SW Fla. housing market has slowed – and that’s good

SW Fla. housing market has slowed – and that’s good

NAPLES, Fla. – Feb. 24, 2016 – The housing market is showing signs of slowing and local experts say that’s OK. Home resales are slowing – and so are land sales for new homes and developments.

“We’re in the middle of a downshift in the marketplace. And it’s a good thing,” said Denny Grimes, president of Denny Grimes & Co. in Fort Myers.

Grimes was one of three expert speakers at Market Watch 2016, sponsored by the News-Press and held at the Harborside Event Center in downtown Fort Myers on Tuesday night. All agreed the housing market is changing in a big way, sharing their thoughts on the future of real estate with a sold-out crowd in the hundreds.

Generally speaking, home resales started falling from Sarasota to Naples in the last two to three months of 2015, Grimes said.

“It’s kind of across the board,” he said. “We saw sales down in Lee County 30 percent in January.”

So what gives? While the roads are full, as they usually are in season, and buyers are out looking for houses, he said, the consumer confidence tank is “low on fuel.”

Part of the low confidence, he said, is “our fault,” with home prices rising too quickly.

“We have seen tremendous price increases in the last two or three years and we are pricing ourselves out of a lot of the market. You can ask for more, but buyers won’t pay it,” Grimes said.

There are a few exceptions. The luxury market in Naples is still going strong, with the volume of resales rising 18 percent in the more than $5 million price category and 11 percent in the $1 million to $5 million segment in 2015, over 2014.

“I think the luxury market and ultra luxury market is being driven by people saying, ‘If not now, when?’” he said.

It’s clear the “Louis Vuitton” market of Port Royal in Naples, he said, is different, with 37 existing homes selling there last year, generating more than $300 million in sales, for an average price of about $8 million. Homes don’t really go “on sale” there, he said.

“You want to be in Port Royal? You pay the price and you come,” Grimes said. “That is an anomaly. I can’t find that type of behavior anywhere else. It may be the only place on the Gulf Coast of Florida like that, which speaks highly for that area.”

Except for the ultra luxury market, he predicts home price growth will slow down this year, and could even retreat a little bit.

“We have to slow down. We are going too fast for our own good,” Grimes said.

Randy Thibaut, president of Land Solutions Inc. in Fort Myers, agrees a slow down is needed, coming from a different angle.

Last year, new home permits soared in Lee, Collier and Charlotte counties. Builders pulled about 13,000 permits in the three counties, for a 44 percent increase over 2014. Lee saw the biggest increase and that was driven mostly by a boom in apartment construction.

Apartments are in higher demand because of the rising home prices. First-time buyers are still looking for homes priced at $200,000 to $250,000, which can be found in very few places in Southwest Florida, Thibaut said.

In Collier County, the median home price – the price at which half the homes sell for more, and half for less – rose to $430,000 in December. For that reason, it makes sense that Maple Ridge at Ave Maria, where there are still homes available for less than $300,000, was the top selling subdivision last year in all three counties, he said.

“The reason why is price and value,” Thibaut said. “So it’s one of the last places people can get a value.”

Some of the buyers in Maple Ridge are coming from the east coast of Florida, and commuting back and forth to their same jobs over there because they can get more home for their money in Ave Maria and they often have a shorter drive than they would on Interstate 95. Thibaut described the trend as mind boggling.

“Wow,” he said. “That is crazy.”

Land prices for residential development now exceed where they were in 2005 at the “peak of the peak,” which is giving builders reason to pause, Thibaut said.

“We are seeing builders, developers and equity firms starting to tap the brakes on land transactions because the prices in some cases, in a lot of cases, have gotten to the point where they can’t meet buyers’ price demand requirements and are pushing the limit to still make margins,” he said.

The pause is good for many reasons, Thibaut said.

“We have a great shortage of labor and we are having a tough time meeting the demand for the sales and products that are being built and permitted,” he said.

Some builders have already noticed a slowing demand for new homes, with several starting to offer incentives to entice buyers to purchase the inventory. One of the areas where that is happening is in the Immokalee Road corridor in North Naples, which has seen a surge in new construction over the past few years.

High-rise condominium construction is back, with five projects planned or under construction from Naples to Estero, and it will be something to watch this year, along with continued apartment construction, which one speaker described as “white hot,” especially in Lee County.

“Apartments are really pulling the market,” said Stan Stouder, a commercial real estate broker with CRE Consultants in Fort Myers.

He showed a picture of a tugboat pulling a big cargo ship to bring home his point. In Southwest Florida, he said, 2,557 apartment units will be built this year, twice the number as last year, Stouder said.

Apartments aren’t just attracting students, but millennials with too much student debt and not enough money for a down payment, would-be buyers with bad credit, and even boomers who can no longer afford the hefty home prices.

“Boomers are coming in great waves,” Stouder said. “But they are less affluent. So their pension plans might have been wiped out, their 401ks might have gone down. Their houses may be selling now, but selling for less than they hoped they could get. They still want to come to Florida. Maybe they can’t afford a second home, but they can afford to rent an apartment.”

Copyright © 2016 the Naples Daily News (Naples, Fla.) Laura Layden. Distributed by Tribune Content Agency, LLC.

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New Home Sales

U.S. home prices increased at a faster clip in November, the gains fueled by solid hiring growth, historically low mortgage rates and a shortage of houses on the market.

The Standard & Poor’s/Case-Shiller 20-city home price index rose 5.8 percent from a year ago, up from a 5.5 percent pace in October, according to a Tuesday report.

Home values nationwide have nearly recovered from their July 2006 peak, as the real estate market has slowly recovered from the housing bust that triggered the Great Recession. But several metro areas have fully rebounded from the downturn. Four metro areas – Dallas, Denver, San Francisco and Portland Oregon – have either matched or eclipsed their all-time highs. And Charlotte, North Carolina is less than 1 percent below its previous high.

Buyers crowded back into the housing market last year. Sales of existing homes rose 6.5 percent over the past year to 5.26 million

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Florida’s Population Boom


For the first time in nearly a decade, Florida gained more people than California this year. Adding 365,703 people—more than 1,000 a day—bumped Florida’s total population to 20.27 million.

Almost a third of Florida’s new residents were immigrants, with Census Bureau estimates released this fall showing Cuba as the top source recently.

Democrats won the 2012 presidential race in Florida by about a 1% margin, and how the latest population figures affect that state’s vote is difficult to pin down. The retirees who flocked there in recent years voted strongly for Republican nominee Mitt Romney, but the bulging Hispanic population helped President Barack Obama take the state, said Mr. Frey.

WSJ.. 12/15

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Fed Raises Rates .25

The Federal Reserve is raising interest rates from record lows set at the depths of the 2008 financial crisis, a shift that heralds modestly higher rates on some loans.

The Fed coupled its first rate hike in nine years with a signal that further increases will likely be made slowly as the economy strengthens further and inflation rises from undesirably low levels.

The central bank said in a statement after its latest meeting that it was lifting its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent. Its move ends an extraordinary seven-year period of near-zero borrowing rates. But the Fed’s statement suggested that rates would remain historically low well into the future, saying it expects “only gradual increases.”

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Home Sales Trends – Realtor.com

July 15, 2015

Our analysis of realtor.com data indicates that the residential real estate market continues to show strong signs of health in July, despite some mixed signals in recent national housing indicators for June.

Nationally, the prevailing positive price trend continued with the national median list price increasing to $234,000, up 7 percent year-over-year and 1 percent over June. Median days on market increased to 71 days, down 5 percent year-over-year, but up 7 percent month-over-month. The listings inventory continued to grow faster, at 1 percent over June but was still down over last year.

Demand remained strong, with traffic and searches on Realtor.com continuing to set new highs in July. Unique users for the month grew 40% y/y, while visits and searches were up more than 50% and 25%, respectively.

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Homeowners Choice Sells First Flood Policy in Florida

Homeowners Choice combines Homeowners and Flood Insurance Together in single package.

Homeowners Choice Property & Casualty Insurance Co., Inc., a Florida based provider of admitted homeowners insurance and wholly-owned insurance subsidiary of HCI Group, Inc., is now selling flood insurance to existing customers in Florida.

Many Florida residents have seen a substantial increase in their flood insurance premiums as a result of the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012. In December 2013, Homeowners Choice was approved by regulators to add an endorsement to its policies to include flood coverage. The carrier’s established rate for flood coverage is expected to be similar to the rates being offered prior to the new laws. New and preexisting Homeowners Choice customers are eligible to receive flood coverage. However, customers must hold a homeowners insurance policy with the company.

Paresh Patel, Homeowners Choice’s executive chairman, said the company is trying to help its customers who were hit hardest by rate increases under the National Flood Insurance Program.

To mark the milestone, Patel this week signed the company’s first flood coverage policy for a couple who purchased their home in Seminole in 2013. The family’s flood coverage in 2013 was approximately $9,700 while the 2014 premium was scheduled to total $57,000. Homeowners Choice said it is issued its policy for a total of $9,693, which includes both homeowners and flood coverage.

Headquartered in Tampa, Florida, Homeowners Choice serves approximately 170,000 policyholders throughout Florida. Homeowners Choice is a wholly owned subsidiary of HCI Group Inc.

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Florida Flood Insurance Update

Thursday, January 9, 2014 8:27 am | Updated: 9:29 am, Thu Jan 9, 2014

SARASOTA, FL- New hope for homeowners dealing with skyrocketing flood insurance rates.

State lawmakers moved along a bill on Wednesday to entice private companies to enter the flood insurance market in Florida.  The proposed bill would allow companies more freedom to set rates and shape coverage plans.

Senator Jeff Brandes from St. Petersburg sponsored the bill.  The bill is in response to escalating premiums the federal flood insurance program has put out on some homeowners,  Nearly doubling costs.

The senate may vote on another bill that would delay the increase of flood insurance rates.

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Realtors Pressure Congress to Delay Massive Flood Insurance Rate Increases

Realtors Pressure Congress to Delay Massive Flood Insurance Rate Increases

Realtors around the United States have urged members of Congress to delay flood insurance rate increases that went into effect on October 1. According to the National Association of Realtors, the Home-Owner Flood Insurance Affordability Act will help millions of consumers facing extreme increases in premiums. The Biggert-Waters Flood Insurance Reform Act was passed by Congress in July of last year, reauthorizing the National Flood Insurance Program (NFIP) and making widespread changes to the cost homeowners pay for insurance. Sponsored Links Under the law, homeowners must pay the full-risk rate, which reflects the full risk of being flooded. Before the Act, the government subsidized the cost of flood insurance on many homes and “grandfathered” them in with insurance rates based on older flood maps with lower risk reflected. New rate increases have been substantial, with some hard-hit regions seeing rates jump $10,000 or more after homeowners paid under $1,000 a year previously. Flood insurance reform has now spurred a storm of real estate worries. In one case, a man attempting to sell a family member’s home to settle an estate lost a sales contract on the home because of a steep price jump for federal flood insurance. Previously, Jones paid $1,000 per year for flood insurance on the home in Oak Island in South Carolina. New estimates for coverage range from $12,000 to $18,000 due to the Biggert-Waters Flood Insurance Reform Act. Jones now doubts anyone will take out a mortgage on the home because the cost is a real deal-breaker. The Biggert-Waters Act was designed to improve finances of the NFIP, which is now billions in debt following Hurricane Katrina and Super Storm Sandy. Still, the subsidized rates previously allowed financing for new construction of millions of businesses and homes in flood-prone areas. Many real estate agents warn that the change will cause harm to the real estate market, with properties in some areas just too difficult to do anything with. It is not just coastal areas that are affected by the flood insurance premiums. Senate Majority Leader Harry Reid has committed to a vote early in 2014 on a bipartisan proposal to delay rate increases under the NFIP while a study is conducted on its affordability. There has been widespread support from lawmakers representing coastal areas, but many lawmakers and organizations oppose the delay, saying taxpayers should not be forced to help subsidize insurance for individuals who choose to buy property in flood-prone regions. Florida leads the country in the number of flood insurance policyholders, and ranks fifth in total payments, according to FEMA. Two state legislators from Tampa have proposed a bill that would allow private insurance companies to provide flood insurance policies to homeowners in the state, saying it would streamline Florida’s regulatory procedures for flood insurance and allow more state regulators to evaluate the products. The Homeowner Flood Insurance Affordability Act has been introduced in both houses to fix some of these unintended consequences of the Biggert-Waters Act. This new bill can delay further implementation of the mandated rate hikes until Congress has had time to review affordability. It is still up to Congress to act before real estate markets throughout the country feel the brunt of skyrocketing insurance costs.

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NEW ACA (Obamacare Tax) For High End Homes.

New Home Sale Tax

If you are single with an adjusted gross income of $200,000 or file jointly with an income of $250,000 or more, you may be impacted. Once you sell your home, any profits over the first $500,000 are already subject to a capital gains tax. And now those profits will have an additional 3.8% tax to fund ACA (Obamacare).

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Florida Real Estate Rebounding

Major metropolitan areas in Florida also are turning in impressive year-over-year numbers, such as Ft. Myers-Cape Coral (median list prices up by 11.6 percent), Tampa (7.1 percent), Ft. Lauderdale (7 percent) and Jacksonville (6.4 percent.) But a handful of smaller markets aren’t performing as well, either because their local economies aren’t producing new jobs, their inventories of houses for sale haven’t fallen fast in the recovery, or they still have an excess of REO available at rock bottom list prices.

Ft. Pierce-St. Lucie, for example, saw median list prices drop by 4.1 percent over the past year. Gainesville prices dropped by 1.2 percent, Tallahassee, the state capital, lost 0.6 percent. And Naples, which is a relatively high-income resort city on the Gulf of Mexico, saw median list prices fall by 2.7 percent.

The contrast with California is pretty stark: Florida’s real estate rebound is substantial but not statewide. California’s housing rebound, on the other hand,  is underway virtually throughout the state.  But it’s verging on bubbly in some areas – which is not necessarily a healthy sign since bubbles always burst.

Ken Harney writes a nationally syndicated column on housing and mortgage issues, the Nation’s Housing, and has won numerous “Best Column – All Media” awards from the National Association of Real Estate Editors

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