Thanks to fast-rising home prices, Southwest Florida sellers saw a big bump up in average price gains since purchase in 2015 — a percentage that’s roughly twice the national average, a new report says.
Nationwide, sellers who sold their homes in 2015 made an average of $20,378 from their purchase price, RealtyTrac reported Thursday. That’s an 11 percent gain — the biggest since 2007, the Irvine, California-based research group said Thursday.
But Collier County sellers who sold their homes last year made an average of $49,900, a gain of 21 percent from when they purchased their homes. In 2014, Collier sellers saw only a 7 percent gain, or $16,900.
Lee County sellers saw average returns of 23 percent, or $33,000 in 2015, compared with 6 percent, or $8,900, in 2014.
While such gains sound impressive, they don’t compare with the returns of housing’s go-go years.
That happened in 2006, when Collier’s sellers walked away with an average of $168,375, a 73 percent gain from their purchase price, while Lee County sellers made an average of $121,000, a 92 percent gain.
Daren Blomquist, RealtyTrac vice president, said that while “the history of the market is very speculative,” Southwest Florida home sellers shouldn’t expect such wallet-bulging windfalls to return any time soon.
Because of government restrictions on lending, “there are checks and balances in place now that weren’t then,” he said.
Meanwhile, the percentage of sales to investors, cash sales and distressed sales continue to shrink throughout the region, while the percentage of traditional sales backed by loans from the Federal Housing Administration is ticking up.
That’s an indication that the region’s real estate market is stabilizing, said Blomquist.
“It’s generally a good sign that the Southwest Florida market is broadening, and not just dependent on wealthy cash buyers,” he said.
While so-called vulture funds dominated the market during the down years between 2008 and 2013, swooping up short-sales and foreclosures, their participation in the market has fallen as once-abundant bargains have dried up, Blomquist said.
In Collier, bank-owned sales dropped to 7.3 percent of the market, or 960 sales in 2015, from 11.1 percent, or 1,487 sales in 2014. In Lee, once the center of the housing crisis, the 2,416 sales made up 10.5 percent of all sales, while in 2014 it was 15.9 percent, or 3,552 sales.
The lack of deals has steadily driven institutional investors to cheaper markets than Southwest Florida, Blomquist said.
In 2015, 98 sales in Collier were made to institutional investors, down from 317 in 2014. The percentage dropped to 0.8 percent from 2.4 percent. The percentage of Lee County sales to institutional investors fell to 1.6 percent, or 351 sales last year, from 5.7 percent, or 1,256 in 2014.
Since investors often buy with cash, their departure is one reason cash sales have fallen in Southwest Florida, Blomquist said.
Cash sales in Collier made up 57.5 percent of all sales, or 7,603 sales, compared to 60.2 percent of sales, or 8,058 sales, in 2014. In Lee, about half of all sales in 2015 were for cash, down from six out of ten a year earlier.
And as the competition for housing has eased, there have been more opportunities for traditional buyers who need a mortgage.
In Collier County, the count of FHA-backed sales rose to 829 in 2015, or 6.3 percent of all sales, compared with 582 sales, or 4.3 percent, a year earlier. In Lee County, 12 percent, or 2,761 sales, were FHA-backed in 2015, compared with 8.2 percent, or 1,844 sales, the prior year.
But Blomquist saw some warning signs, too, particularly in the fact that home prices in the region have accelerated for 57 consecutive months in Lee County and 41 months in Collier County, while incomes generally have remained stagnant.
“At a certain point I could see a definite chilling of the market as affordability hits a wall,” said Blomquist. “This is most likely going forward.”
However, in a separate report released Wednesday by MetroStudy, chief economist Brad Hunter noted two factors that could counterweigh the pressure on traditional buyers: job growth has strengthened, and Southwest Florida housing starts have risen 35.3 percent in the past four quarters, loosening tight supply. New home closings make up about 18 percent of the region’s market, MetroStudy said.
By June Fletcher
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