January 2014 Real Estate Newsletter
2013 was the third straight upswing year for our local realty market. Our clients know that SW Florida leads the nation in the cycle (in either direction) by about two years. We hope last year was a good one for you personally and financially, and that 2014 will bestow the same good fortune. Below is a re-cap of last year and our predictions for this year.
2013 Cape Coral/Ft Myers Re-Cap
Appreciation/Prices: Home price increases moderated slightly from 31% in 2011, and 24% in 2012, to a more reasonable level of 19 % in 2013. As I've mentioned often, I was concerned that the high level of appreciation from 2011 and 2012 would lead to a bubble similar to the one we encountered in 2005 - 2006, so I'm relieved to see the pace slow down a bit. Every month in 2013 saw year-to-year home price increases, making it 36 straight months of price increases since the market bottom.
* Home inventory: Between 3 and 7 months of inventory during this past year (mostly near 4 to 5 months), a very well balanced inventory level
* New construction: Significant increase in new homes built in 2013, mostly on gulf access lots, but still substantially below levels required to meet demand.
* Condos: Finally starting to improve in both sales and prices. Until recently I was not an advocate of condo purchases. My position has now changed for numerous reasons. Home prices have risen to a level that once again make condominiums an affordable housing alternative, with enhanced appreciation potential
* 2013 Lot Sales/Prices:
Lot Sales in 2012 = 318 Average Lot Price in 2012 = $14,637
Lot Sales in 2013 = 359 Average Lot Price in 2013 = $19,615 *
GULF ACCESS LOTS
Lot Sales in 2012 = 429 Average Lot Price in 2012 = $92,976
Lot Sales in 2013 = 426 Average Lot Price in 2013 = $126,642 *
* Freshwater lot prices increased by 35% --- **Gulf-Access lot prices increased by 36% in 2013
Tom's 2014 Projections
Prices: Homes and Condominiums: 12 - 15%. Land Prices 15 - 18%. I expect to see a higher number of luxury homes (over $1 Million) sold in 2014, with some $2 Million and $3 Million homes exchanging hands.
Tom: Bear in mind that my predictions for price increases the past few years have been on the low side. I will be quite happy to be wrong again on the conservative side.
Inventory: Average inventory expected to be 4 to 7 months, depending on time of year. 5 1/2 months is a neutral market, representing neither a strong buyer's market nor a strong seller's market.
New Construction: Will continue to improve. Last year new homes were mostly built on gulf-access lots. This year will see increased construction on off-water and freshwater lots as well.
Interest Rates: Are expected to rise from last years historic lows. All indications are that interest rates for 2014 will be in the 4.5% - 5.5% range. I believe easing of loan qualification requirements by the lending industry will offset the rise in interest rates, and will not slow down the market momentum.
Unemployment: On this one I'm going to go out on a ledge and predict that Florida's unemployment rate will fall below 5.5%, and Lee County will see unemployment rates below 5% sometime in 2014.
Florida to become 3rd most Populated State: Florida will pass New York this year to become the 3rd most populous state. Ok, you got me ...this prediction is by the U.S. Census Bureau. Gee, I can't understand why people would possibly choose Florida over New York since New York has a such a an extremely high sales tax and state income tax rate (Florida has no state income tax), combined with the weather, crime and congestion difference between the two states. To be honest, we have yet to hear any Floridians say "I can't wait until I can retire to New York". . . or any other northern state.
2013 Top Producing RE/MAX Agent
Our clients propelled me to the top producing agent in 2013 at RE/MAX, the top producing real estate company for several years in the area, with over 110 agents. Thank you clients, and thank you Sue, who is much more deserving of the award and recognition than I am.
Kim Arasimowicz Officially Joins Our Real Estate Team
After productively working together for several months, we are proud to welcome our friend and associate, Kim Arasimowicz, as an official member of our real estate team/family. Kim will henceforth be involved in most of our transactions and company decisions.
Kim will reply to a Client Question of The Month, especially as it relates to new construction, one of Kim's specialties from previously owning a construction company. Kim's email address is Kim@movingswfl.com, and cell # is 239 214-1039. The addition of such a talented Realtor to our team will enable us to provide an even higher level of service to our valued clients.
Client Question of The Month
Client: "You have often mentioned the increase in newly constructed homes in the Cape. Do you feel we are near the saturation point, and what would be a healthy or normal amount of monthly new homes?"
Tom: For the past few years new homes have been going up at the rate of 40 to 50 per month, mostly on gulf access lots. During the construction peak (March 2005) 858 new homes were built. Many of those were spec homes, and that figure is much too high to accommodate a normal influx of new residents to the city. My hope is that we will reach 100 new homes per month in Cape Coral this year, and I feel 150 to 250 new homes per month in the Cape is a healthy, sustainable number of new homes.
Second Client Question of The Month
Client: " We recently came to Cape Coral to purchase a home and found that prices are considerably higher than a year ago, and there is less selection. We are considering buying a nice lot on a upcoming visit and building a home in the next year or so. Does this make sense, and can you help us with the lot purchase and selection of a builder?
Kim: We certainly can help in both situations, and more of our clients are choosing to go this route for the same reasons you mention. Selecting a nice lot is the first step, and as you see from Tom's stats above, waterfront lots are increasing in price at a much faster rate than homes. Once we know your desired location and price range we have a great software program that will help select the best lots/values that are available on the market.
Depending on your price range, we have a select list of reputable builders that offer the best "bang for the buck", and that our clients have had excellent experiences with. We are able to help with various aspects of the amenities selection process, and can work with the builder to serve as a second set of eyes if you are not in town while the home is being constructed. We are often able to have a few "upgrades" added in for our clients at no extra cost.
Lack of Qualified Labor for Cape Coral Construction Jobs
The number of new homes under construction in the city is great news, but there aren't enough skilled workers for all those jobs. A lot of our construction labor force left the area during the recession, and haven't come back yet. 2013 saw the highest spike of new construction in six years.
There is a House Bill under consideration to educate a new workforce in the construction trade and bring back workmen, who will be needed over the coming years as new homes continue to be in high demand.
Tom: When more workmen return to the area it will help keep new construction costs from rising too quickly. The extra work is also an added benefit for the economy, as each new home provides the equivalent of three years work for one person, and $90,000 in tax and economic benefits to the area.