As July winded down, it was another fairly quiet start to the week on the Sanibel and Captiva Islands. SanibelSusan finished up a busy weekend of showings with some 2nd looks on Sunday. Several of our listings received inquiries, as well as a few showings. Then today, one of our condo listings went under contract, and rumor has it that offers will be coming later today on a lot listing, and next week on another condo listing. (Sunset photo above by Jim Anderson, JMA Photography.)
The month is wrapping up as one of the best in years for rentals. Internet marketing and high marks on many social media rating sites continue to bring the island business.
Here are a couple of news items followed by the action posted in the Sanibel and Captiva Multiple Listing service this week. Quite a few closings were posted, usual for the end of a month.
“If You Like Seashells, You Should Go To Sanibel Island STAT”
The above headline was posted on-line in “The Huffington Post” Travel section yesterday with the below article. Island rental managers and accommodation owners keep saying that their bookings this year are ahead of last year, which was already a record year. News postings like this undoubtedly contribute.
“Sure it’s almost August, but there’s still a ton of time left to plan a little R&R on the beach. Why not Sanibel Island?
“Known for being a “swanky-but-not-in-your-face-swanky barrier island,” Florida’s Sanibel Island is gorgeous and also has pretty awesome sunsets.
“The island’s beaches also happen to have more seashells than your average beach, making it the perfect place to go “shelling” (which is apparently a really big deal down there). It’s a famous spot for collecting everything from sand dollars to scallops thanks in part to its east-west orientation. There’s even a phrase — the “Sanibel Stoop” — to describe what people look like while there.
“So if you finally want to make that DIY shell necklace you saw on Pinterest — or just want to enjoy some really beautiful beaches before summer’s over — head on down!
Permit Approved for Wulfert Pointe Estates
On Tuesday, Sanibel Planning Commission granted a development permit and preliminary plat approval for Wulfert Pointe Estates, a major subdivision consisting of 34 single-family lots and dwelling units along Sanibel-Captiva and Wulfert Roads.
Previously known as Phase III of Sanibel Bayous, the 76.2-acre property is adjacent to the south end of Wulfert Road.
The Long View on Recovery
“No industry is more cyclical than the housing sector. Changes in job growth and mortgage rates can have a big impact on whether home sales rise or fall. Today, after two years of solid growth, home sales appear to be hitting a soft spot. But that doesn’t necessarily mean the recovery is over.
“Compared with previous cycles, hitting a soft spot only two years into a recovery is unusual. That’s because the country’s steady population growth typically boosts demand for home sales after a downturn. We saw this in the three housing recoveries since 1970. These recoveries were multiyear phenomena of seven, five, and 14 years (the boom).
“This time, the expansion seems to be sputtering after only two years. Why? It doesn’t appear to be a lack of demand. We’ve seen a build-up of potential buyers from the creation of 2.4 million jobs over the past 12 months, as well as continuing low interest rates (4.2% as of early summer), and the pent-up demand from young adults living at home longer or doubling up with friends.
“The difference between this and previous recoveries is on the supply side. There simply isn’t enough inventory to keep the market growing. Just to keep pace with the growing U.S. population, we would need to see about 1.5 million housing starts a year, but since the downturn, we’ve seen the construction of new homes at levels well below that.
“Fortunately, we’re starting to see more homes being listed for sale. March and April inventory levels were higher this year, and home builders are increasing their activity.
“To be sure, the affordability side continues to face pressure. Home prices have been rising throughout the recovery, and credit standards remain tight. But there’s good news on both fronts. As more homes come on the market, the pressure on prices should moderate, and we expect future price gains to be in line with income growth. And we see signs lenders could dial down credit standards to more normal levels, in part because of the strong performance of mortgages originated in the last few years.
“Therefore, all in all, a multiyear housing market recovery is still in the works if we discount the modest slowdown for this year.”
America’s 132 Million Homes
“How Old Are They?
“The median age of a home built in the United States is 40. In 1974, when those houses were built, interest rates on 30-year fixed mortgages averaged 9.1%; the median existing home price was $32,000; President Gerald R. Ford had announced a $300 million mortgage credit initiative to help alleviate the housing market recession; and the energy crisis had spurred the incorporation of energy-efficient features in new construction.
“U.S. housing stock by age
- “0-14 years old – 18 million (14%) were built in 2000 or later.
- “15-54 years old – 33 million (25%) were built from 1980 to 1999 (14-34 years old) & 40 million (30%) were built from 1960 to 1979 (35-54 years old).
- “55-95 years old – 21 million (8%) were built from 1940 to 1959 (55 to 74 years old), 11 million (8%) were built from 1920 to 1939 (75-94 years old) & 9 million (7% were built from 1919 or earlier (95+years old).”
Understanding and Combating the Rate Lock-in Threat
“For years, a large number of home owners were prevented from moving up because of negative equity. These underwater owners were locked in to their current location thanks to rock-bottom home values.
Now that the economy is improving, those home owners may be moving into the market more freely. But some feel hemmed in for a wholly different reason: They don’t want to give up the rock-bottom interest rate they procured in recent years. This time, however, they’re being locked in by the low interest rates — as low as 3.3% in late 2012 — that they secured by buying or refinancing over the past few years. Economists worry this group will be reluctant to move now that interest rates are heading back up, exacerbating an already tight housing inventory….
“Researchers at the Institute of Housing Studies at DePaul University in Chicago say that interest rate lock-in may be more of an impediment to housing turnover than equity lock-in (those who can’t sell because they’re underwater). Their study, published in February, used the Chicago metro area as a test case to predict what rising home prices and interest rates will mean for housing turnover. The study assumed a 1% rate increase each year over a three-year period. They found that the number of households freed from equity lock-in by increasing home prices will not offset the number of home owners who are increasingly being locked in by low interest rates. At the end of the three-year period, the turnover rate in strong markets had decreased by 75%. The effect in weaker markets was slightly less extreme, but similar.
“Though Pat Hendershott, senior research fellow for the study, says the interest rate parameters they set were somewhat arbitrary, rates might actually follow a similar path in the three-year period between 2013 and 2016. National Association of REALTORS® Chief Economist Lawrence Yun predicts that interest rates will increase from current levels (around 4.2%) to nearly 5% by early next year. He says they will probably rise until they reach 6%, then stabilize there. Historically, 6% interest isn’t deadly to the economy, but Yun says that a home owner paying about half that may take rates into account when deciding whether or not to move. “Some home owners will delay moving into a new residence because of the desire to hold on to the current lower rate mortgage,” Yun says.
“John Moony, managing vice president of Guaranteed Rate, a national mortgage company based in the Chicago area, says that even a 1% increase in mortgage rates can make a big difference in a home owner’s decision-making process. He says a 1% increase in interest rates generally equates to a 10% reduction in purchasing power. In practical terms, that means a family looking to keep their mortgage payment below, say, $1,500 a month will need to lower the maximum price they can pay for a house from $300,000 to $270,000 if interest rates go up one percentage point.
“What Lock-in Might Look Like
“It’s hard to know exactly how this will unfold on the national arena, but one CoreLogic executive recently estimated that up to 3.6 million home owners will be reluctant to sell this year because of rate lock-in.
Hendershott says looking back to other lock-in events can provide insight to what home owners might do in the face of interest rate lock-in. He says that historically there has been “a substantial amount of renovation of houses” as home owners seek to put off moving.
“But locked-in home owners have a variety of options other than delaying a move, according to Yun. He says some home owners might consider renting out their homes, rather than selling. Others might look into seller financing and assumable mortgages, which can keep the lower interest rates alive while still freeing up the home owner to move to a new residence.
“Donna Stadum, ABR, GRI, salesperson with AZ Horizon Realty in Casa Grande, Ariz., thinks rising rates will encourage home owners to get off the fence, at least in the short term. “Interest rates are still really competitive,” Stadum says. “They’re going to want to move quickly so that they can keep the lower interest rate.”
“It’s About More Than Numbers
“The lock-in problem is real, but interest rates aren’t the only calculus people use when determining if it’s the right time to buy. “Generally speaking, they’re going to make this decision based on what’s right for them, what’s right for their family,” Moony says. “Most customers will make that decision emotionally, but they’ll use the financials to back up that decision….”
It’s Never Too Early To Think About December
Elise and I groaned when we saw the front page of the “Island Sun” today which posted the schedule for the Captiva Holiday Village events. We love the holidays, but it’s hard to believe that plans for December already are being promoted.
This three-weekend-long event launches the Friday after Thanksgiving with fireworks, tree lightings, holiday readings, and musical performances. Individual events are posted on the “Upcoming Events” page, click on the tab above.
Sanibel & Captiva Multiple Listing Service Activity July 26 to August 1
No new listings.
3 price changes: Sandy Bend #5 2/2 now $629K, Nutmeg Village #304 2/2 now $649.9K, Sanddollar #C101 2/2 now $880K.
4 new sales: Duggers Tropical Cottages #5 1/1 listed for $298K, Spanish Cay #A4 2/2 listed for $349K (our listing), Blind Pass #D204 3/2 listed for $399K, Sundial #D101 3/2 listed for $799K.
4 closed sales: Sundial #D408 1/1 $349K, Breakers West #A4 2/2 $445K, Sundial #O302 2/2 $635K, Gulfside Place #322 2/2 $945K.
3 new listings: 1661 Sand Castle Rd 3/2.5 half-duplex 290K, 2407 Shop Rd 2/1 $339K, 1581 San Carlos Bay Dr 3/3.5 $1.995M.
1 price change: 1203 Isabel Dr 2/3 now $1.095M.
3 new sales: 1709 Sand Pebble Way 5/3 multi-family listed for $429K, 1526 Bunting Ln 5/3 listed for $525K, 475 Sea Oats Dr 3/3 listed for $750K.
9 closed sales: 2186 Egret Cir 3/2 $417K, 621 Lake Murex Cir 2/2 $474K, 917 Pepper Tree Place 4/3 $750K, 1284 Par View Dr 2/2 $610K, 1063 S Yachtsman Dr 3/2 $625K, 925 Lindgren Blvd 3/2 $689.9K, 2538 Blind Pass Ct 3/2 $785K, 6010 White Heron Ln 3/2.5 $930K, 1066 Bailey Rd 3/3 $970K.
No new listings, price changes, or new sales.
1 closed sale: 5407 Osprey Ct $435K.
No new listings or price changes.
1 new sale: Lands End Village #1667 2/2 listed for $1.025M.
No closed sales.
No new listings, price changes, or new sales.
1 closed sale: 11532 Captiva Dr 2/2 $1.2M
Nothing to report.
This representation is based, in whole, or in part, on data supplied by the Sanibel & Captiva Islands Association of Realtors® or its Multiple Listing Service. Neither the association nor its MLS guarantees or is in any way responsible for its accuracy.
Until next Friday, here’s another Sanibel sunset photo, this one from my Swiss friends, Doris & Hans.
Susan Andrews, aka SanibelSusan