Michael Polly Fort Myers / Cape Coral Real Estate News Blog

The news today that foreclosures may have peaked spawned the headlines "Lee's housing market bottoms out."

Working in the industry and studying the market intently I often sit back and wonder what this means. Correctly put I believe that it should say Lee's housing market may have hit the TOP of the foreclosures. (Maybe)

We are really looking for different signs that point to recovery. At the end of the article there is a mention that baby boomers may in a couple of years come back into our market and revitialize it. I would argue that they already are!

The reason they left or stopped buying in the first place was our market became overpriced and was seen as overvalued. Our cost of ownership put many out of the market with insurance and tax costs. Now as our market corrects we are seeing the buyers come out and buy. Many are baby boomers from all over the country. Evidence of this was seen in the recent liquidation sale at Coral Lakes.

We may be seeing the top of the foreclosure market only time will tell. We need to see the top of the inventory growth and we have not yet seen that as our inventory grew again in March to just over 16,150 for single family resale homes. Sales were good but no enough to create a drain on the inventory.

We are feeling and seeing the bottom of the builder market as they are building and selling as low as we will see. As fuel and transportation costs rise so will builders costs and so will the cost to the buyer. If there is a builder with inventory or putting footers in the ground today, it may be the bottom for this sub-market.

We still have to work through the bank sales and short sales and this process is like trying to suck peanut butter through a straw.

Sellers are still hurting adjusting to what the market will offer for their home. This is hard as these foreclosures are really putting pressure on prices.

These tops and bottoms are all good signs just like watching a wound heal. Our market is healing and buyers are starting to realize that the deals are here and now.

Michael Polly - Vice President Denny Grimes and Company

First Quarter posts double-digit improvement over ‘07

My voice mail message light was blinking when I arrived at my office one Monday morning four weeks ago. Believing optimism trumps pessimism, I envisioned the message would lead to new business; it would be a great beginning to a new week.

I was right, sort of. I could tell by the tone of the man’s voice in the message that he was actually giving me the business because he did not like what he read in my latest article. I’ve learned that any message that begins with the words “Mr. Grimes” wouldn’t be one I’d want to build my week on.

He basically accused me of lying in my article that came out in Sunday’s paper, just a day earlier. I reported that pending sales for the first two months of the year were up 16 percent over the previous year. He was then kind enough to read from The News-Press that was tossed on his driveway early that morning. He gleefully read that “existing home sales have fallen since the beginning of 2007.” I couldn’t help but wonder why he chose to believe the more pessimistic of the two stories. He must be a potential buyer.

I’m a glutton for punishment, because I stand by my comment. In fact, let me update my report by saying pending home sales for the first quarter of this year are up 29 percent from the same period last year. Don’t worry; there is plenty of room in my voice mail box, so if you feel you need to call and ball me out, be my guest.

Before you do, let me explain the reason for the discrepancy in the sales numbers. Notice, I use the word “pending sales,” which means contracts that have been written but have not closed. The News-Press receives their monthly sales reports from the Florida Association of Realtors, and those reports use closed sales, although the word “closed” is omitted. I am trying to encourage them to add the word “closed,” so it will be less confusing for the public.

Solid arguments can be made for both methods of measurements. Those that use the closed sales approach rightly state that a sale shouldn’t be counted until it closes. Therefore, they only count closed sales. The disadvantage of that method is that closed sales measure what happened 30 or 60 days ago, not what is happening now.

The closed sales for January and February were lackluster because they reflected the market’s velocity from last November and December, which are typically slower months. You will soon hear that sales (closed) are showing improvement. Why, because pending sales have been increasing, therefore there will be an increase in closed sales. It’s not rocket science.

Your reporting method of choice will depend on when you like to receive your information. If you would rather watch The Masters via your TiVo over the Labor Day weekend, then you will prefer the closed sales approach. My preference would be to watch it live. Therefore, I prefer tracking pending sales because they reflect more of a real-time picture of the market’s temperature. Sure, some of the sales will fall out and not close, but that percentage is as predictable as expecting Tiger Woods to be in the hunt during the final round. The bottom line is that sales are increasing, so why not talk about it now instead of two months from now?