Is the Fort Myers single-family housing market beginning to cool off? (Cape Coral: days on market, for sale)

[hardworkpaysoff]

Just wondering what others think the single family housing market will look like in the coming 1-2 years in the Fort Myers area? The prices appear to have risen a lot these last few years, is another downturn coming?

[nhkev]

Originally Posted by hardworkpaysoff

Just wondering what others think the single family housing market will look like in the coming 1-2 years in the Fort Myers area? The prices appear to have risen a lot these last few years, is another downturn coming?

Nobody can ever say for sure but based on data it should give people a reasonable idea of risk vs reward.

I will simplify the last bust.
1. builders overbuilt vs demand . there were over 5000 homes built in Cape Coral without buyers.
2. Lending. buyers were able to get loans @100% loan to value without being able to afford the payments.
3. a ridiculous amount of foreclosures were adding inventory to the market that made it impossible for anyone (builder or existing homeowner) to sell any house.
4. The area went from a fast growing population to losing population.

all these factors contributed to the main driver of price "supply vs demand"
If my memory serves me correctly there were about 10,000 homes for sale with only 170 sold per month. This caused prices to drop and drop and drop until they hit a level where people couldn't resist passing up a deal of a lifetime.

Over the past years new construction has been minimal compared to 2003-2006. Lending standards have been extremely stringent, foreclosure are at low levels, a majority of homes have been purchased via cash, Cape Coral area is the 6th fastest population growth area in the nation.

So this creates a another supply vs demand situation but the opposite way.

So how to determine the health of the market is by looking at a couple factors (and you have to look at all in relationship to each other).

1. Months of inventory. 4- 6 months worth of inventory is a good stabile market under 4 months would typically indicate a shortage of inventory.
2. Days on market. houses if priced accordingly should have days on market less than 120 days
3. Sale to asking price ratio. houses typically sell around 95% of asking price (although there are some regional differences some areas sell above asking price others leave a lot of room to negotiate)
4. Population growth/ decline levels
5. new construction levels to meet demand- cost to build vs buying an existing home
6. What the area can afford to pay for housing ( Cape Coral's per capita income is around $42k so a married couple average $84k so hypothetically the average couple could afford about a $300k mortgage. So looking at the inventory knowing that some make more and some make less you would have to break down the real estate market into segments.
7. Other factors such as outside demand- snowbirds, foreign buyers , investors that will certainly compete and drive up segments of the market.

so you have to ask yourself is there things that can happen to effect the market outside of these things?
Yes, baby boomers will eventually start to die off or get too old to be living alone. Investors that bought in 2008-2010 already tripled their money between appreciation and rents collected in a short period of time. Now that the days of double digit appreciation are nearing an end will they start to sell to search for better investing opportunities. As long as rents continue to increase so do their margins so rental rates will strongly effect this market.

Climate change could effect this market. Cold winters drive snowbirds down there. A couple mild winters up north or a couple bad hurricanes can influence buying.

As an investor I wouldn't be buying into this market with the exception of gulf access lots in the lower NW section (which may be the best deal on the market today.)

[chiluvr1228]

Prices have definitely been increasing which is unfortunate for me as I am looking to buy a condo or townhouse in the next 6 months.

[Compression]

Market has "plateaued" for the moment.
About 5 months of inventory.......
February numbers from the SWFLMLS
Single family sales down 12.5% year over year
Condos down 26% same period.

However prices UP 12% year over year.

IMHO, a softening market until prices retreat a bit.



CN.......

[sheezit]

Originally Posted by Compression

Market has "plateaued" for the moment.
About 5 months of inventory.......
February numbers from the SWFLMLS
Single family sales down 12.5% year over year
Condos down 26% same period.

However prices UP 12% year over year.

IMHO, a softening market until prices retreat a bit.



CN.......

Can you link me to these stats?

[Compression]

Originally Posted by sheezit

Can you link me to these stats?

Cant link you directly to the MLS report.

But here's the News-Press article.......(the numbers, with added excuses.......er, commentary)

Lee, Collier real estate sales slump in February

The March market report should be available around the 26th of April, you can start tracking the trend from there.......


CN.......

[nhkev]

Originally Posted by Compression

Market has "plateaued" for the moment.
About 5 months of inventory.......
February numbers from the SWFLMLS
Single family sales down 12.5% year over year
Condos down 26% same period.

However prices UP 12% year over year.

IMHO, a softening market until prices retreat a bit.



CN.......

Not to debate you because I haven't looked at the rest of the figures but one cannot take one stat (such as volume ) and derive anything from it. for example if sales were down 12% but inventory was down 25% it is hard to sell the same amount of houses as the prior year (not saying this was the case) in the same argument if sales go up by 5% but inventories increase by 20% that is certainly not a good sign.

[rikoshaprl]

Originally Posted by nhkev

Nobody can ever say for sure but based on data it should give people a reasonable idea of risk vs reward.

I will simplify the last bust.
1. builders overbuilt vs demand . there were over 5000 homes built in Cape Coral without buyers.
2. Lending. buyers were able to get loans @100% loan to value without being able to afford the payments.
3. a ridiculous amount of foreclosures were adding inventory to the market that made it impossible for anyone (builder or existing homeowner) to sell any house.
4. The area went from a fast growing population to losing population.

all these factors contributed to the main driver of price "supply vs demand"
If my memory serves me correctly there were about 10,000 homes for sale with only 170 sold per month. This caused prices to drop and drop and drop until they hit a level where people couldn't resist passing up a deal of a lifetime.

Over the past years new construction has been minimal compared to 2003-2006. Lending standards have been extremely stringent, foreclosure are at low levels, a majority of homes have been purchased via cash, Cape Coral area is the 6th fastest population growth area in the nation.

So this creates a another supply vs demand situation but the opposite way.

So how to determine the health of the market is by looking at a couple factors (and you have to look at all in relationship to each other).

1. Months of inventory. 4- 6 months worth of inventory is a good stabile market under 4 months would typically indicate a shortage of inventory.
2. Days on market. houses if priced accordingly should have days on market less than 120 days
3. Sale to asking price ratio. houses typically sell around 95% of asking price (although there are some regional differences some areas sell above asking price others leave a lot of room to negotiate)
4. Population growth/ decline levels
5. new construction levels to meet demand- cost to build vs buying an existing home
6. What the area can afford to pay for housing ( Cape Coral's per capita income is around $42k so a married couple average $84k so hypothetically the average couple could afford about a $300k mortgage. So looking at the inventory knowing that some make more and some make less you would have to break down the real estate market into segments.
7. Other factors such as outside demand- snowbirds, foreign buyers , investors that will certainly compete and drive up segments of the market.

so you have to ask yourself is there things that can happen to effect the market outside of these things?
Yes, baby boomers will eventually start to die off or get too old to be living alone. Investors that bought in 2008-2010 already tripled their money between appreciation and rents collected in a short period of time. Now that the days of double digit appreciation are nearing an end will they start to sell to search for better investing opportunities. As long as rents continue to increase so do their margins so rental rates will strongly effect this market.

Climate change could effect this market. Cold winters drive snowbirds down there. A couple mild winters up north or a couple bad hurricanes can influence buying.

As an investor I wouldn't be buying into this market with the exception of gulf access lots in the lower NW section (which may be the best deal on the market today.)

Just saw this post. Thanks Kev!

[Compression]

Originally Posted by nhkev

Not to debate you because I haven't looked at the rest of the figures but one cannot take one stat (such as volume ) and derive anything from it. for example if sales were down 12% but inventory was down 25% it is hard to sell the same amount of houses as the prior year (not saying this was the case) in the same argument if sales go up by 5% but inventories increase by 20% that is certainly not a good sign.

I have a healthy respect for your ability to analyze this type of data, and your insights. So in the spirit of "FYI", here's what I think you're asking for. I can provide actual numbers if you would prefer them over the percentages.

Year over year stats. Month of Feb. 2015 vs 2016

Single family/
Active listing + 5.4% New pending sales -12.1%

Condos/
Active listing +12.7% New pending sales -21.7%


Months supply of inventory remained steady at 5.4

IMHO, The condo market is leaning toward a buyer's market, the single family is on the brink.

I don't have time right now, but perhaps this evening I will punch up the data from December, and January, if anyone cares to see it.



CN.......

[nhkev]

Originally Posted by Compression

I have a healthy respect for your ability to analyze this type of data, and your insights. So in the spirit of "FYI", here's what I think you're asking for. I can provide actual numbers if you would prefer them over the percentages.

Year over year stats. Month of Feb. 2015 vs 2016

Single family/
Active listing + 5.4% New pending sales -12.1%

Condos/
Active listing +12.7% New pending sales -21.7%


Months supply of inventory remained steady at 5.4

IMHO, The condo market is leaning toward a buyer's market, the single family is on the brink.

I don't have time right now, but perhaps this evening I will punch up the data from December, and January, if anyone cares to see it.



CN.......

thanks, especially for the pending sales data. I expected sales to be down a little due to new mortgage regulations and disclosures that went into effect in 2016. One could also expect with the stock market correction at the beginning of the year that the wealth effect would negatively impact sales. Negative headlines regarding Lake O discharges and a milder winter up north certainly don't help either. All of these are short term issues and most should correct themselves in the upcoming months when the bulk of the closings happen. The stat that I always give the most credence to is the active listings increasing or decreasing vs months of inventory. They are what drive the prices and the direction they are going more than the anything.
a normal market does not go up double digits each year on end. to start seeing some fluctuations of inventories and sales and prices going up and down month to month would certainly be what the market needs in order to avoid another over inflated market that will lead to a bust.