Anatomy of real estate recessions, corrections and crashes

C u r r e n t l y , t h e g e n e r a l l y a c c e p t e d broad view of the U S housing market is that it has been forced into a recession caused by the actions of the Jerome P o w e l l - l e d F e d e r a l R e s e r v e a n d h i s predecessors Following the last lengthy bear market in real estate, which was caused by the massive levels of fraud related to the mortgage-backed home flipping scandals that led to the infamous Great Recession of 2008 the Fed rode to the rescue by manipulating the mortgage market with abnormally low interest rates T h e F e d a l s o “ b o u g h t b a c k ” m a s s i v e a m o u n t s o f m o r t g a g e d e b t b y p r i n t i n g e l e c t r o n i c m o n e y h o l d i n g t h i s d e b t o n t h e i r b a l a n c e s h e e t t o l e n d a d d i t i o n a l f i n a n c i a l s u p p o r t t o t h e l a r g e W a l l S t r e e t i n v e s t m e n t b a n k s T h e F e d ’ s “ e m e r g e n c y ” z e r o i n t e r e s t r a t e p o l i c i e s i n p l a c e f o r t h e b e t t e r p a r t o f 1 2 p l u s y e a r s p r o v i d e d t h e f r e e m o n e y t h a t f l o o d e d o u r e c o n o m y w i t h d o l l a r s a n d h e l p e d f i n a n c e t h e w i l d s p e n d i n g s p r e e o n b o r r o w e d m o n e y b y o u r e l e c t e d o f f i c i a l s i n W a s h i n g t o n , D C F i n a l l y i n 2 0 2 2 t h e F e d f i g u r e d o u t t h a t t h e s u r g i n g l e ve l s o f o u t o f c o n t r o l i n f l a t i o n w e r e n o t “ t r a n s i t o r y ” i n n a t u r e a n d t h e y b r o u g h t a s w i f t e n d t o t h e i r e c o n o m i c p a r t y b y r e m o v i n g t h e f r e e m o n e y p u n c h b o w l , a s t h e y j a c k e d u p i n t e r e s t r a t e s a t t h e f a s t e s t p a c e e v e r a n d d e c l a r e d t h e i r w a r o n i n f l a t i o n

and Geri Quinn Homing In

a large number of people were able to tap the equity in their primary residences to speculate on building and flipping new construction homes

Just about everyone was sold on the idea that home prices could only go higher and that they could leverage their investments in this new risk free way to become wealthy overnight It was estimated that 40 percent of all the new homes being built in Cape Coral back t h e n w e r e i n v e s t m e n t h o m e s b e i n g flipped between investors with no end u s e r s m o v i n g i n t o a l l o f t h e v a c a n t homes The city even built a new water treatment plant based on the recommendation of highly paid consultants to service what turned out to be imaginary growth Then the music stopped, the market collapsed and there was an explosion of foreclosures that decimated the community

Eric P Feichthaler Real Estate Law

First you and your spouse should be commended for taking the steps necessary to avoid probate

The peace of mind typically gained through planning, along with serious cash and time savings for your heirs is very valuable However as I have noted in prior responses some attorneys may suggest extensive planning even when it does not provide a benefit to the client From the facts provided, this may have occurred here

It appears your goal was to ensure the home passed to your heirs without probate If so having an Enhanced Life Estate deed prepared naming your heirs is the most cost-effective and efficient way to meet this goal If you also had other objectives, such as managing assets like your home after death due to needs of your family then a trust may have been appropriate

The initial problem you faced is using an attorney that may not have extensive experience in real estate or estate planning The deed you describe, as you note, both conveyed the property to the trust AND retained a life interest This shows a lack of understanding of living trusts and/or life estate deeds

Your

See CONFUSION, page 5B

Although most people ignored the Fed’s warning last year that they would be “willing to break things” in the economy to regain control of inflation they were clear that they were targeting what had been a red hot housing market by forcing mortgage interest rates higher With home prices surging to record levels and mortgage rates more than doubling last year homes became even more unaffordable for a larger number of potential buyers who could no longer qualify for a mortgage

All of the above factors, along with a lot of things we are leaving out due to space limitations, gives us the anatomy of a real estate recession, albeit an abnormal looking housing market recession thus far Expert opinions vary widely going forward from here with some calling for a housing market debacle resembling 2008 while others think the worst is already over So let’s dig deeper into what we are seeing in our local market where the number of closed sales have experienced a significant decline throughout Southwest Florida, and prices are generally well below their record highs from last year in what we would currently describe as more of a softening in prices, and not a collapse

As crazy as our housing market boom was from the second half of 2020 through the first quarter or so of 2022 there are some significant differences in these market conditions compared to the local market conditions back in 2005 through 2008, and beyond Back in 2005 through 2008, the run-up in home prices was driven by wild speculation fueled by home flippers playing a dangerous game of highly leveraged musical chairs

Average people on main street were able to take their shot at striking it rich by obtaining mortgage financing on second and third homes as investments through liar loans” and their ability to qualify for a mortgage by simply “fogging a mirror ” As home values increased every week

What did that crash look like? Median sales prices in the overall Cape Coral single-family home market actually peaked at $285,450 in January of 2006, and pretty much moved steadily lower month after month But lenders kept lending and people kept speculating on homes for a few more years as prices fell Eventually the bottom was hit in October 2010, with the overall median sales p r i c e f o r a s i n g l e - f a m i l y h o m e i n t h e C a p e h i t t i n g $115,000 that month, for a top to bottom decline in home prices of 59 7 percent So there you have the anatomy of a real estate market crash

Median home sales prices started their long recovery from the bottom in 2010, by posting a year-over-year gain of 7 1 percent in 2011, finally surpassing the old high from back in January 2006 for good in the second half of 2020 Through December 2022 we have now had 12 consecutive years of increases in our median sales prices with outsized gains of 30 percent in 2021 and 21 8 percent in 2022 This track record would lead one to logically think it would be healthy for our market prices to flatten out and pause for a period of time, if not experience at least some level of a price correction which is already occurring

Median sales prices in the Cape s overall single-family home market peaked at $470,000 in April 2022, and have trended lower from there, now posting three consecutive months (from November 2022 through January of this year) at $400 000 Additionally based on our weekly market surveys median list prices for single-family homes in the Cape peaked at $610,000 on April 19, 2022, and have been mostly hovering around $500,000 recently So far, this is the anatomy of a market correction in prices, which leads to the question of whether it will become a crash We will pick up on our thoughts about that next week along with more about whether this is a recession in the number of closed sales, or simply a return to normal pre-COVID market levels

As of Tuesday, Feb 7, there were 1,307 active singlefamily homes listed for sale in Cape Coral through the Multiple Listing Service at prices ranging from $275 000 to $4 5 million with the median list price rising to $517,000 A total of 498 of these 1,307 listings, or 38

See ANATOMY, page 6B

Real Estate Briefs

Groundbreaking Feb. 16 for Towles Garden

townhomes in For t Myers

There will be a groundbreaking ceremony at Towles Garden Thursday, Feb 16, at 1 p m , on the corner of Edison Avenue and Veronica Shoemaker Boulevard in Fort Myers Towles Garden is an affordable and attainable housing development featuring 141 one, two and three-bedroom townhomes Now is your chance to prequalify for one of over 140 homes in Towles Garden For more information, call 239-332-0744 or visit www tgfortmyers com

Salas new marketing director for Royal Palm Coast Realtor Association

T h e R o y

P a l m C o a s t R e a l t o r Association as welcomed Erik Salas as marketing director Salas will be working under the direction of Allyson Teevan director of Marketing and Communications, in her efforts to further develop the role of marketing and communications at RPCRA

Originally from Palm Springs California Salas spent 22 years as a chef before moving to Sarasota and making the transition to the professional world of marketing

Previously, he spent four years as marketing coordinator for the Windward Design Group before relocating to Fort Myers in January 2023

Salas will be a member of the newly established marketing department that will help best serve the interests of the members, employees, and community, while delivering on all aspects as they relate to

RPCRA’s strategic marketing direction and vision

For additional information call 239936-3537 or visit rpcra org The RPCRA is located at 2840 Winkler Ave, Fort Myers

Weicher t, Realtors –Agency ONE welcomes Gonnelly

Weichert, Realtors - Agency ONE has welcomed Kena Gonnelly to its team of agents Gonnelly will serve home buyers and sellers in Cape Coral Fort Myers and surrounding areas with all their real estate needs

As a Weichert affiliated agent, Gonnelly has access to in-depth training programs the latest technology and sales and marketing tools to help provide the best possible real estate service to her clients Gonnelly, who has nearly three years of experience in the real estate field, is a member of the Naples Area Board of Realtor and Royal Palm Coast Realtor Association Prior to becoming an agent she cared for patients in the medical

Weichert, Realtors - Agency ONE is an i n d e p e n d e n t l y o w n e d a n d o p e r a t e d Weichert® affiliate The company serves Cape Coral Fort Myers Naples and surrounding areas in Southwest Florida

For more information about Weichert, Realtors® - Agency ONE, with offices located at 8191 College Parkway Suite 206 in Fort Myers and 1113 S E 47th Terrace Suite 7 in Cape Coral contact Megan Eister at 239-415-6500 or visit weichertagencyone com

See REAL ESTATE BRIEFS, page 6B ing the remainder interest, any sale or transfer would need to include both of you AND the trust as sellers/grantors The title company erred in excluding your trust from the deed out to your buyer which led to the property not being legally transferred This is what has led to your recent communication from them asking for you to sign the additional deed

The good news is that the multiple errors that have led to today should not lead you to any financial harm So long as this title company isn t asking you for money signing should not create any liability to anyone and should settle the disposition of the property

Whether you are seeking legal services, law firm or title company escrow services, roofers or any other professional service research the reputation and experience of who you intend to use The majority of clients I represent with disputes put their trust in the wrong professional In your case, it sounds like the only harm you suffered in addition to wasted time was paying for a trust you likely didn’t need You may want to seek counsel from an attorney to ensure you are signing nothing more than a deed to correct the mistake m a d e b y t h e t i t l e c o m p a n y b u t y o u should be fine

Eric P Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral

A f t e r c o m p l e t i n g l a w s c h o

Concert: Four bands set to perform

From page 1B from bands such as Radiohead and The Strokes

This year proves to be a busy one for Red Letter Day, as it

Feb. 17 at Rack’em Spirits & Times

The high-energy group is ready to entertain all who turn out next weekend, Come out if you're looking for something a little more alternative, Reasor said We tend to be unique If you like fast rock that is a little bit smart come on out ” Giralt added “I'm super stoked for the show I think the lineup is cohesive and the bands are all great We're looking forward to the atmosphere and a great time

Anatomy: Analyzing real estate recessions, corrections and crashes

From page 4B percent of our market, were priced at $450,000 and under, including 15 homes priced below $300,000 At the other end of the price spectrum there were 182 homes listed at $1 million and above

Just over a month ago on Jan 3 there were 1 330 active home listings in the Cape and the median list price was $509,873 At that time, there were 151 homes listed at $1 million and above, and 531 homes listed for $450 000 and under including 19 homes priced below $300 000 On a positive note the number of pending home sales in Cape Coral has increased by 42 5 percent from 522 homes under contract on Jan 3, to 744 homes under contract on Feb 7, with 50 4 percent of these homes at $400,000 and under, including 36 homes pending below $300 000 Almost two-thirds of the homes under contract in the Cape are at $450 000 and under while only

31 homes or 4 2 percent of our pending sales are at $1 million and above The differences in the price points for pending sales versus the price points for active listings indicates a continued downward pressure on sales prices compared to list prices

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla , as of Feb 7, 2023, unless otherwise noted

It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral single-family homes and does not include condominiums short sales or foreclosures The data and statistics are believed to be reliable, however, they could be updated and revised periodically, and are subject to change without notice The Quinns are a husband and wife real estate team with the RE/MAX Realty Team office in Cape Coral They have lived in Cape Coral for over 43 years Geri has been a full-time Realtor since 2005 and Bob joined with Geri as a full-time Realtor in 2014 Their real estate practice is mainly focused on Cape Coral residential property and vacant lots

Real Estate

BRIEFS

From page 4B

Norris Fur niture designing, fur nishing interiors of model homes for Seneca at Oak Creek

S a g e C o m m u n i t i e s h a s p a r t n e r e d w i t h N o r r i s Furniture & Interiors and Southwest Florida Designs to design and furnish model homes and the Amenity Center for Seneca at Oak Creek at 7621 Green Sage Circle North Fort Myers FL 33917 Seneca at Oak Creek a 55+ all-inclusive maintenance-free rental community under construction in North Fort Myers, will have 184 one- and two-bedroom units that feature a full kitchen, living room and private porches, along with an option for an attached garage Norris Furniture is completing interior designs and will provide living room bedroom and den furniture as well as home décor for model residences

The first residences are scheduled to be completed in early 2023 Five floor plans range from 874 to 1,559 square feet All residents will have access to planned activities the fitness center a community swimming pool and dog park

Introductory rental prices for Seneca at Oak Creek start at $1,890 per month For more information, please visit SenecaOakCreek com or call 239-230-3910

Southwest Florida homebuilder names Anderson director of sales

Christopher Alan Homes has announced the selection of Carissa Anderson as its director of sales Anderson will be responsible for all sales operations for Southwest Florida regional emerging markets and managing all aspects of the Christopher Alan Homes customer experience Anderson is an accomplished real estate leader with more than 15 years of experience in strategic direction and sales execution marketing and branding She has managed teams at several of the top homebuilding companies in the nation and holds a bachelor of science in e n g i n e e r i n g a n d t e c h n o l o g i c a l m a n a g e m e n t f r o m Arizona State University

Prior to joining Christopher Alan Homes Anderson was a director of sales for a national homebuilder where she managed a team of over 40 including sales professionals, interior designers and online sales agents across neighborhoods in Southwest Florida, encompassing more than 2 700 closings

Christopher Alan Homes is a builder-owned organization affiliated with Barron Collier Companies

For more, visit www ChristopherAlanHomes com or call 855-44-MYCAH