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December 2013 Real Estate Newsletter
Cape Home Prices Rise 25% over Last November
In November home prices in Cape Coral rose by 25% over November of last year, and 58% in two years. This increase is especially impressive since there were less home sales than last November, and our inventory has risen to seven months (see chart below). Home inventory hit the low point of only 12 weeks around mid-year. The reason for the contradiction in price vs. inventory is because more upper-end homes are selling than a year ago, and less lower-end foreclosures/short sales are being purchased by investors.
Season Has Arrived in SW Florida
October is the official start of our "season" in SW Florida, but many people are confused or misinformed about which are our busiest months of the year here for tourists and real estate sales. We will clarify and answer a client question of the month, a question that gets asked of us quite often
Client Question of the Month
Client: You often refer to "season" and "high season" in SW Florida. Could you elaborate?
Tom: Snowbirds begin arriving in October as the weather cools up north, and each month shows a gradual increase in visitors. "High Season" starts in January and continues through our peak month of April. Surprising to many clients , April is the busiest month of the year in SW Florida. May and June of this year were still very active months for visitors and real estate sales. Below are the number of Lee County visitors each month for the nine busiest months of the year (in the thousands). These figures are from a few years ago, but are representative of year to year:
OCT 75 JAN 198 *APRIL 319
NOV 107 FEB 266 MAY 159
DEC 138 MARCH 297 JUNE 132
Notice that May's 159,000 visitor count was busier than October, November and December, and not too far behind January's visitor total.
Question of the Month
Client: Why is there an increase in foreclosures in SW Florida, even though prices are skyrocketing?
Tom: Precisely because prices are rising so sharply is why the banks are releasing more foreclosure inventory. It's not because more people are falling behind with late payments, or that more homeowners are now underwater. To the contrary, very few homeowners are still underwater with the escalation of prices in Florida over the past three years. Banks perhaps didn't exhibit savvy business practices when they granted low-doc, high Loan-to-Value loans several years ago, but they are showing smarter business sense by waiting for prices to increase to release more foreclosures.
In my opinion, the increase in inventory is a very positive thing for our local real estate market. Increased inventory will prevent the 30-40 % yearly price hikes that we saw just before the inevitable real estate bubble that accompanies unrealistic appreciation rates.
Cape Coral Ranked 5th Best Mid Size City to Live In
An extensive study conducted by Movoto, a real estate Blog site, ranked Cape Coral as the 5th Best Mid Size U.S. city to live in. The study took into account the following factors:
* Number of Homes for sale per capita
* Cost of Living Index
* Unemployment Rate
* Median Household Income
* Crime Rate
* School Quality Rating
Tom: This is a very prestigious honor bestowed on our "Little Slice of Paradise". If weather and access to water activities had been factored into the equation, I think we would have been ranked #1.
Our Million Dollar Listing Sold Quickly
The $1.1 million dollar listing we had on the Spreader Canal sold to a cash buyer in only 73 days, one of the fastest closings in years for a Cape home priced in the seven figures. This was in great part to our clients accepting our pre-listing TLC suggestions of approximately $27,000. These improvements enabled us to sell the home for about $100,000 more than if the improvements had not been done, and of course the home would likely have sat on the market for a much longer time.
The owners trusted our judgment and utilized our workmen for the repairs/upgrades. This trust rewarded our clients with almost $4 for every dollar they spent on TLC improvements - a very nice return on investment. This sale was one of only two homes to sell for over $1 million in Cape Coral in November. The other home took 505 days to sell (vs. 73 days for our listing) and sold for $14 per square foot less than our home.
We are in the process or preparing several nice gulf-access homes to go on the market in January/February. If any of you need our help to get your home "show ready" please contact us soon. Our workmen are extremely busy this year and we see no let up in sight.
The above sale, combined with a few more gulf-access sales this month, enabled us to be the Top Producer of the Month at RE/MAX for the third time this year. You also helped us nab two second place spots during the year, and another Top Producer for our associate Kim Arasimowicz. We can never say thank you enough.
Tom's Fun Facts of the Month
Fla. Unemployment Down Again: Florida's unemployment rate for October was 6.5%, down from 6.7% in Sept., from 8.4% in Oct 21012. Florida's unemployment rate has been lower than national average (7% in U.S. in Nov, 7.3% for Oct) for eight straight months. We do not get state unemployment figures until later in the month. I predict Florida's unemployment rate will continue to be lower than the U.S. average for all of next year, will drop below 6%, and will be at least 1% lower than the U.S. average sometime in 2014.
Short Sale Tax Savings Expires Dec 31: At the end of this year a short sale will be accompanied by a tax bite. The difference between the loan amount and sale price will once again be taxed as ordinary income. This tax exemption was scheduled to expire at the end of 2012, but was extended one year, and is unlikely to be extended again. The PMI (private mortgage insurance) tax break will also likely expire at year's end.
Hurricane Season Ends: Despite early forecasts of busier than normal hurricane activity this year, this season fortunately ended with a whimper (again). Hurricane season ends November 30th, and this season delivered only two hurricanes, the fewest since 1982. Neither hurricane came anywhere near the U.S.
Negative Equity Plunges Nearly 30%: Underwater homes now stand at 21%, down from 31.4% at the peak. 4.9 million homeowners have risen from negative equity since the underwater peak in 2011. Because our market hit bottom much earlier than the rest of the U.S., and prices have risen so much in the last three years, I believe even less than 21% of homeowners in SW Florida are underwater. The number is shrinking each month as prices continue to increase here.
Homes Selling Much Faster Than Last Year: Nationwide, homes listed for sale on Zillow sold in 86 days, down 30 days from 116 days a year ago. U.S. inventory is down 7% from a year ago, and sales prices are up 15.3% over last year, according to Redfin.
$5.5 Million Home Sold in Lee County: A 14,000 square foot mansion on the Caloosahatchee River in South Ft Myers sold for $5.5 million, the highest priced sale in the area in 10 years. The all-time record for a house sold in Ft Myers is $8 Million in 2003, on the river in the ritzy Gulf Harbour development.
Late Payment Rate on Mortgages down in 3Q - Lowest Rate in 5 Years: Fewer U.S. homeowners are falling behind on their mortgages, aided by rising home values, low interest rates and stable job gains. Trans Union reports the percentage of mortgage holders at least two months behind fell in the 3rd quarter to 4.09%, down from 5.33% a year earlier. The peak foreclosure rate was nearly 7% in the 4th quarter of 2009.
Historic Interest Rates: According to Standard & Poors, the 30-year mortgage averaged 6.1% between 2002 and 2007. Over the longer term (the last 40 years), the historic average has been 8.6%. In comparison, mortgage rates have been in the 3.5 % to 4.5% range in 2013. Today's rates are very attractive when compared to historic rates. Early in my real estate career interest rates were 18.5% - YIKES. That high interest rate necessitated high creativity in order to sell homes.
Forecast: Higher Prices to Drive Housing??
Jumbo Loans Cheaper Than Other Mortgages
U.S. Homes Sell 30 Days Faster Year-to-Year
I Bought a House - What Can I Deduct on my Taxes?
More Banks Offer 5% Down Payment Loans
Home Builders Target Higher-End
We'd like to take this opportunity to say thank you for a great year, to
wish you every happiness this Christmas season, and peace and joy
throughout the coming year.
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
Topics: Cape Coral's Housing Recovery 2nd Strongest in U.S. - Will Current Appreciation Continue? - When will we see the Next Real Estate Peak?
Topics: Cape Coral/Ft Myers 3rd Fastest Rising Market in the U.S. - $5.3 Million Dollar Home Sells in Cape Harbour - Cape Median Home Prices Break $251,000 Mark
Topics: Summer Weather Heats Up - Real Estate Sales Remain Hot-Number of distressed sales has been greatly reduced - Only 11 Weeks of Inventory left l