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The good ole days……. so they thought

Like any frontier town, Cape Coral’s first businesses included a grocery, a bank, a newspaper and, well, like any Florida frontier town, a realty—aptly named Wonderland Realty, as most early buyers were wondering what they had gotten themselves into. They seemed to be abandoned in the middle of a strip-mining operation. In one direction, nothing but miles of white sand and raw canal banks; in the other, glittering water. They were marooned in “Wonderland.”  more

Cash Rules Southwest Florida Home Sales

Cash is king in Southwest Florida where the certainty of a quick, uncomplicated home sale can trump a higher offer that’s at the mercy of a bank loan officer.

That’s what local buyers, sellers and brokers alike say, and the sentiment is borne out by a recent report by Irvine, Calif.-based housing data company RealtyTrac.

Among metro areas with 500,000 or more residents, Cape Coral-Fort Myers is No. 1 with 73.6 percent of its home deals in cash in the first quarter, according to the report.

 

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The Naples area wasn’t included in the report because it has fewer than 500,000 residents.

“It’s amazing how much cash offers there are,” said Courtney Neuhausel, co-owner of Fort Myers-based Sandbill Homes, which buys and sells homes and property. “You would think things would be tighter” with the recession still vivid in people’s memories.

He cited an example of a purchase brokered by Sandbill in which the buyer “offered $20,000 under list price, and the seller took it just to have the comfort of knowing it was a done deal.”

But deals don’t always play out that way, Neuhausel said, because someone in no hurry to sell won’t be swayed by the prospects of a speedy transaction.

Still, he said, some sellers — especially of land — buy and sell at a rapid pace and won’t deal with anything but cash offers because they can’t afford the delays and the uncertainty that go with financing.

When Sandbill buys land, Neuhausel said, he has to close the deal quickly and irrevocably. “If I have a nonretractable contract and I put $5,000 down, I don’t want to walk away from that money.”

Jeff Tumbarello, owner/broker of North Fort Myers-based Steelbridge Realty, said the difference between cash and carry can cut both ways.

A cash buyer using his own money might be unwilling to bid up to the price needed to close the deal in a rising market, he said, while “a leveraged buyer will pay more” because he’s financing the deal with a loan.

In that case, Tumbarello said, “the narrative favors the leveraged buyers, who are able to respond more to the sellers.”

Bob Knight, co-owner of Cape Coral-based Paul Homes, said that for a buyer having a house built, there’s been a recent shift back toward financing.

“During the recession it was more cash for building new construction because it was difficult to get financing,” he said. “Banks were still reeling because of what happened. Now, in the past 18 months, the banks have opened up a lot more.”

As a result, Knight said, some of his clients who have the wherewithal to simply write a check are financing because low interest rates make that a more attractive proposition.

From a builder’s perspective it’s a wash, he said. On the one hand, “With the bank, the money’s in place and it will be to the end of the project. It’s more work, though, dealing with the bank’s regulations.”

Dealing directly with a buyer is generally simpler but the builder has to make sure he’s good for the total cost of the project,” Knight said. In the end, “It’s probably about the same amount of time.”

Mike Diamond, of Diamond Custom Homes, who builds upscale houses in Lee and Collier counties, said his clients generally can pay cash although sometimes they choose strategically to use a private banker or a line of equity. “Most of these people aren’t obtaining a mortgage.”

Also, he said, a lot of customers simply have a lot of cash lying around with no attractive options to invest it: interest rates are low and the stock market is arguably over-bought after five years of strong gains.

“There’s just a lot of cash on the sidelines,” Diamond said.

Zillow: Buy A Home In Southwest Florida

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To the age-old question of whether to buy or rent, Zillow has an answer: buy if you live in Southwest Florida.

The Seattle-based real estate data collector says in a recent survey that people in Lee, Collier, Charlotte and Hendry counties have better odds than most of the country of coming out ahead if they buy.

Nationally, buying is a good decision for people who plan to stay in the home for at least two years, according to an analysis of first-quarter financial data.

But what Zillow calls the “breakeven horizon” is much shorter here: 1.1 years for Lee County; 1.0 for Collier; 1.1 for Charlotte; and 0.7 for Hendry.

Commercial real estate agent Jim Garinger of Colliers International Southwest Florida said Zillow’s analysis is borne out by what he sees in the apartment complex market.

“Traditional apartment complex occupancy has become stronger over the past 12 months or so,” he said. “There’s been a significant increase across the board but especially in Class B apartments.”

As that’s happened, rents have increased as well, Garinger said.

The average apartment complex in the Fort Myers area in March had a vacancy rate of 96.7 percent, up 1.8 percent from March 2013, according to Carrollton, Texas-based ALN Apartment Data.

In the same period, the average monthly rent rose 7.9 percent to $920, ALN’s report says.

Even as occupancy rates and values rise for apartments, however, lenders are still skittish about financing multi-family housing, Garinger said.

“Lenders are still looking at comparable sales as distressed properties,” which makes them reluctant to finance purchases or new construction, he said.

That problem will resolve itself with time, Garinger said, but meanwhile “If you’re a renter, it’s a great time to buy if you can swing it. As occupancy rates increase, rents are increasing as well.”

Home prices are also going up and interest rates are still historically low, contributing to the advantage of buying, he said.

There’s no shortage of prospective home buyers.

The share of Americans who own their homes was 64.8 percent in the first quarter, down from 65.2 percent in the previous three months, the Census Bureau said. The rate is the lowest since the second quarter of 1995, when it was 64.7 percent.