New Housing Trends May Not Surprise SW Florida Residents. A lot of what SW Florida readers and TV viewers see and hear can leave them with the definite impression that the nation is headed for rough sledding. Most of us do understand that the “news” is selected to get our attention…and that often results in a steady stream of headline-grabbing accidents, malfeasance, and international catastrophes of every stripe.
It could make anyone feel pessimistic about the future. When it comes to how we plan for our own personal prospects, issues like a rising national debt and stymied income levels could lead any SW Florida resident to envision a future of gradually diminishing living standards. When people fear a storm coming, they prepare. Pull in their horns. Cut back. Economize.
But apparently if our futures are to bring the kind of storm clouds hinted at in the nightly news, few of us believe it.
The evidence for that conclusion comes from no less an authority than the United States Census Bureau. It issues an annual report called The Characteristics of New Housing. Reading the latest, which summarizes new housing built last year, yields some surprising information. This, too, is news. It may not have reached any of the news outlets SW Florida readers would have seen, but I think it deserves a headline or two.
The first new housing surprise was that of the 620,000 single family homes completed in 2014, 565,000 were built with air conditioning. That’s 91% of them. I’d expect that kind of statistic for the Sunbelt states, but not nationwide. Clearly, the day of swamp coolers or toughing it out during September heatwaves are over. The era of relying on good cross-ventilation in a home has apparently gone the way of automobiles sold without radios (or, come to think of it, without A/C!).
More significantly, 64,000 of the more than half million homes were completed with two bedrooms or less. That may not surprise—there are many two-bedroom SW Florida homes, and some of them are elegant. What’s surprising is that 282,000 had four bedrooms or more. 4-to-1 over what used to be the U.S. standard of two bedrooms. If hard times are ahead, clearly the new housing buyers plan to weather them with elbow room to spare.
The rest of the Census Bureau’s survey is similar, and points to American homes with physical plants that are pretty opulent by historical standards. Only 25,000 had 1 ½ bathrooms or less, but nine times that many (221,000) were designed with three or more bathrooms. If we’re headed for a new Great Depression, at least we’ll meet it freshly bathed.
New Housing Trends May Not Surprise SW Florida Residents. The median size of a single-family home completed last year was 2,453 square feet. When you consider that it was about 1,600 in 1973—and that the average number of persons per household has gone from 3 to 2.5 during the same period—you see why the American Enterprise Institute says that the living space per person has nearly doubled.
SW Florida residents with long memories have probably noted that the average household does seem a lot roomier in 2015 than in decades past, but probably less so the extent of the difference. For anyone looking to expand their own family’s elbow room, this fall’s SW Florida listings provide a terrific lineup of candidate properties. Give me a call if you’d like to take a close look at some of them!
SW Florida ‘For Sale by Owner’ Messaging May be Unfortunate. If you will be selling your house this fall, an early decision will be whether to team with a SW Florida REALTOR® or go the “For Sale by Owner” route. One thing to consider is messaging.
“Messaging” is one of those words that SW Florida homeowners began to hear a lot after Madison Avenue decided to verbize the noun ‘message.’ I know verbize isn’t a real word, but to me, messaging convolutes English in pretty much the same way.
Messaging rose in popularity about the same time that Hollywood actors and politicians started referring to their own names as their ‘brands’—apparently on the assumption that it makes them sound more valuable. To some of us, it makes them sound more like cattle ranchers.
Nonetheless, since it’s now mainstream to be messaging this and messaging that, whether you’re leaning toward planting a For Sale by Owner sign in the front yard or recruiting an SW Florida Realtor, you should be considering the messaging. Once you know that, you can message like crazy, confident that you’re not sending any wrong signals.
Most of the messaging will certainly be about how terrific it would be to live in the house. The subtexts might be that it’s a fantastic place that’s well worth the price asked; that any owner would be proud to invite friends and relatives over; that it’s clearly a leading contender among other SW Florida homes in its price range.
With messaging in place, your REALTOR can create a complete professional listing, then set the ‘For Sale’ sign in the front yard. For those who would rather go it alone, they can figure out how to pay for the listing they create themselves, then plant a ‘For Sale by Owner’ sign out front.
But that could be where the messaging goes a little haywire.
Yes, a For Sale by Owner sign on a SW Florida home announce to the world that the house is For Sale—and that is excellent, unambiguous messaging. But the by Owner part will, for some, carry some additional messaging that’s not quite as positive. Think for a moment about the impression you get whenever you see a house with that sign out front (a nicely printed one…the ones scrawled by hand on poster board don’t even count). Chances are, you are like everyone else: you assume you know something extra about the seller.
The messaging is, at best, This house is for sale by someone who is up front about not wanting to pay for a professional to sell it.
The other messaging takeaways can be less helpful:
Professionals haven’t been able to sell this house for the price you’ll be finding out about soon enough is one possibility. There is also:
Here is a bargain, sort of like a yard sale—want to pick over what’s here? Or:
This house is going to be cheaper than a real house. Or:
Nobody who is professional will be involved in any way. Or:
If you’d like to get into a personal bargaining situation with someone who considers himself a shrewd negotiator, here’s your chance!
That kind of For Sale by Owner messaging differs greatly from:
SW Florida ‘For Sale by Owner’ Messaging May be Unfortunate. This house is professionally represented—the unambiguous messaging all my “FOR SALE” signs send. You’ve probably seen them around SW Florida (often with a ‘SOLD’ placard attached). They’ve got my phone number on them, but you don’t have to drive around to find it, since it’s right here on the website. You can call me right now! Thank you.
SW Florida Real Estate Watchers Give Price Graph a Double-Take. When SW Florida real estate trackers keep tabs on the progress of the national rebound, they note the findings of the major pollsters and data miners, read what the pundits have to offer, and look at charts and graphs—lots of charts and graphs.
The graphs that chart residential real estate price history for the last decade or so tend to look very similar. It doesn’t matter whether they’re showing regional or state or national price movements. If they’re line graphs, they look like a cross-section of a trampoline just as it’s about to propel a 7-year-old into the wild blue—or what your overweight neighbor’s hammock looks like when he’s taking a snooze. The lines start high, tumble south, stay down there for a stretch, and then wend their way back up.
Last week’s CoreLogic roundup of June home prices included a typical example. It showed four colored lines, each of which traced a different residential home price tier: low, low-to-middle, median, and high. Almost in parallel, they showed a dip from the ‘bubble’ highs, a slog along the bottom of the real estate bust, and the ascent that has been pleasing SW Florida real estate watchers in recent years.
There was a noteworthy detail in that chart. This was Figure 2, “HPI by Price Segment.”
“HPI®” is CoreLogic’s own proprietary “home price index” which corrects residential real estate prices to account for the distortion inflation creates. The values are all corrected to 2006 dollars. Inflation may not have grabbed headlines of late, but even relatively tame rates add up: if you’ve bought a half-gallon of milk or a dozen eggs lately, you know that.
Anyway, the single detail that would have had sharp-eyed SW Florida real estate observers doing a double-take was the dark blue line, which tracked the low-end residences (defined as 0% to 75% of median prices). It ended at what looked like—actually, did more than ‘look like’…it was—higher than the starting point…and headed up! The sale numbers—corrected for inflation, even—confirmed the story: that segment of the national residential real estate market has now eclipsed pre-crash price levels.
CoreLogic’s commentary elaborated further. The low-price tier is up 53+% from its deepest point, registered in March, 2009. It has now surpassed the per-crisis peak. With prices up 12.7% thus far in 2015, the segment has taken off the fastest—although the slope of the other three segments looks similar (just not as steep).
SW Florida Real Estate Watchers Give Price Graph a Double-Take. The highest segment of market was an orange line, and it came the closest to that dark blue one. Still a little more than 5% below the heights of the previous high, it (and all the other price tiers) look to be headed skyward. For any SW Florida real estate watchers who believe that ‘buy low, sell high’ is a guiding principal, the time to take a thoughtful look at the real estate market would be at a point in the charts where the lines are headed up. That would be a good time to give me a call…and it seems to be now!
A SW Florida Rental Investment: Stiff Competition for Investor Capital. When you buy a property as a SW Florida rental investment, you join the world of investors who recognize the value of an investment that’s as solid as the ground we walk on—one with the additional advantage of providing a steady cash dividend. With those dual advantages, you’d wonder how other investments can offer much competition, were it not for one major consideration: your time.
That’s the part that not everyone fancies. A SW Florida rental investment is one that simply requires more active management attention than many others. You don’t have to check on your bond portfolio regularly, but when you have a house or condo rental, it’s a good idea to do so. You don’t have to monitor your stock investments to be sure you’re in compliance with the latest local, state, and local fair housing rulings, but for an SW Florida rental investment, it’s prudent. Your IRA holdings don’t require your attendance at seminars on risk management, but hands-on landlords sometimes show up at them.
No wonder everyone isn’t automatically drawn to rental real estate investments.
The truth is, SW Florida investors with sufficient free investment capital are also likely to be people whose time is at a premium. They’d like their investment to make life easier, not more complicated. Who can blame them?
As a strong proponent of the advantages of SW Florida rental investments, I’m happy to point out that there are two major solutions to those built-in drawbacks.
The easy solution is what folks who are close to retirement age sometimes discover about themselves: they like being landlords! If their time is actually not in critically short supply, retirees (or in today’s more common circumstance, semi-retirees) who have mastered a career or two of management challenges often find the hands-on administration of their rental investments to be a relatively low-intensity assignment. No sweat, since they have enough free time to do their due diligence were needed. Piece of cake!
The other solution is what busy people in leadership roles have learned to use in other spheres: delegation. And the lucky fact is, there is a whole industry staffed and ready to accept the assignment. They are our SW Florida professional property managers—eminently qualified and experienced in handling the management burdens their clients send them. Their fee can cover any part or all of the landlord’s duties, from composing tenant advertisements to collecting the rents…from monitoring Fair Housing compliance and supervising maintenance emergencies to preparing rigorous financial documentation.
A SW Florida Rental Investment: Stiff Competition for Investor Capital. This month’s market features some terrific SW Florida rental investment property offerings at prices that make them worth exploring. Give me a call for more details!
To Sell a Luxury SW Florida Residence, Understand Luxury Buyers. When you have a SW Florida luxury residence ready put on the market, you are about to enter a specialized area of the real estate realm. The luxury home market is, as the name implies, other than ordinary—and so are some of the ways to effectively navigate through it.
First off, we have to recognize the importance of the fact that the pool of prospective buyers is a good deal smaller than that for a standard home. By the National Association of REALTOR®s’ assessment, it comprises only about 8% of the buying public. This speck of a target audience might seem to create a discouraging marketing handicap—but it’s balanced by the fact that these well-heeled buyers are only attracted to about 8% of the homes presented in the SW Florida listings. These buyers have more defined objectives than most: a true luxury home prospect isn’t about to accept any other than a high-end residence. Because there are fewer of such properties on the market at any given time, your own luxury residence stands to benefit. Limited supply is, after all, the simplest marketing cure for a limited demand situation.
One characteristic that distinguishes the best luxury residences is exactly that: it’s distinguished. Luxury residences do well when they have distinctive, notable features in their design or setting—even better if those features create a theme that’s memorable. Lacking that, a property may be able to depend upon sheer size or quantity (bedrooms, bathrooms) as well as quality construction to validate its place in the luxury category.
To be in show condition, a property in any category that is up for sale in SW Florida needs to be well maintained and presented. But for luxury residences, there may be a difference in the degree of attention required. The finer the property, the more attention any lapse attracts. Fair or not, people have a tendency to notice (and remember) even minor maintenance miscues—anything that stands out. The last thing you want is for a minor flub to be the most memorable thing a prospect takes away after an otherwise sterling showing.
There is also a seemingly extraneous factor that can help a luxury residence sale: the homeowner’s disposition. Eligible buyers in this category are typically busy people with demanding schedules. They may also be used to calling the shots in their own careers—and as potential buyers of an expensive property, assume they will be treated like what they are: VIPs. Since the owners of SW Florida luxury residences probably have similar credentials deserving the same degree of deference, being asked to accommodate a buyer’s sudden schedule change can be grating. The more understanding an owner can be, the more likely to result in the kind of positive atmospherics that produce the hoped-for result.
To Sell a Luxury SW Florida Residence, Understand Luxury Buyers. The actual mechanics associated with the sale of a luxury residence are generally more involved than with run-of-the-mill home sale transactions because financing, inspections, etc. are usually more time-consuming. To keep the proceedings on track and as efficient as possible, a key ingredient is the same as that which propels the entire process: close communication between the owner and the owner’s REALTOR. It starts with the kind of no-obligation consultation I’m pleased to offer—and it’s only a phone call away!
Decision to Buy a SW Florida House Shaped by Personal Circumstances. When you decide that the time is approaching to put your home on the market, you probably take special interest in exploring the conditions that are likely to motivate families to buy your SW Florida house. Most of the research on the subject indicates that it has at least as much to do with how people live their lives as it does with external forces–like changes in the economy or jobs market. When you spend as much time as I do chatting with people who are in the hunt to buy a house, you’d probably agree.
When SW Florida empty nesters come to the conclusion that supporting more house than they need is wasting their resources, finding the right smaller place can become increasingly appealing. The idea that they could buy a house that’s right-sized for them—and come away with extra cash to support more travel and leisure activities—can soon become Priority 1. The current status of the real estate market doesn’t come close as a determining factor.
In the same way, there’s nothing like the arrival of a new baby to prompt the decision to buy a house with an extra bedroom or two. Likewise, when a youngster is approaching school age—but your district isn’t quite up to par—a move across town might suddenly beckon.
When the time comes to buy a house, people tend to take more seriously these kinds of long-term issues. Since there is a whole universe of possible changes in income or family situation that life can send our way, it does make sense to delay some decisions for a while.
If a move is to be from renting to owning, the dollars and cents wisdom is usually clear enough. Across the U.S., rents are rising quickly enough to practically guarantee the practicality of making such a move—even if only because of the ‘forced savings’ advantage that ownership brings. If a move is contemplated to a larger or a smaller home, or from one SW Florida neighborhood to another, developments in the economy or particulars like changes in the mortgage rate may influence the decision, but not lead it. Family matters motivate most moves.
Decision to Buy a SW Florida House Shaped by Personal Circumstances. Such outside factors may not be decisive, but the good news is that this fall is one of those times when many of them are in place to make buying or selling a SW Florida house more attractive than usual…and for sure, a good time to give me a call!
SW Florida Real Estate Watchers Follow the Dots… Last week was a head-swiveling version of a follow-the-dots puzzle for those who keep tabs national news related to on SW Florida real estate. Children like following the numbered dots to reveal a picture. You can’t be sure what it will turn out to look like until the end. The week was a lot like that:
Monday led off with the release of housing-builder sentiment: its best reading in 10 years! It was given credit for reversing an early-day 100+ point stock market drop. When the Dow closed up 68 points for the day, real estate performance got the kudos.
Monday’s dot connected to the next one, which appeared as USA Today’s early Tuesday dispatch pointing out that the previous day’s market rescue was hardly a flash in the pan. The Money section’s lead story, “Housing Provides Much-Needed Lift to Wall Street” drew a broader picture. In a ho-hum year for the broader stock market, housing-related stocks were uniformly “among the best-performing shares.” The S&P 500 may have been up less than 2% for the year, but homebuilders’ shares were up 13%; home-improvement retailers, 11.1%; home furnishings stocks, a blistering 26.1%! The reason was “the power of the resurgent real estate market to generate positive action in the stock market.”
Then, on Wednesday, CoreLogic provided the next dot with its release of the August MarketPulse roundup, pointing to a 6.5% increase in its national home price index. This was the logical next dot—one that was hardly unexpected. The predicted continuation of price increases was again explained by lean inventories, continuing low mortgage rates, and consumer confidence rated “the most optimistic in eight years.”
Thursday’s dots had been anticipated, too: the morning announcement of July existing-home sales marked the 41st consecutive month of year-over-year price gains. Volume was up, too, as sales topped an annual level of 5.5 million for the first time since early 2007. TheStreet took that as “just the latest confirmation that the housing nightmare is mostly over.”
By Friday, the last dots appeared in calm contrast to the frenetic news from Wall Street, which completed its worst week in five years. Even the real estate industry stocks which had rescued the day on Monday couldn’t buck the outrushing tide of equity losses. But the last dot for SW Florida real estate watchers was found in the analysts’ post mortems after the market’s close, as speculation increased that the carnage on Wall Street might well be sufficient to nudge Federal Reserve decision makers away from raising interest rates in September. Real estate trackers were able to put their pencils down and relax for the weekend.
So, what was the picture the follow-the-dots puzzle revealed? The real estate industry dots seemed to trace a simple circle…with a curved line near the bottom that looked a lot like a smile.
SW Florida Real Estate Watchers Follow the Dots… Whether or not this fall’s SW Florida real estate offerings continue to benefit from historically low mortgage interest rates (they dropped again last week!), there are definitely great opportunities for buyers and sellers. Give me a call whenever you feel the time is right to take advantage of today’s market!
SW Florida homeowners take note:
Neglecting your filters!
SW Florida Homeowners Easily Conquer Bad Home Habits. That was only one of many “bad home habits” blogger Annie Stevens admitted to in last week’s confessional outpouring on the Aussie web site Domain. “Bad home habits” may not be a phrase SW Florida homeowners are accustomed to thinking about, but it’s an idea worth mulling—especially if selling your SW Florida home is something that could be in your immediate (or even middling) future.
In its mildest form, a Stevens bad home habit would be one that needs to be straightened out before John and Jane Q. Public come to look your house over after it’s listed. In the extreme, a bad home habit can lead to escalating maintenance issues. Neglecting your filters is one of those.
Filters you neglect can be the thin, washable, plastic-and-foam panels you slide in and out of your window air conditioner. If you have one, you are among the many SW Florida homeowners who was grateful to have it last week. Filters you neglect can also be one of the larger, paper-foil-and-mesh replaceable thingies that you are supposed to replace in the workings of your central air unit. They can also be the cottony stuff you wad into your tropical fish aquarium, but that’s not the kind that’s a big homeowner concern. That one is strictly between you and the fish.
In all but that last example, neglecting your filters can lead to an air circulation problem, or even to a burnt-out blower motor. This bad home habit can be blamed on the location of the filters. Being out of sight, it’s hard to remember they are even in there, much less that they require your tender ministration.
Another of blogger Stevens’ bad home habits is “buying exercise equipment you will never use.” It’s easy to see why this is a bad budgeting habit, but not really a bad home habit. After all, if you turn the garage into a home gym, it could be a selling point when you’re ready to sell. And if you don’t ever use the exercise equipment, it will be appealingly shiny and new (even if you are more out of shape than you want to be). Potential home buyers won’t care about that.
Stevens actually described eight bad home habits, but some of them don’t really apply to SW Florida homeowners (she writes from Australia). For instance, leaving half-drunk cups of tea around the place is not a common SW Florida homeowner failing. And sleeping with your phone is more of a bad lifestyle habit, since constantly checking an iPhone in the middle of the night disrupts a normal sleep cycle.
Much more applicable is Bad Home Habit #6: letting dirt build up on the things you forget to clean. It’s easy to forget to clean areas and things that are in dim, out-of-the-way corners, but when it comes to getting your home into shape for open houses and showings, it’s amazing how prospective buyers somehow seem to make a beeline for them. Fortunately, a few serious deep cleaning sessions will cure any vestige of bad home habit #6.
SW Florida Homeowners Easily Conquer Bad Home Habits. It’s a Murphy’s Law kind of rule that any neglected maintenance feature will tend to go completely kaput just when you least want it to. As you get your home ready to put on the SW Florida market, that’s why catching it in advance is definitely to your advantage. Also to your advantage: giving me a timely call!
SW Florida Open Houses Can be Effective…Unless they aren’t! It looks as if the debate about the effectiveness of SW Florida open houses as selling tools isn’t going to be settled any time soon. Part of the reason is the difficulty of getting accurate feedback about prospective buyers’ actual behavior as opposed to their intentions. Pollsters do their best, but you have to question the answers they come up with.
A good example was a couple of surveys that tried to pin down how future buyers intended to find their next home. The major online web giant Trulia found that more than 90% of folks who were in the market said they planned to attend open houses as part of their home search! And 62% of U.S. home buyers “reported using/planning to use online sites to find open houses.” If true, that should definitely end the debate. If nearly two out of three buyers are heading to the web to find open houses, when you add in the number who would undoubtedly see street signs or other notices, what SW Florida home seller would choose to ignore what amounts to the majority of potential buyers?
The problem is that a similar study done for the National Association of REALTORS® came up with very different results. The NAR found that 44% of buyers used open houses as an ‘information source’—less than half the number Trulia reported. Which survey is more accurate? There’s no telling. But there’s not much question that open houses can benefit prospective buyers. Although the SW Florida internet listings provide an efficient way to survey and compare descriptions of what’s currently out there, being able to casually pop in and out of several open houses on a Sunday afternoon is a convenient way to get a more in-depth feel for what’s available in various neighborhoods.
The downside for sellers is the usual: the inconvenience involved in getting the property in top condition, making sure that pilfer able objects are securely out of reach, and having to vacate the premises for the duration. On the other hand, opening the property to prospects who might not yet be as committed to buying as those who seek showings through their real estate agents is a way to widen the field of possible buyers—especially true for some SW Florida properties which don’t photograph as well as they show in the flesh.
And it’s definitely a marketing plus—a foolproof way to bring wide attention to the fact that yes, the house is seriously up for sale! When the subject comes up, neighbors and passers-by are more apt to make a mental note of the house over on the next street that I remember is for sale. More than one home has been sold because a friend of a neighbor has an aunt who’s been looking for a place…
SW Florida Open Houses Can be Effective…Unless they aren’t! An open house can be one useful marketing tactic—but like all others, whether or not to use it is the client’s choice. If you are contemplating marketing your own SW Florida home, or are soon to be in the market to buy, don’t hesitate to give me a call!
Why SW Florida Mortgage Interest Rate Rises Concern Shoppers. If you begin a search for a new home by going online to check out the SW Florida listings, it’s likely that one of the first search criteria you enter will be the price range. After all, unless you are a virtual looky-loo who is just checking out how the other half-lives, your budget will dictate which homes you seriously consider. If you are one of the more than two-thirds of us who will be counting on a loan to help finance that home purchase, the monthly payment amount is really what matters.
That’s why you don’t have to be a dedicated number-cruncher to be keenly interested in the direction SW Florida mortgage interest rates are going to head. In fact, if you aren’t one of those whose idea of a good time includes working out spreadsheet calculations, it probably came as a shock the first time you realized how big a deal it is when SW Florida mortgage interest rates notch up or down even a single percentage point. If you’ve never sat down to look at the numbers, please sit down before continuing…
For a quick example, suppose you were Average American Homebuyer taking advantage of an average American home purchase just this past July. Your family income was a bit higher than the median of $55,000—say, $60,000—so if you went with the lenders’ standard rule that 28% of income is the most a housing budget should allow, that meant $1,400 would be your maximum mortgage payment.
You found a terrific buy—a brand new home at exactly the median U.S. new home price, $286,000. You had saved up diligently, so the 20% down payment was available. That made enough of a dent in the sales price to qualify for the median mortgage interest rate, which was July’s 4.05%. Your annual taxes and bank-required insurance came to an annual $3,000, which added $250 a month). The whole situation made you more than median-ly happy, because it meant that your monthly mortgage payment on the home’s 30-year fixed rate mortgage came to only $1,350. That provides $50 of breathing room…
But remember, this quick example is one that required you to sit down. Sooooo — what’s the problem? It’s this talk about the Federal Reserve wanting to raise the federal funds target rate. That would have to trigger rises in the mortgage interest rates in SW Florida (and everywhere else). In our quick example, taxes and insurance costs stay the same; but suppose the mortgage interest rate notches up one little percentage point, to just 5.05%? That’s still below the historical average, yet the same home—and the same loan except for that one percent raise—now requires a monthly $1,486 payment. That crosses the budget recommendations—and although some lenders would likely consider other factors that might make the loan possible, that single percentage point rise does wind up costing Average American Homebuyer more than $1,630 a year (and nearly $50,000 over the life of the loan).
Why SW Florida Mortgage Interest Rate Rises Concern Shoppers. The reality is that prudent home shoppers are currently able to consider properties at higher price ranges than will be the case after mortgage interest rates rise. For them, the market is literally wider than it will become later.
A further note: August saw SW Florida mortgage interest rates fall below even July’s 4.05%. Another very good reason to give me a call!