TOM & SUE DEMOGENES...
"YOUR INFORMED REAL ESTATE COUPLE"
September 2013 Real Estate Newsletter
Realty Trac's housing-recovery index ranked 100 metro areas based on 7 variables including home-price appreciation, unemployment rate and decline in foreclosures. A strong housing market usually accompanies a vibrant economy, while a weak housing market and a sagging economy amplify each other.
Here are the top 10 metro areas where the housing recovery is strongest, ranked by the Realty Trac Index:
Tom: Cape Coral's unemployment rate has inched up slightly over the past few months. This is common when we enter the slow tourist summer months and there are less seasonal workers in stores and restaurants. I still predict we will fall below 6% unemployment sometime in high season of 2014.
2830 SW 42nd Lane, Cape Coral
Above is one of three waterfront homes that we've recently listed after clients accepted our advice on needed remodeling and TLC improvements. In the case of this home our clients spent approximately $20,000 on improvements (using our suggested contractors), which enabled us to list the home for about $80,000 more than without the improvements.
As our long time clients know, we have extensive remodeling experience, and homeowners can typically expect to receive $3 to $4 back for every dollar spent on improvements (a very nice investment return), and the home normally sells in 30% less time. People who come here from out of state do not have the desire or contacts to do remodeling/repairs, and would rather pay to have it done in advance. Also, most people do not have the foresight to imagine what improvements will look like afterwards. Thus, it's best to have the home looking as pristine as possible - inside and out.
Tom's Fun Facts of the Month
* Rise in Interest Rates: Recent interest rate increases are already having an impact on national new home construction, but haven't slowed down existing home sales. Tom: Interest rates have not slowed down local re-sales or new construction...at least not yet. We will report that trend when/if it occurs.
* Short Sales Sell for More Than Foreclosures: Foreclosures, which account for 9% of all sales now, sell at a 16% discount over traditional sales. Short sales, which are currently 6% of all sales, sell at only a 12% discount. Tom: due to the long delays of closing a short sale, combined with the stress and uncertainty of even being able to close on the home, and a 4% higher price than foreclosures, it has not made sense to me why buyers will consider short sales over foreclosures.
* Homeownership is at Low Level: Homeownership, currently at 65%, is at the lowest level since 1995, according to the Census Bureau. Tom: There is a lot of pent-up housing demand, which should result in more home ownership when the economy improves, and multi-generational households will not be as prevalent as was necessitated by the deep recession.
* Florida Leads Nation in Cash-Only Buyers: Florida currently leads the nation with an astounding rate of all-cash home sales: 66%, up from 57% a year ago. Nevada (64%) and Maine (60%) are the only other states to come even close to Florida's tidal wave of cash-only deals. Investor groups, international buyers, retiring northerners & second home owners, and landlords are fueling a cash-only market. Tom: For the past few years cash-only buyers in SW Florida have been within a few points of the 50% mark.
* Higher Prices Sap Foreign Interest: Foreign investors, who scooped up U.S. real estate during the 2007-2009 recession, are backing away from the same market they so eagerly jumped into a few years ago. Property prices have risen, while the dollar against international currency has appreciated over the past year, thus no longer making real estate the bargain it once was to foreigners. Tom: because foreigners buy in SW Florida as much (or more so) for the weather and water than for investments, we have not witnessed any drop-off from foreign buyers. To the contrary, foreign purchasers seem to be increasing. Canada still has the largest foreign ownership of U.S. property, at 23% of all international buyers.
Client: Cape Coral/Ft Myers has experienced tremendous appreciation over the past two and a half years. Do you expect it to continue at this pace?
Tom: Although the meteoric rise in values has been very good for the local real estate market, as well as for our personal investments and sales commissions, I honestly hope the appreciation rate moderates to a more reasonable level. I prefer a gradual rise in the market cycle, followed my a minimal to flat downturn, as opposed to the wild fluctuation that SW Florida is known for.
There was a 31% rise in prices in 2011, 24% in 2012, and 16% in the first eight months of this year. A nicer, more stable rate of appreciation in my estimation would be 10 -12%, but there is no denying "Old Man Supply and Demand". As long as supply remains low and demand is high, I fear we will continue to see high levels of appreciation for a few more years.
Client: "How much more do you think Cape Coral prices will increase, and when do you think the next peak will be?".
Tom: I will need the help of Nostradamus or "The Great Carnac" (for Johnny Carson fans) to help answer this one, but I'll respond as well as I can.
Historically, every new peak has surpassed the previous high point, which for us was January 2006, when median prices in Cape Coral were $381,482. In most cycles the new peak has blown by the past peak by a substantial margin.
We have gone from a low of $120,000 median home price in December 2010 to $215,000 last month, a 79% increase. If we were to only reach the previous peak, we still have 77% more appreciation ahead of us. There is never a guarantee in life or real estate, but if we don't at least rise to the level of our previous peak (and likely a substantial amount more) it will be the very first time since real estate records have been compiled
Buy To Rent Markets Will Expand
Higher Rates Could Mean More Loans??
Boomerang Kids: Many Forced To Live At Home
Housing Rebound Contributes 500,000 New Jobs - 54,000 in Florida
In August, for the third time this year, you have propelled me to the Top Producing agent at RE/MAX Realty Team, the largest real estate sales company in the area with 110 experienced agents. Combined with a 2nd place in August and a 3rd place in July, our clients have enabled me to be in the upper echelon for 5 out of 8 months this year.
I really appreciate our loyal clientele and their many referrals, and of course the biggest thanks goes to Sue, who is invaluable to the success of our business. I just happen to get the official company credit because I hold the license.
We are enjoying a wonderful "staycation" at the ocean on Bonita Beach with Tom's son Tyler, and some friends who drop by. We'll be returning on September 14, ready to attack the upcoming high season, which we expect to be one of the busiest on record. Sue took the beautiful sunset photo
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
Topics: Cape Coral/ Fort Myers Home Inventory Under 3 Months - Lot Loans Available Again After Long Absence - SWFL Seasonal Rental Market Is Very Strong
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