprised if we don't exceed 20% increase in prices from January to December of this year, and I expect we'll have 7 - 10 years of rising home prices (from the trough to summit).
* Unemployment: Florida's unemployment is now below the national average. A strong comeback from just two years ago, when the state was 3.5% above the national average. Early last year I boldly (or stupidly) predicted that we would fall below the national unemployment rate sometime in 2013, even though the differential was about 2% at the time. I honestly didn't think it would happen this early in the year, but welcome the good news. The Sunshine State is rebounding in all areas of the economy.
* State Population Growth: Cape Coral/Fort Myers is growing again. Out of 411 metropolitan areas, C.C./FT Myers was the 40th fastest growing market since 2010. In the boom years Cape Coral was often in the top ten fastest growing communities, reaching #1 on several occasions. I predict we will soon be among the top 10 fastest growing cities once again.
* U.S. Home Inventory: The number of homes for sale has fallen to the lowest level in 13 years, and construction permits is at the highest level in 4 1/2 years.
* Underwater Homes: In 2012, 1.7 million homes went from negative to positive equity. However, there are still 10.4 million homes underwater. $60,000 is the average underwater amount. Tom: at the pace national home prices are increasing, I expect 2 million underwater homes a year will move into positive equity each of the next few years. At 8% annual appreciation, the vast majority of underwater homes will be in positive territory in 3 1/2 years. Locally, I anticipate that almost all underwater homes will be in the black in two years.
* Florida turns 500 Years Old: During the first week of April 1513, Ponce de Leon became the first documented European to arrive anywhere in the United States. Happy Birthday Florida.
* Construction Labor Shortage???: More than 50% of national builders report they have a labor shortage. This can only mean higher prices for new construction, which in turn raises prices for existing homes. Tom: Locally builders tell me the same thing about a labor shortage, and that building material prices are also skyrocketing again by double digits.
Client Question of the Month
Client: "Last month you stated that you prefer owners of waterfront homes to rent their homes seasonally as opposed to annually, until such time as they can occupy the home full time. Could you explain why?"
Tom: Here are my reasons:
1. Much less wear and tear on the home by fewer occupants. Less time is actually spent in the home by vacationers, as they are out enjoying all that Southwest Florida has to offer. And most vacationers visit without children or pets in tow.
2. Approximately 3 1/2 months of high season rent produces as much income as an annual rental, allowing the owner the flexibility of using the home personally or for family members when it's not rented.
3. Most seasonal renters are out-of-state Baby Boomers or international visitors. Many want to come back year after year to a well maintained home, thus they leave the home in very good condition.
4. The seasonal management companies (there are two that we highly recommend) inspect the home after each rental, have it cleaned in preparation for the next renters, and attend to any deficiencies or repairs. This is not the case with annual renters.
Off-water homes are not much in demand for seasonal rentals, so annual renting is the best option. Yes, there are nightmare stories about damages, non-payment of rent, and way too many occupants living in the home. But a number of pre-emptive strategic moves can be done to greatly minimize these problems occurring. A good management company is the first step in the rental process, whether seasonal or annual. We can recommend companies for either type of rental.
Second Client Question of The Month
Client: You often mention "high season". When does high season end in SW Florida?
Tom: In a normal market high season ends around the end of April. My projection is that high season this year will last into June. It won't be vacationers visiting - it will be people who came earlier in the year and are coming back to purchase real estate before prices rise much higher.
New Blog Topics
- Cheaper To Own Than Rent (in every single U.S. metro area)
- Move-Up Buyers Shouldn't Wait Any Longer
- Appraisals Hinder Real Estate Resurgence
- Boomerang Buyers To Make Strong Comeback in 2013
Topics: Short Sales vs Foreclosures - Major CC Gov't Happenings - Future Appreciation in SWFL
Topics: Snowbirds Race to Snatch up Florida Housing - What are the Best Gulf Access Home Areas?
Topics: Local Home Prices Up 32% - Is It Too Late to Enter the Cape Coral / Ft. Myers Market?
Topics: Cape Coral Prices Highest in 5 Years - Million Dollar Homes Selling Again