Cape screaming growth

Cape Coral 5th fastest growing city in county

Cape Coral is now home to over 142,000 residents and was recently ranked 5th in the country in growth for cities over 100,000 residents.

It is estimated that over 10,000 residents are moving to the Cape each year. With building permits continuing at near record levels, the pace of growth doesn't appear to slow any time soon.

Cape 5th in U.S. growth [News-Press]

Backwards flip

Developers clamping down on flippers

In many hot markets throughout the country, developers are taking significant steps to discourage flippers from investing in their projects.

From a developers perspective, these actions make good economic sense particularly in limiting downside potential as the developer is ultimately taking the majority of the risk in building a project. Without limitations, developers run the risk of having too many resales that compete with their own incremental phases of a project. Additionally, speculators with a limited amount of capital tied-up in a new construction project are far more likely to walk away in a downturn.

In our local market, particularly at some of the higher-end projects with proven developers, recent changes that we are seeing include higher down payments, no contract assignment clauses, and penalties payable to the developer for a resale within a year.

Speculators beware [Orlando Sentinel]
Flippers: Riding the tide [Philadelphia Inquirer]

Deed scam redux

Another deed scam involving the deceased surfaces

In November, All American Foreclosure Solutions of Ft. Myers filed three deeds with the Lee County Clerk of Court's Office in which the company claimed to have bought vacant lots owned by individuals who are deceased. These three individuals supposedly signed deeds last November, but in fact each has been dead since at least 1991.

This latest scam is the work of Derek K. Runion, 23, of Cape Coral, the owner of All American Foreclosure Solutions and is very similar to the deed scam that unfolded last February in Lee County.

Firm files deeds with 'signatures' of dead [News-Press]

Sob story

Deceptive land acquisition pitches

Local vacant land investor Frances Snyder has acquired over 50 lots over the last two years, netting at least $400K in the process.

She is an avid letter writer and seems to have a continually changing sob story to try and convince land owners to sell her their property. Her pitch repertoire includes: acquiring land to build a school for the disabled; she has been depressed and needs to get out of a "small, two-bedroom villa and she cared for her mother for the past five years who suffered from dementia and Parkinson's and passed away.

If you are holding vacant property, you will habitually start getting these types of letters from investors. In Lee County, it is very easy to check the Lee County Appraisers Property Line to verify if a party looking to acquire your lot is an investor holding multiple properties. I am amazed at how often these writers of deceptive letters have an extensive portfolio of property.

Lot buyer accused of 'sob story' pitches land [News-Press]

Buildable land shortfall

Sarasota 10 year plan projects shortage of land

Sarasota County planners predicting a shortage of buildable land is the equivalent of Beethovan's Symphony no. 5 to vacant land investors.

Sarasota County is predicting that 64,000 new residents will call the county home by 2015. In terms of building permits, this population projection translates into roughly 23,300 new homes.

According to one analysis done by county planners, the unincorporated area already zoned for urban and suburban housing can accommodate 20,175 of those new homes -- 86.5 percent of the forecasted demand.

By 2015, villages could be best option [Sun-Herald]

LaBelle investor beauty

Hendry County community primed for take-off

EF Hutton here and when I speak........well you remember the rest.

Nearly every day I get asked the same question......."hey Mark, what is the next hot area?" Well you heard it here, LaBelle is hot.

One of the sure-fire signs that an area is heating up is the flood of postcards, letters, listing agreements and contracts that start jamming the mailboxes of property owners. As reported by fellow blogger and LaBelle resident Don Browne of Southwest Florida Online - Sunday Morning News, "Builders and out of town real estate brokers are sending letters to virtually all Port LaBelle and Montura lot owners asking to buy their lots."

Another sign of a hot market is the ratio of pending to active (PTA) listings in MLS. Typically a market with a PTA ratio greater than 33% is considered an active market. Currently for Port LaBelle vacant residential lots in the Sunshine MLS, there are 139 pending sales and 213 active listings for a sizzling PTA ratio of 65%.

A key infrastructure project will be completed this summer which widens S.R. 80 to four lanes between Ft. Myers and LaBelle. Eventually, S.R. 80 will be widened all the way to Palm Beach and will become a major cross-Florida transportation route. This road widening will make LaBelle a significantly more attractive commuting option for the Ft. Myers workforce.

The Bonita Bay Group has acquired 4,700 acres in LaBelle with plans to develop a Celebration style "Main Street" concept of mixed use commercial and residential. Long-term plans call for up to 15,000 homes to be constructed in this project.

At the present time vacant lots in LaBelle start in the mid 30's and have been experienced significant recent appreciation.

Pre-construction plethora

Pre-construction listings at all-time high

The number of houses for sale even before they're built has jumped 47% the past 12 months.

The Census Bureau says that 88,000 houses were for sale but not yet started in April, the latest data available, vs. 60,000 a year earlier and 40,000 five years ago.

The appetite for new homes is strong: There is about a 4.1-month supply of new houses for sale, up just 0.1% from 12 months earlier. That's low.

Unbuilt homes sell like crazy [USA Today]

Married with property

Options for holding real estate investments

A common question that comes up when a married individual makes a real estate investment is "how do I hold title?"

Nationally recognized real estate attorney and syndicated columnist Bob Bruss peels the onion on the various title holding alternatives.

Why do most couples take title to their homes in joint tenancy? [Naples Daily News]

Global housing perspective

Housing markets have cooled in Australia & Britain

The Economist weighs in with a view of the global real estate market.

The major take-away here is that the hot real estate market is not limited to just the United States. Other highly developed countries including Britain, Australia, France, Spain and China have experienced rapidly rising property values.

The central banks in Britain and Australia have cooled the housing boom in their countries by easing interest rates up -- a tactic the Federal Reserve has been reluctant to attempt.

In come the waves [The Economist]
After the fall [The Economist]

Close the book

Barnes & Noble passing on Cape Coral

In a head scratcher, Barnes & Noble has rejected a plan to build a store in Cape Coral at Pine Island and Pandella Roads. The national bookstore chain cites demographic shortfalls as the reason for bypassing the Cape.

Seemingly the Cape doesn't measure up to Barnes & Noble standards for a new store in key demographic categories including income levels, education and entertainment spending. As Barnes & Noble utilizes a 15 minute driving radius for their demographic analysis, many of the high-end gulf access Cape neighborhoods in the Southwest like Tarpon Point, Cape Harbour and the Hermitage are outside the range of this Northeast location.

As most new Barnes & Noble stores include a Starbucks coffee bar, frequent readers of Gulf Returns can sense the disappointment in my text today as my quest will have to continue for a Starbucks in Cape Coral. My money is still on the Shops of Sandoval as the location for the Cape's first Starbucks.

Bookstore in Cape doesn't add up [News-Press]

Net buyers beware

Florida swampland sales via the Internet

In a flashback to the questionable land sales practices that plagued Florida in the 1960s, today some operators are selling worthless wetlands on the popular Internet auction site eBay.

The Daytona Beach News-Journal ran a very enlightening story titled "Swampland sales are back in style" detailing sales on eBay of land in the University Highland plated subdivision. At the present time it is highly unlikely that the 6100 lots in this subdivision could ever be developed.

Real Estate Investor Magazine publisher, investing seminar evangelist and attorney Robert Abalos has an interesting history of land scams and frauds on his site Investing in land.

Over the past couple of quarters we have touched on a number of local scams as well including: Deed Scam Hits Lee County; Another Cape scam; Deed scam update; Cape land claims raise suspicion; and Minorities hurt by investor flipping.

In the past I have been quite amused by some of the eBay real estate auctions for Lehigh Acres that included beautiful gulf beach scenes. Maybe I am just clueless, but I have spent an incredible amount of time cruising the streets of Lehigh looking at property and I have yet to find one with a view of the gulf.

If you are considering making an investment in this market, it is most important to assemble a team of professionals that you trust. A good investor team includes at a minimum a realtor, title company, real estate attorney and a banker.

Watch out for swamp land sales on the Net [Sun-Herald]

Tile denial

Building supplies shortages impacting new projects

Last summer's devastating hurricanes, coupled with the continued record new housing starts has created a serious shortage of building products in Southwest Florida.

Cement roof tiles and cement blocks are the items in shortest supply and is particularly problematic for high end construction that utilizes tile roofing.

In the near term, these shortages are likely to continue particularly spurred by the rising global consumption of cement. The phenomenal growth in construction in China most likely will have continued long-term impact.

It is important to note that these material shortages combined with a labor force that is stretched thin due to the ongoing hurricane clean-up has pushed out the time it takes to build a new home in many cases by at least a quarter.

Supplies can't meet demand [News-Press]

Estero mucho dinero

Upscale communities transforming Estero

As each new upscale gated community opens in Estero, many more high net worth families are attracted to this area. These communities are highly-amenitzed and the many include private clubs and golf courses.

New Estero developments that have opened in the last five years include: West Bay Club; Pelican Sound; Miromar Lakes; Grandezza; Stoneybrook; Cascades; Rookery Bay; Rookery Point and Belle Lago.

Although Estero does not have a Naples address, certainly all the amenities and benefits of Naples are in close proximity. Estero is also influenced by Florida's newest state university, Florida Gulf Coast University, Germain Arena and planned and existing retail developments including the Miromar Outlets.

Luxury market booming in Estero [Naples Daily News]

Fixed-rate renaissance

Traditional mortgages coming back into style

Bell bottoms, VW beetles, Pabst Blue Ribbon, 30 year fixed-rate mortgages .......are all back in vogue after being outside looking in. Yes, traditional 30 year fixed-rate mortgages like daddy used to have are suddenly all the rage.

At Wells Fargo, fixed-rate mortgages accounted for nearly half of all mortgages in the first quarter of this year, up from 35% during the fourth quarter of 2004, says Brad Blackwell, national sales manager. Figures for the second quarter aren't available, but, "We're seeing that shift continue," he says.

Good old 30-year mortgages are back in style [USA Today]

Crimson optimism

No housing market slowdown says Harvard report

A new report titled the State of the Nation's Housing 2005 from Harvard University's Joint Center for Housing Studies provides an optimistic view of the US housing market. Key Findings from the report include:

STRONG HOUSING MARKET INDICATORS

􀂃 Single-family starts hit a record 1.6 million units in 2004, while new and existing new home sales grew to nearly 8 million.

􀂃 Homeownership reached an all-time high of 69 percent in 2004, with households all ages, incomes, races and ethnicities joining in the home buying boom.

􀂃 The inventory of new homes for sale is near its lowest levels ever. New homes sales would have to fall by more than a third—and stay there for at least a year—to create anywhere near a buyer’s market.

􀂃 Nearly 18 million homes were added to the nation’s housing stock between 1995 and 2004. Demand for new homes is on track to total as many as 20 million units between now and 2015.

HOUSE PRICE TRENDS

􀂃 Even though the cost of owning a typical home now exceeds the cost of renting a comparable home by 30 percent nationally (and by much more in certain areas), homeownership continues to set new records.

􀂃 With double-digit real house price inflation in 53 out of 163 of the largest metros and four of nine census divisions, aggregate home equity climbed 10 percent to $9.6 trillion in 2004.

􀂃 Ratios of house prices to median household incomes are certainly higher than in the past, with more than half of evaluated metros hitting a 25-year high in 2004.

􀂃 The condominium market is especially hot, with price appreciation nearly three times larger than for single family homes since 2000.

DEMOGRAPHIC DRIVERS

􀂃 Household growth over the next ten years is projected to surpass the more than 12 million new households added in last ten years.

􀂃 Today fully one in ten household heads is foreign-born. Immigration is expected to account for about onethird of household growth in the decade ahead.

􀂃 The children of immigrants will be a major contributor to housing demand, as the number of second generation children aged 1-10 grew by 41 percent and of 11-20 year olds by 63 percent.

􀂃 The sheer size of the baby-boom generation, who held more than $3.5 trillion in aggregate home equity as of 2001, helps assure that these households will keep housing demand going strong.

MORTGAGE PRODUCT DIVERSIFICATION

􀂃 Less than half of all home purchase loans in 2004 were standard 30-year, fixed-rate mortgages. Interest only loans, low and no downpayment loans, and adjustable rate mortgages have all gained in market share.

􀂃 Interest-only loans particularly grew in popularity, going from just a small share of all home purchase loans a few years ago to nearly a third in 2004, as reported by Loan Performance.

􀂃 Home buyers choosing an adjustable-rate mortgage could be in for payment shock if interest rates take off. Even if the rates to which mortgages are indexed do not go up, borrowers that took out loans with a one year discount will see their payments increase by 0.4-1.5 percentage points over the course of 2005.

AFFORDABILITY CONCERNS

􀂃 One in three American households spend more than 30 percent of income on housing, and more than one ineight spend upwards of 50 percent. An additional 2.5 million households are not cost burdened but live incrowded or in severely inadequate housing.

􀂃 Between 2000 and 2003, the number of households spending more than 30 percent of income on housing jumped by nearly 5 million, and those spending over 50 percent of income grew by 2.5 million.

􀂃 The number of households spending half their income on housing was up 69 percent among renters in the lower-middle income quartile in 2000-3, compared with a lesser but still large 43 percent among owners.

No Slowdown in Housing Market Seen, Report Says [Washington Post]

Florida apartment shortage

Growing problem in the Sunshine State

Rocked by the condominium conversion craze and minimal new development, Florida is experiencing a growing apartment shortage statewide, a National Apartment Association executive said Friday.

"It's going to be a big problem," said Dave Watkins, the association's treasurer and a regional vice president for Greystar Management Services Inc., one of the county's largest apartment-property managers.

Apartment shortages on state's horizon [Orlando Sentinel]

Mediterranean manifest

Project proposed for downtown Cape Coral

Coming on the heels of last weeks Piazza di Venezia announcement, a new project coined the Terraces at Rosa Vista was announced.

The project, located at S.E. 47th Terrace by S.E. 5th Place, will include professional offices, restaurants and shopping. The architecture is designed to evoke memories of an Italian or Mediterranean village complete with outdoor cafes.

Wow, two new projects for the Cape within a week of each other. With the "Naples-ization" of downtown underway, this is an exciting turn for the future of the Cape.

Cape to inject Mediterranean flair downtown with Rosa Vista [News-Press]

Squeeze play

Housing afordability gap growing in SW Florida

While the continued rapid housing cost appreciation that has delighted investors, it is a monumental problem for moderate income buyers.

One of the the strong draws to this area has always been the abundance of cheap housing. While signs of job growth particularly in tourism and construction are readily apparent throughout he region, it does not appear that the growth in high paying jobs is keeping up with the pace of housing cost escalation.

It does appear that the area is benefiting from a major in-migration from the Southeast Florida where prices have risen to even loftier levels.

Tight housing market squeezes families [News-Press]

Big AL weighs in

Greenspan comments on the real estate bubble

Here are some excerpts on the real estate bubble from Alan Greenspan in his testimony before the Joint Economic Committee, of the U.S. Congress.

There can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a "bubble" in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.

The housing market in the United States is quite heterogeneous, and it does not have the capacity to move excesses easily from one area to another.
Instead, we have a collection of only loosely connected local markets. Thus, while investors can arbitrage the price of a commodity such as aluminum between Portland, Maine, and Portland, Oregon, they cannot do that with home prices because they cannot move the houses. As a consequence, unlike the behavior of commodity prices, which varies little from place to place, the behavior of home prices varies widely across the nation.

Speculation in homes is largely local, especially for owner-occupied residences. For homeowners to realize accumulated capital gains on a residence--a precondition of a speculative market--they must move. Another formidable barrier to the emergence of speculative activity in housing markets is that home sales involve significant commissions and closing costs, which average in the neighborhood of 10 percent of the sales price.
Where homeowner sales predominate, speculative turnover of homes is difficult.

But in recent years, the pace of turnover of existing homes has quickened.
It appears that a substantial part of the acceleration in turnover reflects the purchase of second homes--either for investment or vacation purposes.
Transactions in second homes, of course, are not restrained by the same forces that restrict the purchases or sales of primary residences--an individual can sell without having to move. This suggests that speculative activity may have had a greater role in generating the recent price increases than it has customarily had in the past.

The apparent froth in housing markets may have spilled over into mortgage markets. The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern. To be sure, these financing vehicles have their appropriate uses. But to the extent that some households may be employing these instruments to purchase a home that would otherwise be unaffordable, their use is beginning to add to the pressures in the marketplace.

The U.S. economy has weathered such episodes before without experiencing significant declines in the national average level of home prices. In part, this is explained by an underlying uptrend in home prices. Because of the degree of customization of homes, it is difficult to achieve significant productivity gains in residential building despite the ongoing technological advances in other areas of our economy. As a result, productivity gains in residential construction have lagged behind the average productivity increases in the United States for many decades. This shortfall has been one of the reasons that house prices have consistently outpaced the general price level for many decades.

Testimony of Chairman Alan Greenspan The economic outlook [The Federal Reserve Board]

Quality cape cruisin'

Cape Coral recognized for good roads and quality drivers

Have you ever been cruising down Del Prado and been squeezed by a blue hair in a shiny DeVille with Michigan or Massachusetts plates intent on being in both her lane and yours? How about driving through the pothole obstacle course on Kismet Parkway in Northeast Cape Coral?

One does not generally equate Cape Coral with either good roads or particularly good drivers, but in the past week the Cape has been recognized for both.

On the subject of road quality, the Cape was ranked first in the nation by Washington DC-based national transportation research group, The Road Information Program (TRIP) for having the lowest percentage of poor roads. I couldn't believe this one and checked out the fine print, the ranking only applies to major roads and does not include secondary roads.

On the good driver front, Allstate ranked Cape Coral first in the percentage of good drivers out of the 11 cities surveyed in Florida with over 100,000 residents. Allstate published the findings in "America's Best Drivers Report."

It is highly unlikely that I qualify as a good driver when cruising around the Cape with the lot map open, thumbin on my blackberry and trying to interpret the directions on the MLS listing sheet.

How Knoxville rates on national rough roads report [WATE 6]
Cape drivers can't believe they're best [News-Press]

Please....Mr 10G man

.......Reserve a spot for me

Maybe I'd pay $10,000 to talk on the phone with Eva Longoria who portrays Gabrielle on Desperate Housewives......but to talk with a sales rep from the the planned Monaco Resort & Spa in Ft. Myers.....You got to be kiddin me!!!

This 27 story luxury project, to be constructed in Downtown Ft. Myers along the Caloosahatchee River, is being developed by Yonkers, NY based Homes for America Holdings.

To create a buzz and according to company a spokesman "to better qualify potential buyers," the developer is requiring a refundable $10,000 "expression of interest payment" to get on the list for a phone interview. The phone interview will last for up to 30 minutes and before the end of the call you will have to decide whether or not you want to buy your selected unit.

Pricing will be provided prior to the phone interview and starts in the upper 200's for a suite and the 600's for a residence. This is a 20% down deal and the contract is only assignable with the developers permission.

If you decide to fork over the 10 grand and register, feel free to mention me on your application.

Developer requiring $10,000 for an appointment [ABC7 News]

We will survive

Citizens unite to save mobile home park from development

Although my trailer park tycoon friend from Dallas will probably be disappointed, I was excited to read this feel good story about the residents of the Chesapeake Point Mobile Home Park.

They organized and came together to purchase their park out from under a developer that was planning on building luxury single-family homes on the site. Sometimes it just feels good for the underdog to win one of these battles.

Hands off this mobile home park [St. Petersburg Times]

Big-time sellers market

Power rests with the seller in a boom market

If you have tried to purchase a prime piece of property in SW Florida recently, hopefully you were wearing full body armor and were carrying an uzi.

I have seen many bidding wars break out on a property within hours of it hitting the MLS system. I usually back off these scenarios as emotion often rules the day over logic in these situations.

A growing problem is that appraisers are having a difficult time keeping up with the rapidly changing market and many homes are selling for more than the appraised value. Buyers are often adding "not subject to appraisal" clauses to their offers to try and lock up a property.

Should home buyers offer more than the appraisal? Many do [Sun-Sentinel]

Viva Cape Coral

Piazza planned for Community Redevelopment Area

While it is easy to equate a cruise along one of the Cape's canals with a similar excursion in Venice, it is a far stretch to visualize the Cape's Atlantic Court as the Piazza del Campo in Siena.

Well that is about to change if Chicago developer RTS is successful in building their proposed project in the Community Redevelopment Area along Cape Coral Parkway between Coronado Parkway and Manor Court. Plans include residential condominiums, a hotel, movie theatre, retail and restaurants.

Cape Coral is in dire need of a development like this and particularly one that serves as a downtown destination focal point. With the rapid price escalation of property in the Cape, the new more affluent residents of the Cape are clamoring for upscale places to shop and dine. If the crowds attracted Rumrunners most evenings are any indication, this project should be a hit.

City to get taste of Italy [News-Press]

New building permit record

Lee County housing starts at all-time high

Lee County issued 906 new housing permits in May, a new record breaking the previous high mark of 865 set in March.

It is clearly evident from a review of the MLS inventory or a drive through Lehigh that much of this activity is occurring in this section of Lee County.

Cape Coral reported 724 new single family permits, the second highest number ever trailing only the 858 permits issued in March.

These continued high number of permits provides much optimism for investors particularly those focused on vacant land. There continue to be very few new homes available for any period of time in the MLS system as buyers snap up anything that is available at a decent price.

County permits break record [News-Press]

Lease-options

Alternative method for acquiring or selling property

The "try before you buy" method of purchasing a home via a lease option can prove very beneficial for many buyers. Often a lease option is the only way for a buyer to save a down-payment via rental credit.

For the seller, lease options can delivers a rental tenant that usually takes better care of the property and continued income tax deductions such as mortgage interest, property taxes, and rental depreciation.

Most of the "make a fortune in real estate" books and seminars advocate the use of lease-options as the vehicle to create a real estate fortune. My hunch is that lease-options are probably not as attractive an option for buyers right now with cheap interest rates and very loose over-the-phone mortgage approvals.

Lease-option pros and cons for buying or selling your home [Naples Daily News]

Luxury condo hotels

Growing trend in Florida resort communities

Imagine Boardwalk and Park Place are all yours......usually leads to a victory in Monopoly.....but what about for real?

The hybrid concept of a luxury hotel that sells some of it units as condominiums has become one of the most popular trends in the industry in recent years. The trend blossomed as a means for hotel developers to raise necessary capital to launch their projects and has developed steam with buyers that want to be associated with a luxury brand.

Condo-hotels in the past two or three years have expanded beyond traditional markets in ski resorts or Hawaii and into other tourist destinations such as Orlando and Las Vegas. An estimated 30 projects currently are under construction in South Florida an it is expected that the Orlando area and the Miami-Fort Lauderdale area each could have as many as 10,000 units in the next few years.

Hilton, Four Seasons, Marriot, Starwood and the Ritz-Carlton are all players in this hybrid market.

Hotel-condo hybrid growing trend in Florida, nationwide [Palm Beach Post]

Lizard tales

Nile monitor lizards invading Cape Coral

Retiring baby boomers are not the only species with ever increasing numbers in Cape Coral these days. The nile monitor lizard population is also expanding very rapidly.

No one is exactly sure when these African lizards first appeared on the scene, but the canals and vacant lots of Cape Coral provide an inviting habitat for the nile monitor. Pet stores sell baby monitors as cute pets, but when they get bigger, they become aggressive and are often released by their owners.

The ever multiplying population of nile monitors has become a nuisance for the two legged population of Cape Coral and is also a threat to native endangered species including the burrowing owl.

University of Tampa Professor Dr. Todd Campbell has assembled a team to tackle the problem. To date his team has captured and eliminated over 50 of these lizards from Cape Coral.

Lizard Tales [The University of Tampa]

Chiquita talent show

Model home beauty pageant emerges in Cape Coral

Lined-up like contestants in the Miss America Pageant, over 50 developer model homes now line Chiquita Boulevard between Cape Coral Parkway and Pine Island Road. Even though I have driven down this part of Chiquita hundreds of times, I still get excited to see the seemingly endless string of prospective buyers swarming to these models.

If you check out some of these models, try not to fall in love as most are decked-out to the nines with extras and will set you back many more shekels than the standard builder home that starts around $270,000 in Cape Coral.

As a vacant land investor, I have focused much of my activity in the units located along the Chiquita corridor. The way I see it, after spending time in the model home center picking out the perfect house, customers will look at vacant lots close to the Chiquita models before venturing afar to find a lot. This strategy has proven to be a winner and worked well for me.

Model Home Row evolves [News-Press]

Pondering interest rates

Low mortgage rates surprise experts

U.S. mortgage rates are lower than they were a year ago and are falling. According to Freddie Mac, the rate on the average 30-year fixed-rate mortgage fell to 5.65 percent in the week that ended May 26, the lowest rate since mid-February and below the 6.32 percent level of a year ago.

Virtually every expert predicted major increases in rates as part of their projections for 2005. We are nearly half way through the year and rates are holding steady. This certainly bodes well for the continuing of the frothy (thanks Alan) real estate market.

Low Mortgage Rates Defy Expectations [Washington Post]

Bubble....what bubble?

Housing more affordable according to Chicago Fed report

Chicago Federal Reserve senior economist Richard Rosen has suggested that with rising incomes and low interest rates housing is more affordable than it was ten years ago.

Rosen has created a “mortgage servicing index” that correlates the ratio of a mortgage payment for an existing single-family home at the national median price to the median household income. Using this index, consumers paid 20 percent of their household income for a home in the mid 80’s with just 15.8 percent in 2004.

Bubble? Housing more affordable, study says [Chicago Tribune (06/01/05); Umberger, Mary; Fitzgerald, Alison]

Lehigh property up 95%

Values up 27 percent across Lee County

Property values in Lehigh Acres were up 95 percent in 2004 based on figures released by Lee County.

"It's the strangest, strongest year I've ever seen," said Ken Wilkinson, the county property appraiser who released the numbers Tuesday.

"Five or six years ago, you couldn't give those Lehigh lots away. Now you can't touch them for less than $30,000 — and the values all over the county just keep going up."

Other areas of Lee County showed sizable gains including 49.4 percent in Cape Coral and 28.8 percent in Ft. Myers.

Lehigh paces Lee's land bonanza [News-Press]

Rental glut

Soft rental market in many areas

The flurry of the real estate boom has created a large pool of investor owned rental properties in many markets. With potential renters, choosing to buy, investor owners are often reducing rents to attract tenants.

The rental market provides balance to the overall housing market and can act as a correction mechanism if housing prices get out of control by luring potential buyers back into a rental scenario.

Latest fad in housing: Buy, then rent [Christian Science Monitor]