Having spent part of my career in the Investment Banking Business I often would see on any downturn in the market the flood of people that would put in their sell orders and on any up turn they were also putting in the buy orders. Now if you consider that as a good philosophy for investment you must subscribe to the “buy high and sell low” theory. This theory has turned many a fortune into pocket change.
For some reason many people need a column written in the local paper telling them that this is a good time to buy. However, by the time that little tidbit hits the press, the time has already passed.
When you look at the current per square foot price of homes in some areas you find that if you had a lot and tried to build a home today for the same per square foot price, you would not even be able to get the walls up, let alone complete the home. Therefore my question is, why wait for further decline, which may or may not happen? At most, if we see further decline in pricing, it will be minimal since the worst seems to have already taken place. In a lot of areas the trend is stabilizing in pricing and that will be followed by increases in pricing. The ability to time the rock bottom is luck more than skill and a gamble when opportunities exist today.
When prices reach a level where they are bargain prices, it is time to act. If you believe in the better philosophy of buy low and sell high, the right time may be now. It appears that that this thought is catching on since the latest report showed an increase in home sales nationally. In the region I am located this philosophy has been underway for several months and prices have reached close or at the bottom and opportunities exist in abundance.
So if you hear the knock – knock, remember it was opportunity and hopefully you will answer the door.
Sales of resale homes in the Greater Fort Myers area rose again for the tenth consecutive month in October, with a total of 805 properties sold - up 122.4% versus the prior year. However, the value of homes continued to drop due to the continued presence of short sale and bank owned properties. The median price is now $119,900, which is 22.6% below the 2003 level.
There were 12,611 single-family homes for sale in October in the area, for an estimated 8.3 month supply of inventory. Sales activity is picking up pace as over 1,877 properties are pending, including properties that are active contingent and require lender approval. This is an increase of 170% versus a year ago and a 5% increase versus September.
Have we reached the bottom? That is a question people ask all the time. My take on that is not so much have we reached the very bottom but are prices at a level that the buyer can feel comfortable that they are receiving value for their dollar. One of the methods I use to determine this is the cost per square foot. Currently homes are being sold for less than what you could build them and to me that means the bottom may be here or very close. The above stats bear this out since we are at levels that go back to before 2003.
Homes in Gated Communities have dropped but not as much as homes outside of gated communities. The reason for this may be because there have been fewer short sales and foreclosures in these communities. However they have dropped significantly, as well.
There are still funds available to those who want to finance a home. A large part of the sales in this area are second homes. Although some of the funding requirements have changed for foreign national, there still is a finance market available.
Foreclosures offer the greatest opportunity but also are very competitive. The great buys often have multiple offers with some going for $5,000 to $10,000 over asking. Banks seem to want to move these properties and price some of them way below even the current market. Not all of them but more than I have ever seen in the past. These are the homes that end up with the multiple bids. However they are normally priced so far under that even at the above asking offers they are still sold at below market. A good example was a two year old pool home with 2100 square feet and in excellent condition. It sold for $338,000 in 2006. It was on the foreclosure market for $101,000. There were 7 bids on it the first day. The market for this home was in the $150,000 range when you compared it to similar homes in the area. So if you are looking for some great opportunities, they still exist and more come to market daily. However, this market will not last forever and perhaps this is the time to examine the opportunities available.
Pool Home on Freshwater Canal
• 2,300 sq. ft., 2 bath, 3 bdrm single story - 
MLS® $199,000 USD - Short Sale
South - Units 3, 30,44-45, 64, 66, 67, 2323, Cape Coral - SHORT SALE – This never lived in, like new home is located on a fresh water canal, with sea wall in place. You will have quick access to Veterans Pkwy. Open floor plan with split bedroom design, blinds on windows, manual shutters, walk-in closets, irrigation system, and a great pool and Lanai.
This is a short sale subject to current mortgage holder's approval and may have time constraint.
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Pay as you Play Golf
• 1,725 sq. ft., 2 bath, 3 bdrm single story - MLS® $256,000 USD - Lowest Priced SF Home
Colonial Country Club, Fort Myers - Enjoy the privacy and charm of this spacious home in this upscale Golf community. This home offers either three bedrooms or two bedrooms and a den. This open floor plan is tiled throughout and the fantastic preserve view offers the ultimate privacy while enjoying the pool and spa on the lanai. This home is like brand new and has never been lived in. Social membership offer pay as you play golf and the use of all club facilities. Don’t miss an opportunity on this home! This is a short sale subject to current mortgage holder's approval and may have time constraints. This property is in the final stages of the Short Sale - Bring your contract. Price is firm! Great buy at this price!!!
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Since I am in Real Estate I try to avoid subjects like this but I could not resist any longer posting on this subject. I like Senator Lieberman and he is very wrong on his Bill. It will do nothing for the Climate Change and will only hurt America.
The cost of S.2191 Lieberman/Warner America's Climate Security Act of 2007 which is scheduled to be reviewed currently is devastating to your wallet. The purpose of the bill is to punish those companies that emit more carbon dioxide (CO2) into the atmosphere. On the surface who can disagree with reducing our emissions since it means cleaner air. However, there is no proof that reducing this will have any effect on the climate. Contrary to media hype and misinformation, no respectable scientist can produce any concrete proof that climate change is nothing more than the normal chain of events in the cycle of life here on earth.
Lets review a few fact to see if our legislatures have got things right to date. Let us start with energy and their approach to fix it, as lame as it was and still is! They passed legislation that mandated that ethanol be used to reduce CO2 and reduce energy dependence. When you hear things like reduction you feel good. I can go along with that. However, what were the real results. First, ethanol was not a product that could be refined within any economically feasible profit range without government subsidies. Albeit farm subsidies or tax credits or subsidies and grants. So the legislatures we now have really did more harm than good. They spent your tax dollars to subsidies a flawed system rather than looking an alternatives that had promise. The result is that corn is now at record price levels, @$2.00 a bushel in 2005 and now pushing $6.00 a bushel. That just doesn’t affect the price of corn flakes; it changes meat prices, the price of anything that uses corn syrup and all the things that are not being grown because corn is the cash crop today.
Let’s move to the next blunder, the devaluation of the dollar. This has been one of the significant factors in the high cost of oil but not the big one. The biggest one is the lack of your Congress and their ability to implement a change in energy policy.
Rather than spend time working on a solution they are working on a way to totally drive our economy into the dirt. S.2191 will cause the prices of everything that you buy or use to go up. Why? Because it taxes anyone that uses energy and emits CO2 and the cost of those taxes will be passed on to you.
Is there a solution? Yes! We need a plan for alternative energy and we need to pull the oil out of our ground and stop the 56% reliance on foreign oil. The amount of Shale Oil in the US is estimated at 1.5 trillion barrels which is almost 5 times the reserves in Saudi Arabia. That amount doesn’t include Anwar or the Eastern Gulf. If we put a plan together to drill and recover this oil and added a plan to develop alternatives we would conquer the emission problems and the reliance on foreign oil.
There is another form of energy that could be used called methanol. It is made of waste. It requires a $100 change to you car if done when manufactured. This is pollution free and solves a land fill problem since garbage, leaves or any waste material can be turned into methanol. Your legislatures have known this for a while but have chosen to ignore it.
It is time for change alright. Throw them out if they vote for S.2191 and if they don’t start a real energy bill that helps, they must go. The sad thing is all the current candidates for President support this idiotic bill. Your support will help change their minds. Don’t accept what I have written, look for yourself and look at what they have done and see if they have been wrong on most of what they have done.
I am afraid that what they do is flow with the popular topic of the day and really don’t do any analysis of the facts. I recently wrote Senator Nelson of Florida and he wrote me back the lamest response that was lacking any facts or solid evidence of his position.
The only way you will see change is to act.
This is NOT a Short Sale
• 1,840 sq. ft., 2 bath, 3 bdrm single story - MLS® $199,986 USD - Priced Below Market
Central Fort Myers, Fort Myers - This three bedroom /two bath home offers large rooms and is centrally located to all that Fort Myers offers. Split floor plan with addition computer space outside of guest bedroom. This home is priced below market for quick sale. Great Home – Great Location.
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The new lending rules have really put a damper on foreign nationals purchasing property. With the falling dollar, the foreign markets were a tantalizing market with the opportunities that existed with low prices and the difference in currency. However, as usual we have taken a positive and put a damper on it.
The new rules, if you are in what Fannie Mae or Freddie Mac considers to be a depressed area, now require that a foreign national has to put 45% down in order to secure US Funding for a loan. I had a lot of Canadian and German clients that were ready to take advantage and buy that second home and now have been shut out by the new lending rules.
It appears to me we have two ways making lending rules, they are either lax or over the edge. Perhaps in time will get this right. In the mean time we are seeing a wave of buyers being turned away because of these nonsensical rules. Less that 1/100th of 1% of foreclosures belong to this category of buyer. I would love to hear the logic in the decision that put this rule in place. We are pretty good at cutting off our nose to spite our face. IMHO
It is articles like the following from the Wall Street Journal that should get more attention from those interested in the Truth!
The Housing Crisis Is Over
By CYRIL MOULLE-BERTEAUX
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
See all of today's editorials and op-eds, plus video commentary, on Opinion
With all the press and pundits talking about the doom and gloom scenario, they for some reason have failed to view the glass as half full. It is often said that the best teacher is history, so here is a brief history lesson. It was back in 1973 when interest rates were about the same as they are today. That was considered a buyers market then, however inventory levels were far below the level of today. Since then there has only been 2 years that offered similar interest rates as today. It was 2001-2002, rates were similar but this was the height of the seller’s market, which offered low rates but higher prices and fewer homes to choose from. We have had other buyers markets but they were in the 80’s and 90’s with interest rates ranging between 8%-21%.
With supply at record highs and low interest rates available, the selection and cost has not been similar for 35 years. In fact there has not been a better time to purchase in almost four decades. For those wise buyers, I think they are looking at the glass as being half full and ignoring the pundits that have a track record of getting it wrong most of the time. So if you really want to rely on something, historical data is unchangeable and the facts substantiate that there has not been a better opportunity than now, to buy a home.
Pay as you Play Golf
• 1,725 sq. ft., 2 bath, 3 bdrm single story - MLS® $256,000 USD - Lowest Priced SF Home
Colonial Country Club, Fort Myers - Enjoy the privacy and charm of this spacious home in this upscale Golf community. This home offers either three bedrooms or two bedrooms and a den. This open floor plan is tiled throughout and the fantastic preserve view offers the ultimate privacy while enjoying the pool and spa on the lanai. This home is like brand new and has never been lived in. Social membership offer pay as you play golf and the use of all club facilities. Don’t miss an opportunity on this home! This is a short sale subject to current mortgage holder's approval and may have time constraints. This property is in the final stages of the Short Sale - Bring your contract. Price is firm! Great buy at this price!!!
Property information
Pay as you Play Golf
• 1,725 sq. ft., 2 bath, 3 bdrm single story - MLS® $256,000 USD - Lowest Priced SF Home
Colonial Country Club, Fort Myers - Enjoy the privacy and charm of this spacious home in this upscale Golf community. This home offers either three bedrooms or two bedrooms and a den. This open floor plan is tiled throughout and the fantastic preserve view offers the ultimate privacy while enjoying the pool and spa on the lanai. This home is like brand new and has never been lived in. Social membership offer pay as you play golf and the use of all club facilities. Don’t miss an opportunity on this home! This is a short sale subject to current mortgage holder's approval and may have time constraints.
Property information
Ever had your computer crash or a hard drive go bad and you have to reload all your programs. You can find the disk but the activation code or license number is somewhere but you can’t find them! I have went through all of the above and the other day heard about a program that gives you a list of all installed programs on your system and gives you the activation codes or license numbers to reactivate, if you ever have to reload the program. It searches your computer and you print out the list of programs installed with all the information you need to reinstall. It is available at Belarc.net. The great thing is it is free. If you combine this with The Carbonite Back up system you will never have to worry about another crash. If you are not familiar with Carbonite it is an on line back up system that copies all you files to an on line directory. Should your system crash you just put in the new hard drive and reinstall all your files from the on line back up. Great system and it is under $50 a year. These two products take all the worry out of hardware crashes or a virus ruining your day.
Real Estate although painted with a broad brush by the press has always been a local market. It is impossible to make a claim that the Real Estate Market is up or down unless we explain that we are talking about more down areas than up areas in general or we address a specific market. It is too broad to even state that the Southern Florida Market is up or down since Southwest Florida may be experiencing an up market and Southeast Florida may be flat or down. So when ever you are looking you need to check the specific market reports for the area of your interest. If you only look at the broad brush reports you may miss an opportunity thinking that the market is down and thinking that, I’ll wait until it hits the bottom before I make my move. The problem with that strategy is by the time you read about it, you have missed it and secondly unless you are reading new on your specific market you may be acting on bad information.
I suggest that anyone that is looking to buy or sell research the specific market and follow those related news reports to make their own informed decisions of the current trends in Real Estate.
Fort Myers was one of the first to experience a down turn in its market almost three years ago. In 2008 it is bucking the Nation trend and is seeing resurgence in activity. In the last 12 weeks Home sales of Single Family homes is up 45% over the same period the previous year. At the start of 2008 inventory was at a 22 month level. In other words the supply of homes would take 22 months to sell at the current rate of activity. As of April 1, 2008 that level has dropped to an 11 month supply of homes. This is a dramatic drop and does signal a significant change. If you combine this fact with the average price increasing by $15,000 we see that this area may have seen the bottom.
A four month supply of home is a good level and the supply is still high but declining. This still indicates a buyers market but the signs are there that the end is near and perhaps the wise buyer will take advantage of the opportunities that remain. It is the writers’ belief that through the third quarter of this year we will still have many great opportunities since there will remain many short sales and foreclosures that will continue to suppress any significant price movement.
So in summary, if you are a buyer, now is the time to act. If you are a seller and can wait until the fourth quarter to list your home, you will see an increase in prices.
NW - Units 51-53,55-57,59-61, 76,80-82,98,U29A, Cape Coral - Announcing a Short Sale on 1523 NW 31ST PLACE, a 1,338 sq. ft., 2 bath, 3 bdrm single story. Now MLS® $196,000 USD - SHORT SALE.
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South - Units 3, 30,44-45, 64, 66, 67, 2323, Cape Coral - Announcing a Short Sale on 1200 SW 31ST TERRACE, a 2,300 sq. ft., 2 bath, 3 bdrm single story. Now MLS® $255,000 USD - Short Sale.
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