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I just finished reading an article put out by The Associated Press over at MSNBC about the amount of FORECLOSURES. Looks like our area - Cape Coral / Fort Myers - ranks #1 according to data supplied by RealtyTrac. You can click to read that article here.
Why all the foreclosures? I was asked just that last week by a woman who found me on my Cape Coral Real Estate website. She wanted to know why there were so many SHORT SALES and FORECLOSURES in our area.
There are a few reasons for it.
One reason is that real estate is cyclical. That’s right. Real Estate goes up & it goes down. Check the historical data, it is true.
Another reason in our area specifically I suppose, everyone got greedy. Investors & just average people all wanted to make A LOT of $$$$ in real estate. They heard that their friends bought some land or a house in Cape Coral & doubled their money in 2 years. Heck, many of these same people made a lot of money in the previous few years here as well. Yes, that is also TRUE - check the records. But what goes up must come down?
It came down. Many investors speculators were just getting into the market here, building a new home hoping to make a fortune (because others did). Unfortunately, hundreds of other investors speculators were doing the exact same thing. The builders were delayed because of the influx, the city’s permit department was behind too, - - you get the picture. Many investors speculators had to WAIT. While they waited many other homes finished & were sold to end users. But by the time their homes were near completion the supply was HUGE. We still had a demand for Cape Coral homes but the supply was just too large.
Unfortunately, most of these investors speculators did not have a plan B. They assumed they would sell & make a fortune. Many, at this point, hoped that they could at least sell and break even or take a small loss just to move on. But we weren’t able to tell the buyers to pay for the other’s misfortune. They wanted a deal and were going to get a deal because of the excess inventory. Homes were, and still are, selling but they must be priced right.
The next reason is the lending. Yes, I said it. The lenders were giving loans to anyone with a pulse it seemed. How was it that an average person earning $50,000 a year was able to afford 2-5 brand new homes (around $250,000 each) with 0% down? HMMM. But they were given the loans. Did someone misstate the truth? Not sure but I do know that many were stated or even no doc loans so they weren’t even checked on. The banks were making their money, so were the mortgage brokers. Heck, the real estate agents, appraisers, title companies, builders, etc were all making money as well. Home investor speculator was expecting to make theirs too.
The same banks that so generously handed out financing the previous few years were tightening up their guidelines. Many would be buyers could not qualify. Uh oh - that just shrunk our buyer pool.
Prices continued to decline, financing options changed, option arms reset, economy slowed as a whole….
So what can we do now? Read more about the
Cape Coral Foreclosure problem….
We can move the inventory. Yes, were have A LOT of abandoned homes in our area. Some were NEVER occupied. Some people just left their homes & moved elsewhere after they exhausted all of their options. They didn’t have any equity to refinance, their credit was deteriorating, the banks that were so friendly before weren’t as nice, they didn’t know what else to do. Some have been lucky enough to short sale their homes, but that still isn’t great. Better than a foreclosure but still not the ideal situation. It’s all we can do if they can’t afford the home.
So we continue to work with banks, selling their inventory (foreclosured properties). We continue to help owners sell their homes that are upside down in short sales. We continue to educate buyers to make sure they find the best home for their needs at the best price. We keep moving on.
Is the market turning around next year? NO. It’s going to take some time. But we still get to call this place home.
Cape Coral is truly a paradise. Sure, the foreclosures (deals) are abundant, BUT the weather is still awesome, the beach is still close, boating, golf, friendly neighbors & so much more are still here, waiting for you.
Please feel free to leave comments or contact us directly with any questions or comments you may have concerning buying or selling in SW Florida.
Yours in Success,
Susan Milner
Broker/Owner
(239) 542-8521
copyright 2008 Florida Future Realty, Inc.
