Bargain Basement Real Estate Prices

Homebuyers find happiness in Lee County

(Buyers and Sellers of Real Estate)

Southwest Florida's bargain-basement home prices have enabled Luis and Natasha Almodovar to realize the dream of home ownership.
In March, the young couple purchased a 3-year-old house in Cape Coral, with 1,875 square feet "under air," for the asking price of $75,000.
"We saw it, we liked it and an hour later, we put in a bid so we could be first in line," Luis Almodovar said.
Their purchase contributed to what has become a trend over the past 19 months in Lee County: sales prices coming close to or matching list prices for single-family homes.
Since December 2007, the median monthly sales price has been within a minimum of 91 percent of the median monthly list price. In fact, that ratio has often been much higher, hitting 98.24 percent in March and 101.13 percent in April.
The trend is being driven by the explosion of "distressed properties" - foreclosures and short-sales - on the market and the fact more sellers are pricing their homes to market levels, according to Realtors. They said those homes and their bargain-basement pricing have attracted a bevy of buyers, including many investors who are able to pay in cash.
But those rock-bottom prices have also resulted in appraisers lowering home values in their reports to lenders who are considering loans for prospective buyers. The result is more difficulty in securing home loans at a time when credit standards have tightened.
Realtors said it's become common to have multiple bids - sometimes 20 or more - for homes, especially in the price range of $100,000 or less.
Almodovar, 30, said he and his wife had been outbid during their two-month search, so they acted as soon as they found the house in northeast Cape Coral. They submitted their bid on a Friday and it was accepted on Monday by the bank.
"These houses are flying off the shelves," he said. "They used to be ridiculously high and now they're ridiculously low. You can't go wrong now."
Distressed homes comprised about 75 percent of sales last year for the Re/Max Realty Team in Fort Myers, a ratio that's jumped to 95 percent in 2009, said Darius Cochran, an agent at the office.
Bidding wars have become common, said Suzanne Sherer, an agent for Re/Max Realty Team in Cape Coral and president of the Realtor Association of Greater Fort Myers and the Beach.
Bids have begun to exceed the asking price of late as the flood of bank-owned properties that hit the market in late 2008 has been absorbed, said Susan Collins, a broker-associate for Rossman Realty in Cape Coral. The result, she said, is a shortage of available properties, especially in the lower price ranges.
Mary Huber, a Realtor for Century 21 Sunbelt in Cape Coral, agreed. She said she's seeing 20 to 30 bids, in some cases, for foreclosed homes built in 2004 or later, that are in move-in condition and have list prices for between $50,000 and $70,000.
But for anyone trying to finance the purchase of such a home, it's vital that their agent "run the numbers" to see whether the appraised value matches the asking price, she added.
The widening gap between list prices and appraised values has been occurring for six to eight months said Marc Gizzi, of Anthony Gizzi Appraisers in Fort Myers.
One reason for this gap may be appraisers who aren't being thorough when investigating sales prices for comparable homes in the market.
"It's 'Find me three very recent sales' and the three recent sales might be three liquidation sales that hit the market, and they're right around the corner," he said. "Liquidation pricing might not be market value. Typically liquidation is priced under market value."
Courtesy Fort Myers News Press

Bank sales help set record in Lee County

Lee County is facing a looming shortage of a precious financial resource these days: houses taken in foreclosure and dumped back on the market by lenders.
Houses sold by banks and other "distress sales" accounted for 74 percent of the record 1,468 Realtor-assisted sales made in April in the county, according to statistics released Wednesday by the Florida Association of Realtors.
But the rich vein of foreclosures caused by the crash of home values and the recession is about to run out, said Brett Ellis of Re/Max Realty Group in Fort Myers. Fewer than 1,000 foreclosure houses remain among the 12,500 homes listed for sale.
"I can't see us continuing to reach these records unless we get a steady diet of foreclosures hitting the market," he said. "Sales will start slowing if only because we won't have the inventory."
Most of the bank-owned houses hitting the market are inexpensive homes built at the height of the housing frenzy that ended in late 2005, said Jeff Tumbarello, director of the Southwest Florida Real Estate Investors Association. Speculators abandoned thousands of those houses as bad investments, and now about 24,000 foreclosures are working their way through the county court system.
But a steady drop in prices during the past three years has spurred a frenzy of interest in those houses as they come back onto the market. The median price was $322,300 at its peak in December 2005 but in April was only $85,500, according to the association's statistics.
Will the boom in sales that rejuvenated the real estate industry this year continue?
Steve Koffman, a real estate broker with Century 21 Sunbelt in Cape Coral, said he thinks the foreclosures will keep on coming, providing a steady supply of houses for the second-home buyers and investors who make up the majority of today's market.
"I think it's a temporary bottleneck" that caused the relatively low number of foreclosure homes now for sale, Koffman said, noting that a few months ago giant lenders "Freddie Mac and Fannie Mae had a self-imposed moratorium that caused there to be a gap in the pipeline."
But, Koffman said, foreclosures from now on are likely to be more from the "second wave" of more expensive houses whose owners lost their jobs and couldn't pay their mortgage or, in some cases, simply walked away because home values had fallen.
Nationally, the spike in homebuying was more modest as sales of distressed low-end properties have even sparked bidding wars in places such as Lee County as well as Las Vegas, Phoenix and Miami.
But the market for high-end properties is at a virtual standstill, mainly because it remains difficult to get a mortgage for expensive homes.
"We're looking at a dual market right now," said Sherry Chris, chief executive of Better Homes and Gardens Real Estate.
The National Association of Realtors said Wednesday that home sales rose 2.9 percent to an annual rate of 4.68 million in April from a downwardly revised pace of 4.55 million in March. Sales were 4.6 percent below April last year, without adjusting for seasonal factors.
Compared with January - the lowest point in the housing recession - April sales were up nearly 4 percent. But compared with the peak in September 2005, sales are still down 35 percent.
And they have not kept pace with foreclosures, which continue to pile up at an alarming pace. Those properties helped drag down the median sales price to $170,200.
- The Associated Press contributed to this report.

Real estate hitting new highs, new lows

LEE COUNTY: The Fort Myers-Cape Coral area now leads the state in home sales. But property values are expected to plunge to their steepest year-to-year declines yet.
Tuesday, we say one home that sold for 50-percent less than it sold for a few years ago. And because of rock-bottom prices like that, home sales are red hot.
If you thought the door to making money in real estate was sealed shut, Matt Sinclair, of Sinclair Custom Contracting, will open it for you.
He says he is a general contractor by trade, but was turned into flipper by the market.
"Anyone who can afford to jump in and buy should be jumping into this," he said.
Over the past seven months, Sinclair has bought and sold about a dozen homes.
His latest purchase was a four-bedroom, two-bathroom home in northeast Cape Coral. In 2004, it house sold for $163,900. Two weeks ago, it sold for $64,000.
Lee County Property Appraiser Ken Wilkinson predicts an average year-to-year drop of at least 30-percent, with parts of Cape Coral and Lehigh Acres taking the biggest hits.
The northern part of Cape Coral is one of the areas dealing with the most dramatic drop in property values.
"I've seen homes - three-bedroom, two-bath with a pool, never lived in, for $40,000. We've never seen anything like that," said Wilkinson. Article courtesy NBC-2.com

Foreclosures up 31-percent in Ft. Myers-Cape

LEE COUNTY: A new report from Realty-Trac shows the Fort Myers-Cape Coral area is ranked second in the country for foreclosures in April.
One in 57 homes in Fort Myers-Cape Coral received a foreclosure filing last month.
For the month of April 2009 there were default notices, auction sale notices and bank repossessions reported on 342,038 properties nationwide.
In Nevada, the top state for foreclosure activity in April, one in every 68 housing units received a foreclosure filing, which was an 18-percent decrease from March 2009.
In Florida, there was a 37-percent increase in foreclosure activity from March. One in every 135 housing units received a foreclosure filing in April statewide.
Foreclosure activity was up 75 percent from April 2008 statewide.
Locally, foreclosure activity increased 31-percent from March. Courtesy of NBC-2.com

The median price of an existing home sold in Lee County plummeted in March to $88,500

The median price of an existing home sold in Lee County plummeted in March to $88,500 — the lowest since it was $78,500 in December 1998.According to statistics released Thursday by the Florida Association of Realtors, the March median was down 58 percent from $212,500 a year earlierMeanwhile, the number of sales in March soared to 1,464 — almost triple the 501 recorded a year earlier.

Transactions include only those in which a Realtor was involved. For condominiums, the median was $126,200, down 36 percent, and the number of sales was 358, up 53 percent.Brett Ellis of ReMax Realty Group said the falling median was in part a result of homes flooding onto the market as banks take back houses in foreclosure and re-sell them.“I’m not sure the overall prices are still trending down but I think there are larger amounts of foreclosures,” many in the lower price range, he said — the result is a lower median price: half the houses sold are more expensive and half less expensive.

The trend could turn around later this year as banks take back more of the more expensive homes, Ellis said. “I see signs in some segments that may already be occurring.”

Home prices plateau

Prices for Lee County homes in February continued at well below what they were a year ago, but the number sold was sharply higher, according to a report issued Monday by the Florida Association of Realtors.
There were 875 single-family homes sold in February, 97 percent more than a year earlier and up 15 percent from January.
The median price of a single-family home sold with the assistance of a Realtor in February was $97,500, 54 percent less than the $211,600 it was a year earlier. But February's price was 3 percent more than January's $94,900, which was the lowest it has been since it was $90,000 in February 1999, the report states.
In a separate report also released Monday by the National Association of Realtors, sales of existing homes rose from January to February in an unexpected boost for the slumping U.S. housing market as buyers took advantage of deep discounts on foreclosures.
The report said that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January. It was the largest sales jump since July 2003.
In Lee County, the lower prices prevailing now have stimulated a wave of buying by both investors and people looking to buy a place to live, said Brett Ellis of Re/Max Realty Group in Fort Myers.
"You're seeing snowbirds visiting Florida and saying, 'This is the best opportunity in years,'" Ellis said, and there are also "the sophisticated investors who realize an opportunity. These are serious people who are saying this is probably oversold, let's start buying."
The investors, Ellis said "are really concentrating on that $40,000 to $60,000 market" for homes while people buying for themselves typically go for somewhat more expensive dwellings.
Josh Bevington, an agent with John McWilliams and Tom Buckley & Associates in Lee County, said he sold 33 homes last month and the most in demand are lower-end houses. That means a lot of sales in Cape Coral and Lehigh Acres.
Condominiums are a tougher sale than single-family homes because many condo developments are suffering from high rates of foreclosures. As a result, their fees have increased, making them less desirable, he said.
Hans Tomson, who has been trying to sell his Fiddlesticks home in south Fort Myers for two years, said he has noticed that more people are looking lately.
"So far, so good -except we haven't been able to sell it yet," Tomson said. "People don't seem to have money."
Originally, he had it priced at $2,650,000, but has reduced the price to $2.1 million.
Tomson doesn't expect to go lower. "We've come down almost 20 percent. I told my wife, 'We don't have to sell. We'd like to sell, but we won't lower the price any more.'"
Nationally, the median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record.
February's median sales price was up slightly from January, which recorded the lowest median price since September 2002. Prices are down about 28 percent from their peak in July 2006.
In contrast with the housing boom, when buyers took out ever-riskier loans and maxed out their home equity lines, "homebuyers are not over stretching" said Lawrence Yun, the Realtors' chief economist. "They want to stay within their budget."
By summertime, sales are expected to get a boost from a $8,000 tax credit for new home buyers included in the economic stimulus package signed by President Barack Obama last month.
The number of unsold homes on the market last month rose 5.2 percent to 3.8 million, a typical increase for the winter months. At February's sales pace, it would take 9.7 months to rid the market of all of those properties, unchanged from a month earlier.
The bursting of the U.S. housing bubble has caused foreclosures to swamp the market - especially in particularly distressed states such as Florida, California, Nevada and Arizona. Article courtesy of Fort Myers News Press.

Foreclosed homes dominate Lee County market

Foreclosures continued at a near-record pace in February — and as banks
take houses back and resell them, they’re dominating Lee County’s real
estate market as never before.
That means terrific deals for buyers but more depressed prices for home sellers.
Meanwhile, the number of permits to build houses in the county stayed near
record lows in February as developers found themselves unable to compete with
the fire-sale prices being offered by lenders putting foreclosed homes back on
the market.
There were 2,109 foreclosure actions filed in the Lee County courts in February,
up 7 percent from January’s 1,963 and up 19 percent from 1,774 in February
2008.
However, February’s number was 21 percent off the all-time high of 2,665 in
October, according to the Southwest Florida Real Estate Investment Association.

In January, the latest month available, of 827 total sales listed with the
Realtor Association of Greater Fort Myers and the Beach, foreclosure resales
accounted for 542 and short sales for 107.That left only 181 sales — 22 percent — that were not distressed sales involving a bank.
In Lehigh Acres, the area hardest hit by foreclosures, only 8 percent were
non-distressed sales.
Those lucky enough to be buyers in this market say they’re getting phenomenal
deals as banks get rid of the houses as fast as they can, experts say.

Bob Pearce, 48, rented a house in Cape Coral on Oct. 15 but got a foreclosure
notice Oct. 23 — unbeknownst to him, the owner had leased the house to him
even though it was about to be taken back by the lender.
"So I started freaking out" at the prospect that he and his two children
would be without a place to live, he said. But less than two months later he had closed on a three-bedroom, two-bath house in the Cape for $40,500 with a mortgage of about $400 — less than he’d been
paying in rent.

John McWilliams of John McWilliams and Tom Buckley & Associates, who
represented Pearce in that sale, said most of the deals he handles these days
are for people buying bank-owned properties. Even short sales — in which the
bank agrees to forgive part of the seller’s debt so the transaction can go
through — pale by comparison.
"Half the Realtors will not even show a short sale" to a client because it
can be four or five months before the bank OKs the deal, he said. "That
eliminates a lot of buyers. Realtors throw their hands up in the air."
Since most non-distressed sellers either don’t want to sell or can’t because
their mortgages are too high, that leaves bank-owned houses as the major source
of sales, McWilliams said.

David Hall, president of First Community Bank of Southwest Florida, said he
checks out bank-owned sales as thoroughly as any others. "We verify the market
value whether it’s Bank of America or XYZ Co. or Mary Jane Jones."
But, he said, as a rule the bank-owned properties are priced correctly.
"Generally banks are trying to sell properties — they’re not in the
business to hold long term."The aggressive pricing by banks is a good thing, he said. "We have to work our way through these foreclosures and get them sold."

There are about 14,000 houses listed for sale in the county and 30,000
foreclosures working their way through the courts.
Meanwhile, there are few signs as yet that the flood of foreclosures is abating,
said Jeff Tumbarello, director of the real estate investment association that
puts out the statistics. "We’re in a negative feedback loop" in which foreclosures go back on the market to be sold at low prices that cause other property owners to let their own properties go, he said.

Foreclosures in Lehigh are still accelerating, Tumbarello said, although
foreclosures in Cape Coral have been falling slightly — probably because
"Cape Coral crashed first, so it should dry up first." Courtesy of the Fort
Myers News Press.

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