TOM & SUE DEMOGENES...
"YOUR INFORMED REAL ESTATE COUPLE"
June 2013 Real Estate Newsletter
Cape Coral/Fort Myers Home Inventory Under 3 Month Supply
Homes available for sale in Cape Coral/Fort Myers have dropped to a surprisingly low level. As most of our clients know: 5 1/2 months of inventory is a neutral market, and over 6 1/2 months of inventory is a "buyer's market". Below 4 1/2 months of available homes is a "sellers market".
In May there were 454 single family Cape Coral home sales. There are currently 1128 homes available for sale. That equates to under 11 weeks of inventory. Our prediction a few months ago that the end of Snowbird season (April 30th) would not be the end of buying season has come true in spades. May was a boom month for sales, with not much letup in sight for June.
Eleven weeks of inventory is not only a very strong seller's market, but we again run the risk of bidding wars and high yearly price increases (sometimes monthly) such as we experienced in 2004 - 2006. There are parts of the country where available homes for sale are already down to two month levels, and the average home in those areas is selling for 3 to 5 % over asking price. We hope this doesn't happen here, but it sure looks like it's headed down that road.
Here are a few reasons why we may not drop to such low inventory levels (but I can't state for certain that we won't) :
* Interest Rates: Interest rates are creeping up and may continue to do so for the foreseeable future. As each 1/4 of a point is added to home mortgages, tens of thousands of potential borrowers are no longer able to buy homes.
* Mortgage Restrictions: After the real estate meltdown, the loan industry significantly tightened their loan requirements. No longer are buyers able to secure no money down, no income verification loans. This helps moderate the buying craziness that we witnessed in 2004 - 2006.
* Appraisals: Prices here are rising so fast that appraisers are not able to keep up to market prices. This has caused 20 - 25 % of appraisals to come in below contract prices (and true market prices). This has a direct effect on moderating home prices, as often the seller has to reduce the price to accommodate the low appraisal.
* Shadow Inventory: Yes, we've been hearing for years about the "shadow inventory" held back by banks, yet we feel it's been more of "banks who cry wolf" Don't count too much on shadow inventory flooding the market and keeping home prices at bay. Banks have figured out how fast real estate prices are rising, thus they are slowly releasing their foreclosure inventory to minimize their losses.
* Assessed Property Values: Assessed valuation on real estate is 12 to 18 months behind the market. This is the first year in a while that Lee County property owners will see an increase in their property tax bills (even though we hit bottom in Aug, 2010, and prices have risen over 50% in value since then). Beginning next year, and for many years thereafter, the assessed valuation is going to start catching up to market values. Much higher property taxes will eventually slow down home sales. Note: Florida's Save Our Homes law and Proposition 1 will not affect people how are Homesteaded very adversely. (See Florida property taxes on our web site)
Lot Loans Available Again - After Long Absence
A few local lenders have come out with what we feel will be the first of many lot loan programs to become available. After the real estate crash there were virtually no lenders willing to give loans on lots, not even with 50% down. The local lenders are requiring 25 - 35% down payment with approved credit score, amortized over 15 years. Call us if you need more information.
Here's what lot loan availability means for local real estate:
1. The banks are now confident that land prices are past the bottom, are steadily increasing, and will continue to rise in value. Heck, all of our clients who read our Newsletters could have told the banks that info a year and a half ago .
2. Builders, investors and buyers wanting to build a new home will be able to buy the lot(s) of their choosing without having to dish out cash for the entire land purchase. This means a lot more construction and jobs for our area.
3. You can probably figure out this next part - new construction and the price of land will increase even faster than it has been. As more lenders begin offering land loans, banks will lower rates and down payments to be competitive, which will lead to more land purchases, which will lead to higher land and home prices.
Tom: Land started being a good investment around the beginning of 2012. Land loans by the banks are going to make land an even better investment for the next few years due to leverage combined with the fact that more lots will be sold, and more homes will be built on those lots.
Client Question of the Month
Client: We are considering buying a waterfront home for when we retire. We have read that you suggest seasonal rentals to help with carrying costs in the interim. Is the SW Florida seasonal rental market strong?
Tom: Extraordinarily strong!! We do not directly handle rentals, but have a few great seasonal property management companies that we are associated with. The managers tell us that they didn't have nearly enough rental inventory for season of 2013. Our clients who own gulf-access homes had their homes rented for the entire season, and several weeks are booked for off-season.
We are told that most of the good seasonal rental homes for the start of season are booked by Aug/Sept of the previous year. With the economy improving, more Baby Boomers retiring, and many northerners coming to Florida to live, we don't see any logical reason that the rental market will not stay strong for years to come
Fun Facts For June
* New Baby Boomers are retiring by 8,000 a day, and we know where many of them want to live
* Median home/condo sales price in Naples has reached $635,000 (April), up 22% from April of 2012. As Naples inventory is low, we can expect to see $750,000 soon.
* Over 70% of U.S. housing markets are now improving, more than 3 times the number of a year ago. This stat is based on employment growth, home appreciation and single family housing permits
* U.S. home prices rose 10.9% year over year, the highest percentage since 2006
* Cape home prices were over $200,000 for May, with each month of 2013 exceeding the $200 K mark. As predicted in December 2012, when median prices were $188,678, we will likely never see prices below $200,000 again. Our December prediction of $225 K median home prices for 2013 is in sight.
* 90% of today's renters plan to purchase a home, but are concerned about strict lending requirements
* U.S Regains Some Wealth from Recession: The average American household has recovered 63% of the wealth it lost during the recession. Two-thirds of the rebound in wealth has come from the surging stock market, with increased real estate values attributing for most of the balance. The average household net worth in the U.S. was $539,500 as of the end of 2012.
Lee County: 1st Increase in Taxable Values in 6 Years
For the first time since 2007, Lee County's appraised real estate valuation will have an increase of 1.99%. Cape Coral will once again lead the way with a 5.67 % bump. Lehigh Acres is at 5.66%. Ft Myers will see a 2.57% property tax increase for 2013.
In 2012, Cape Coral also had the highest valuation increase in Lee County, at 3.82%. This contrasts to value decreases of 14.17% in 2010 and a whopping 32.78% in 2009
For those Homesteaded in Florida, they will only see a tax increase of 1.7%, which is the consumer price index increase, and the maximum allowed per state law.
Tom: because assessments in the state are 12 - 18 months behind market values, the county will start seeing sizable revenue gains for many years to come. The county has been dipping into reserves and cutting back services, due to several years of declining property values and subsequent lower tax revenues.
Anyone considering purchasing in Florida in the next year would be well advised to purchase during fiscal year 2013, as January 1st will be under next years Assessed Valuation, which will be significantly higher than this year's modest increase. Read about Florida's property tax rules on our web site.
Welcome To Our New Associate- Kim Arasimowicz
We are proud to announce that Kim Arasimowicz is joining our expanding real estate business. Kim, an accomplished realtor in her own right, will be assisting our clients in her area of specialization ~ luxury off-water homes, condos and new construction. Kim previously co-owned a local construction company.
Kim's assistance will enable Sue and me to more fully concentrate on our area of expertise ~ waterfront properties. For some time we have needed someone of Kim's caliber to work with us, but we weren't going to settle for an average real estate agent. Welcome Kim, and good luck. You'll be working with some wonderful clients.
* Fort Myers Beach Named One of Top Beach Bar Cities (Cheers to that)
* NOAA Predicts Active 2013 Hurricane Season ...(for about the 30th year)
* Boomer Generation is Retiring Earlier Than Planned
* Over 50% of Americans Expect Home Prices to Rise (99.999% in SW Florida)
* Canadians Flocking to Southwest Florida (with bucket loads of cash)
* Gov. Scott Signs Ban on Texting While Driving
Topics: Vacation Season Ends- But Not R.E. Buying Season- Gulf Access Lot Prices up 83% in One Year- Bidding Wars Are Back
Topics: Best Local Real Estate Year in 7 Years? - Seasonal or Annual Rentals - Which is better for Owners? - Construction Labor Shortage
Topics: Short Sales vs Foreclosures - Major CC Gov't Happenings - Future Appreciation in SWFL
Topics: Snowbirds Race to Snatch up Florida Housing - What are the Best Gulf Access Home Areas?
Topics: Local Home Prices Up 32% - Is It Too Late to Enter the Cape Coral / Ft. Myers Market?