The median prices of existing single-family homes in Collier and Lee counties have been rising at a 20% to 30% annual clip in recent months. Can they keep rising at this pace?
Prices for existing single-family homes in Collier and Lee counties have surged in recent months by 20% to 30% compared with the same months last year.
These price increases are steeper than in other areas of the Gulf Coast, suggesting that residential real estate in Collier and Lee counties may be recovering faster.
There's no single reason for the big jumps, but experts point to fewer foreclosures, shrinking inventory, low interest rates, increased demand and investor interest.
Still, there are forces that may keep prices from spiking further. Nobody's flipping homes like they used to during the boom, and the price increases are coming off the bottom of a home-price collapse. There's an unknown number of sellers and banks waiting to put “for sale” signs up once prices firm and homebuilders have dusted off plans for thousands of new homes in the area.
In September, the median price in Collier was $232,000, and in Lee it was $124,000. Those prices were up 25% in both counties compared with the same month in 2011, continuing a trend of similar annual median price increases throughout this year.
Of course, the median price of a single-family home has a long way to go before it hits the boom highs. In Collier, the median price of an existing single-family home hit the peak at $511,400 in January 2006 and in Lee, the median price hit the peak at $322,300 in December 2005.
But many Realtors say there are no reasons why prices can't continue to rise in the foreseeable future because supply is shrinking and demand is rising.
“Back in March 2007, we had 12,440 properties on the market,” says Mike Hughes, vice president with Downing Frye Realty in Naples. “Now we're down to 6,195. That's a 50% reduction and 1,000 of them are probably under contract, so our inventory is getting low.”
In Lee County, there's just a three-and-a-half-month supply of single-family homes for sale based on current sales pace, says Marion Briggs, owner of Sun Country Homes and Sun Country Realty of Florida in North Fort Myers. “Three and a half months is really nothing; that drives the price up,” says Briggs, who is also president of the Realtor Association of Greater Fort Myers and the Beach.
Jeff Tumbarello, a sales associate with Steelbridge Realty who follows the foreclosure market closely, says there's just a 1.7-month supply of homes for sale at less than $100,000 in Lee County. “Now what's coming out is owner-occupied, nicer homes,” he says, noting that 77% of sales are traditional transactions.
Tumbarello, who is also executive director of the Southwest Florida Real Estate Investor's Association, says he doesn't believe there's another big wave of foreclosures and banks don't have a giant “shadow inventory” of homes to sell. “The shadow inventory has become Big Foot,” he jokes.
Besides homebuyers who plan to live in the homes, the market also has attracted investors chasing higher yields with rentals. In addition, foreigners such as Europeans and Canadians armed with stronger currencies have been buying Florida property. “When you talk to these people, it's almost as if Florida is its own country,” says Briggs. “They say they're looking at Spain and Florida.”
“We're pretty close to a balanced market,” says Phil Wood, president of John R. Wood Realtors in Naples.
Still, Wood says new-home construction and residents who have been waiting for better prices to sell their homes may temper the price increases. “You'll see quite a few developer sales this season because buyers will want something new,” he says.
Brenda Fioretti, the managing broker at Prudential Florida Realty in Naples, says price increases will bring out sellers. “I think there are a lot of people who have held off because they couldn't afford to list their home,” she says, though she acknowledges it's hard to judge how many. “It's going to bring out some of the people who are waiting to sell.”
The residential real estate market could surge after the elections if issues such as taxes and deductions for mortgage interest are resolved. “It could unleash a lot of activity,” says Hughes.