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April 2015 Newsletter

SWFL MARKET UPDATES

Northern Winter Puts Further Strain on SWFL Seasonal Home Rentals
 

Over the past few months we have heard from many clients who are "crying uncle" over the miserable winter up north, and want to come down to SW Florida to purchase a home. Unfortunately, many clients have either not read our reports, or didn't believe that seasonal rentals are in such short supply. Months ago I wrote that seasonal rental homes for 2015 were fully booked, and that the nicer rental homes were mostly booked for season of 2016. I'm now issuing fair warning again: Book your 2016 seasonal rental yesterday, and consider booking your 2017 soon. Otherwise, you will not be able to find a nice rental home (or even motel/hotel rooms), or you'll pay a high price for inferior accommodations. 

This tight rental situation speaks loudly about our current and future real estate market. When the next client asks me "how is the rental market in SW Florida?" I will take a deep sigh and forward this report. Sue: See our blog this month about snowstorms preventing Northeast sellers from even getting their homes prepared for Spring selling season. This will push SWFL's "peak seasonal selling season" into May or June.
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Monthly Payments on a $500,000 SWFL Home Today...and in One Year
 
The illustration below shows the monthly loan, property tax, and insurance payments of a $500,000 home today, versus the same home a year from now with the following assumptions:
 
* 10% Appreciation in a year
 
* Interest rates increasing from 3.75% currently to 4.75% in a year (most economists are predicting at least a 1% increase in a year)
 
* 20% down payment and a 30 year loan
 
* $6,000 Current Yearly Property Taxes  +10% in a year
 
* $4,000 Current Yearly home/flood insurance  +10% in a year
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Current Cost for $500,000 Home                    Same Home at $550,000 in a Year
 
Mortgage Pymt:  $400 K loan -    $1,852                $440 K loan    -  $2,295
Property Taxes:                             $500                                            $550
Insurance:                                      $333                                            $366
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TOTAL MONTHLY PAYMENT        $2,685               $3,211  + $526 (+19%)
 
Bottom Line: A $500 K SWFL home today will cost $526 (+19%) more in monthly payments in a year if home prices increase by 10% and interest rates rise by 1% (both reasonable assumptions). In addition, it will require an additional $10,000 cash down payment for the higher priced home in a year.
 
Note: A $440,000 loan in a year (with 1% higher interest) versus a $400,000 loan today would add $121,278 in additional interest over the life of a 30 year loan.   If you want to compute the total monthly payment difference on a more or less expensive home, you could use the same 19% approximate difference. Not an insignificant sum!!
 
As we tell clients, "we will be here whenever you need us, and we make a higher commission the longer a buyer waits". But our clients know that Sue and I would gladly forego a little extra commission in order for our clients to save tens of thousands of dollars on their home and subsequent monthly payments.
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 Million Dollar Homes Selling Again in SW Florida
 
Unlike the "bust" years in SWFL, million dollar homes are selling well again. Last year there were 20 homes Cape Coral that sold for over $1 million. In the first two months of this year seven homes over the $1M mark were sold or are under contract, including one home listed at $4.5 million.
 
2014 & 2015 Million Dollar Homes: Sales & Pendings
 
                           NAPLES                  LEE COUNTY                    CAPE CORAL
2014 Sales            1,039                         369                                     20                
 
High                     $17,650,000               $8,480,000 (Captiva)         $2,020,000      
 
Average                $2,303,000                $1,686,800                         $1,417,000
 
2015                      432                             169                                      7
(Sales/Pendings)
 
With only two months gone by, all areas of SWFL are on track to exceed 2014's number of Million dollar plus home sales. And 2014 had more luxury-end home sales in SWFL than in any of the previous several years.
 

Please click here to view “Cape Mansion Sold at Auction” (Very Interesting Article)   
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Easy U.S. Visa Rules Attract more Chinese Buyers
 

In November, China and the U.S. signed an agreement to eliminate the hassle of yearly renewals of tourist and business visas. Citizens of both countries will now be able to obtain 10-year visas. 25% of Asians stated that the visa extension would directly affect their decision to purchase real estate in the U.S.

The Chinese will affirm their position as the top spender on U.S. homes, according the National Association of Realtors. Spending among Chinese house-hunters nearly doubled from $12.8 billion to $22 billion from 2013 to 2014, as Chinese investors represented nearly a fourth of total dollar volume spent by foreign buyers. Tom: In my opinion this is going to be a monumental long-term economic and real estate boost to the entire country. Chinese buyers have BIG BUCKS to spend, and I envision many of them purchasing vacation homes and businesses in SW Florida.
                                  
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Facts And Stats
 
Lee County Building Permits on the Rise: In 2014 Lee County building permits were up to 933. This is in stark contrast to the bottom of the market (2011) when only 373 permits were issued, and equally striking to the 9,000 permits a year during the peak years. 4,000 - 4,500 yearly permits is a stable/healthy figure, so there is much room for new construction to keep growing.
 
800 People a Day Move to Florida: Sue: with the brutal winter up north it is surprising that 8,000 people a day aren't moving to the Sunshine State
 
All-Cash Buyers in Cape Coral/Ft Myers Rise to 53.9%. However, Miami took over the #1 all-cash buyer position from the Cape last month at 58.1%.
 
8,000 Baby Boomers Retiring a Day: Many retiring Baby Boomers will be relocating to, or buying a seasonal home in SW Florida. 84% of retirees own a home, and 72% of retired homeowners are mortgage free.
 
Homeowner Tax Breaks Seem Safe for Now: Mortgage interest and property taxes, two major homeowner income tax advantages, appear to be off lawmaker's radar for now. There had been discussions about eliminating or reducing these two major income tax breaks, but lawmakers don't appear to have the appetite to remove or reduce either popular tax break. Tom: if these tax advantages were eliminated it would put a major damper on our economic and real estate recovery.
 
New U.S. Homes Getting Smaller: The U.S. Commerce Department reports that the median size of newly built U.S. homes today (2,385 sq ft) is 106 square feet smaller than the record high of 2,491 sq ft in Sept 2013.
 

lock in.jpgLow Interest Rates Locking Some Owners Into Their Current Homes: The historically low interest rates that were available over the past few years is making the decision very difficult for those homeowners to move to a larger or nicer home. This condition is known as "mortgage lock-in". The last mortgage lock-in period was from the mid 1970's to early 1980's. Some owners are able to convert their low interest, existing home into a rental investment home.

February 2015
2015 SW Florida Market Porjections - National Online Search Sites Not Accurate - SW Florida Ranks High In Safest FLA Cities

 December 2014
 Book Your Waterfront Vacation Home For 2016 - Allegiant Air Expanding Routes - Upcoming Developments
 

 November 2014
Cape Coral #1 in U.S. for All-Cash Home Sales - SWFL has Record Year for Visitors - Allegiant Air Expands Routes to Punta Gorda

October 2014
"Luxury Waterfront Team" expands to Bonita, Naples, Sanibel, Pine Island - Cape's assessed values up by 8.63% - Seasonal rentals in short supply

September 2014
25% of international buyers choose FL - First time buyers stuck as entry-level homes dry up - Farmers Almanac predicts cold winter

August 2014
Naples, Cape Coral rank in the top 10 in Forbes report - Home inventory still low in summer - New home permits highest level in over 7 years

July 2014
Home inventory low, demand high - Lee Memorial Health System Top 1% in nation - Owning a seasonal rental can be profitable

June 2014
Home Inventory Under 4 Months - Majority Say Housing Crisis Is Over - Cape Coral Ranked #8 As Best City to Retire

MAY 2014
Topics: Longer Than Avg. Real Estate Season - Real Estate Preferred To Stocks - Cape Coral 2nd Best Mid Size City

April 2014     
Topics:
 Low New Construction Inventory – Cape Coral, One Of The Fastest Growing Cities – Property Values Continue To Rise

March 2014
Topics: Local Home Prices Highest in 6 years - Gulf Access home prices up 24% - Bad Weather Hinders Construction in the North

February 2014
Topics: 4th Year of Real Estate Recovery – No Housing Bubble! – Cape Celebrates Comeback

OUR SINGLE MOST IMPORTANT REPORT OF THE YEAR:
Timing The SWFL Real Estate Market - 2015

 

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Tom & Sue Demogenes

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