Last month marked the 37th straight month since we officially hit the bottom of the real estate market in Lee County (see chart below). Median home prices in January was $204,000 versus $183,000 in January 2013. 2011 saw Cape home prices rise 31%, followed by a 24% increase in 2012, with 2013 home prices increasing by 19%.
A few new out-of-state clients (who had not yet been reading our monthly Newsletters) recently made comments to the effect that it appears we have started to turn the corner here.
My thoughts were: These buyers are either referring to their own local market, or are unfamiliar with real estate activity in SW Florida. Secondly, 37 straight months of same month, year-to-year price increases, and approximately 85% in total appreciation is far better than "turning the corner" in a real estate cycle. It's a clear indication that the local real estate recovery is strongly under way, and there will be no slowing it down until we reach the next peak. Below is an article which discusses the national recovery, and an estimation as to when the U.S. will reach the next real estate peak.
- Though home prices hare projected to grow nationallly at a 3 to 5% appreciation rate, economists at Clear Capital shay there should be no worries about a housing bubble brewing any time soon.In fact, according to Clear Capital's Home Data Index, if home appreciation continues at its current pace, prices may not return to peak levels until 2021 - seven years from now.
The National Association of Realtors reported that home prices rose 11.% in 2013 compared to 2012. That marked the strongest gain since 2005, when median prices for existing homes rose 12.4% However, Clear Capital economists predict that national home prices will now fall into line with inflation and follow more traditional rates of growth.
When adjusted for inflation, 46 out of 50 metro markets have home price levels are at pre-2003 levels. Twenty-five of 50 markets are reporting prices below 2000 levels
Tom: A few points about this report:
1. Although much can change in the future, it's good to have an idea of when the next peak may arrive
2. Due to numerous seasonal/part-time owners, and foreign visitors/buyers, our market fluctuates much more than the national average. In January I predicted that homes in our area will appreciate by 10 - 12% in 2014, but as has been the case for the previous three years, I fully expect my projection to be low.
3. Our local realty market precedes the U.S. peaks and valleys by 18 - 24 months. Based on Clear Capital's report, we should be looking a little sooner (2019 - 2020) for our next peak. You can be certain I'll be watching the market closely to ascertain when it appears we are approaching the next peak. We are nowhere close to the next peak right now.
From building changes to name changes to adapting to the ups and downs in the Southwest Florida economy, the Cape Coral Chamber of Commerce has endured since it opened for business near the corner of Del Prado Blvd and Cape Coral Parkway in 1989. The Chamber runs numerous city events each year, such as Celebrate Cape Coral, Holiday Festival of Lights, Red, White & Boom (4th of July Celebration) and two farmers markets,
Mike Quaintance has been president of the Chamber since 1997, and is happy to report that the Chamber is making a nice comeback since the local economy was brought down by the real estate collapse beginning in 2006. Quaintance said the high point for membership came in 2006 when there were 1,078 members. Two years ago that number was 586, and is currently up to 710 members and growing by about 100 members a year. The goal is get membership back over 1000 in the next three to four years.
U.S. Home Foreclosures Drop 26% in 2013: And down 53% from the peak of foreclosure filings in 2010. 1.4 million foreclosures is the lowest number since 2007. Florida is still ranked #1 for foreclosure inventory, with 25% of the national total. Tom: because Florida is a state with one of the longest legal foreclosure process is in great part why banks still have so many foreclosure properties on the books.
Lee County Foreclosures Fall to 2006 Levels: According to Southwest Florida Real Estate Investment Association the number of foreclosures filed in January in Lee County fell to 216, the lowest it's been since September 2006. That was followed by a period in which foreclosures quickly spiked up to more than a thousand a month before slowly drifting back down to the current level. In January 2013 there were 530 foreclosures. In January 2010 there were 1,973 foreclosures
Cold Weather Increases Florida Real Estate Activity: With every 10 degree drop below 41 degrees Fahrenheit, web home searches in metros with warmer climates rose 4.4%, and warm vacation spots surged 5.5%, with the biggest increases in home-search traffic along Florida's coast, according to Realtor.com
Tom: As the winter weather up north has been unusually brutal we are hearing from many clients who were originally 1 to 4 years away from buying a primary or secondary home here. Many are crying "No Mas", and scurrying to make plans to come here to buy sooner rather than later. Besides the cold weather, many buyers want to take advantage of today's home prices and property tax base, before they rise much more...which they undoubtedly will over the next five years.
Larger Homes Make a Comeback: After years of homeowners opting for smaller/simpler homes, the National Association of Home Builders announced that larger, more luxurious homes are staging big comeback. Tom: we are seeing that same trend locally. 2,000 sq ft of living space seems to be the new minimum for new homes, with 3 car garages and 3 baths also pretty much standard.
Flood Insurance Increases Likely Delayed: · Senate passes Flood Insurance Bill which calls for a 4 year timeout on rate increases. Unfortunately the Bill does not delay rates for non-homeowner
occupied properties (investment or second home)
FEMA has announced that it would not start raising rates until 2015 for "grandfathered properties". The Bill is headed to the House of Representatives, where it is 80 votes shy of a House majority vote.
U.S. Home Prices Rise by Most in 8 Years: S&P/Case-Shiller Index of property prices climbed 13.7% in late 2013 from the previous year. This is the highest year-to-year increase since February 2006
Student Loan Debt Slowing Housing Recovery: Student debt is the main culprit today hampering the housing recovery according to the Consumer Financial Protection Bureau. Three-fourths of the fall in new household formation can be directly correlated to student housing
U.S. Construction Rose 27.3% in 2013: Two-thirds of the residential construction market comes from single-family homes. Tom: Local new-home construction continues to improve, but still has a wide berth of growth before reaching normal levels. As mentioned in recent updates, one reason local construction has not taken off even more is due to a shortage of labor here.
The first month Kim Arasimowicz aligned herself with us was very productive thanks to our clients, and Sue of course. As other teams at RE/MAX have several agents on their team, it is not easy for just two licensed agents to be Top Producing Team, but hard work and excellent teamwork paid dividends. Thank you clients
Client: "We visited the area three years ago when your market was depressed, and it was not uncommon to offer 10 - 15% below asking price. Is that still the case if we want to buy a home now?"
Tom: I sure wish you had bought a home three years ago, as you would have saved about 85% over today's prices, but today's prices are still very far below what you will pay in the coming years. As a point of reference concerning your question: January's home list/sale price was 95.2%, meaning an average reduction of only 4.8 % off the asking price. It's safe to say it's not a buyer's market anymore
Naturally the homes that are overpriced will have a wider margin, and the homes that are very well priced will have a lower difference of list/sale price. In about 10% of home sales the listing price is below market value, and those homes will receive multiple offers and sell at asking price or above. The way things are shaping up, this could be our strongest real estate season in many years.
Client: “We have been looking for an agent to represent us in your area for some time now. We notice that you specialize in waterfront homes, and have outstanding testimonials on your web site and Angie's List . What qualifies you as waterfront experts, and why is it important to have a Realtor who is a waterfront specialist?”
Kim: When a market has risen as much as our market has for the past 3 years, the number of newly licensed agents also increases significantly. Few agents have nearly our level of experience and knowledge of waterfront real estate in this unique city, with over 400 miles of canals.
In order to be considered a waterfront expert an agent requires extensive experience selling upper-end homes, and also must be well-informed regarding the waterways, bridge heights, locks, boat lifts, sea walls, rear exposure, canal size, permitting, and much more. Not only are we residents of Cape Coral, but we specialize in selling waterfront/gulf access homes in the city.
Florida Realtors Releases 2013 Buyer/Seller Profile...Interesting
U.S. Home Builders Raise Prices
Florida Realtors Economist Expects 10 -12% Sales Hike in 2014