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39 CONSECUTIVE MONTHS OF LOCAL PRICE INCREASES
March continued the streak of 39 straight months of same month to month median home price increases in Cape Coral/Ft Myers. However, the increase was very modest compared to the previous 38 months. Median home prices in Cape Coral in March were $203,000, versus $197,000 March. Does the low yearly increase in prices (3%) indicate that we may be near a market peak?
First, 39 straight months of increases is an unusually long time. There are normally a few months or more that prices drop during that long of a period, and we should embrace a slight slowdown of the past three year's prolific price increases. If we continued with 25 - 30 % annual gains for many more years we would inevitably see another bubble burst here in SW Florida, and that was not a pretty picture. Although I hope and expect that appreciation will moderate somewhat in the coming years, I don't anticipate SW Florida is even close to the next market peak for the following reasons:
1. Local home inventory dropped in March, after several straight months of increase in supply
2. The brutal winter up north has many people coming down to Southwest Florida to buy sooner than they had originally planned. We have many buyers coming down in June and July, when normally our selling season ends in April/May.
3. Baby Boomers: Many boomers have been waiting for 5 to 7 years for their home values up north to increase so they could relocate to Florida. This increase in value is finally taking place
4. Increase In Stock Portfolios: Allowing people the financial ability and confidence to purchase a second home.
5. Buyers Out of The Penalty Box: Millions of people who lost their homes to foreclosure, short sale or bankruptcy, are now passing the two to seven year waiting period to be able to buy again.
6. Credit Scores/Easier Financing: At the same time that many American's credit score is recovering after the Great Recession, banks are also easing up on strict lending requirements.
7. Drop in Unemployment: Equates to more jobs, which equates to more future home purchases.
When will we know when we have officially reached a market peak? If we have more than three straight months of same month year-to-year home price decreases then we have confirmation that the market has leveled out and may stay there, or more likely will begin the downward cycle. Whatever the news is we will report it, whether it's positive or negative news. Informed is forearmed.
Cape Coral/Ft Myers: 10th Fastest Growing Area In The U.S.
According to the U.S. Census Bureau, Cape Coral/Ft Myers was the 10th fastest growing community in the country in 2013. Additionally, the National Association of Realtors reported that Cape Coral/Ft Myers was 9th in the country for Increase In Home Equity since the fourth quarter of 2010. Tom: because Cape Coral has a low crime rate, and is one of the most reasonably priced waterfront communities in the state, I expect we will continue to see the city rise in both population growth and home equity for several more years.
U.S. Home Sales Slow - Prices Rise
Snowstorms, rising prices and higher mortgage rates combined to reduce home sales to their lowest level in 19 months.
A tight supply of inventory is helping boost prices, even as sales slow. Sales fell to a seasonally adjusted annual rate of 4.6 million homes, according to the National Association of Realtors. That sales pace equates to a 5.2 month supply of home inventory - below the six-month supply typically available in healthy markets. Kim: Local inventory is closer to 7 months, in part because high season is the time of year many people put their homes on market to yield the highest buyer interest and highest price.
Local Supply of New Homes Shrinks
One Month: That's all the supply of finished but vacant new homes in Lee and Collier's master-planned communities. Based on current sales pace, according to market tracker Metrostudy. That's a sharp reversal from the early days of the recovery, when Southwest Florida faced a glut of new homes on the market. In 2010, there was about a one-year's supply of new homes. While there are plenty of developed lots in both counties, builders have snatched up many of the lots in good locations.
Trulia: 42% Cheaper To Buy a Home in Cape Coral/Ft Myers Than To Rent
Trulia's Winter 2014 Rent vs. Buy Report indicates that it is 38% cheaper to buy a home in the U.S than it is to rent a comparable home. Cape Coral/Ft Myers is even more favorable, at a 42% advantage of buying versus renting. Tom: As home prices and interest rates rise it will eventually become less expensive to rent than to buy. In the meantime homeowners get to enjoy the double benefit of lower monthly housing outlay and a healthy yearly appreciation on their homes.
Cape Coral Ranked in 10 Best Cities To Start A Business
The Business Insider named Cape Coral as one of the top 10 cities to start a new business. City officials state that 138 new businesses are opening up every month this year in the Cape. The new business boom is a sure sign that the foreclosure crisis is over. Sue: Two of these new businesses are restaurants that we love. Slate's and Blaze Bistro are two new restaurants that we have visited with friends and can highly recommend. Another of our long-time favorites is Brew Babies. Great meals and wonderful service every time.
Home Prices Projected to Reach Peak in 5 Years
The Conference Board and Nielsen is projecting that the median price of single-family homes will approach the peak prices reached before the housing market tanked in 2006. The projection is that this will occur in approximately five years. The top 5 markets are projected to have gains of 32%, with Tampa and Jacksonville the #1 and #2 larger cities for projected appreciation. Tom: I'm predicting Cape Coral/Ft Myers will have at least a 50% increase in property values in 5 years, with 70% - 80% appreciation not out of reach.
Client Question of the Month
Client: We have our home up north under contract. Can we submit an offer on a home in your area contingent on our home selling?.
Tom: This is a question we are often asked, as many of our northern clients are selling their homes and moving to Florida. The "home sale contingency" is much more common up north than it is in Southwest Florida. The market down here is so strong that sellers are extremely reluctant to take their home off the market, especially in high season, on the basis of an out of state home selling weeks or months into the future.
There are a few things that can help us convince a seller (except foreclosures) to accept a contingent offer. First, your home should be past inspection stage. Secondly, it is extremely important that your current home has had an appraisal done if being purchased via loan (unnecessary if a cash purchase). When these two hurdles are overcome there is more assurance that your home will close. Additionally, the deposit on your home is now non-refundable, enabling you to submit a non-refundable deposit, which provides the seller more confidence that a sale will consummate.
* 2014 Could Be Strongest Housing Year Since Pre-Great Recession
* 4 Million more Homeowners Above Water in 2013
* 37.5 Million Americans To Move This Year....Only About 37 Million Want to Move to Florida :)
* Rising Prices - Double Edged Sword
* 70% of Boomers Expect Next Home to be Their Last
Wishing all of you a Happy Easter spent with special friends and family
Topics: Local Home Prices Highest in 6 years- Gulf Access homes up 24%- Bad Weather Hinders Construction in the North
Topics: 4th of Year RE Recovery - No Housing Bubble! - Cape Celebrate's Comeback
Topics: Lot Prices Increasing - 2014 Projectons - Construction Labor Shortage
Topics: FL Unemployment Down Again- 25% Raise in Home Prices- Cape Coral 5th Best Mid-size City
Topics: Flood Insurance Info - Out of Area Realtor Help - New Home Construction
Topics: Cape Median Home Prices Drop Below $200,000 - Seller/Buyer Season Preperation Reminders - Misconception of Hurricanes in SW Florida