New Home Sales Increase Again for January

Reports indicate Americans purchased more new homes in January after a decreased number of new homes sales were reported during the prior month, indicating that the housing market is healthy despite higher mortgage rates.

New home sales increased by 3.7 percent to a seasonally-adjusted 555,000, the Commerce Department reported last Friday. That is 5.5 percent higher than one year ago.

Solid job gains and some signs of an increase in wages have helped to drive consumer confidence. More confident consumers are more likely to purchase homes. Sales of existing homes jumped to their highest level in a decade, according to data released early last week.

The solid sales have occurred despite an increase in mortgage rates since the fall.  In fact, the rising rates may be prompting some to purchase homes now, as many buyers could be accelerating purchases to get ahead of any further rate increases.

Financial markets are anticipating more rapid growth and higher inflation as a result of President Donald Trump's tax cuts and deregulation initiatives. This has pushed interest rates up on both the 10-year Treasury note and mortgages.

The average 30-year fixed mortgage rate was 4.16 percent last week, virtually unchanged from the prior week, but up from the 2016 average of 3.65 percent.

Low mortgage rates and a strong and steady job market have helped the housing market recover from the recession. Reports indicate, home prices on average nationwide have returned to their pre-recession peaks to some degree, yet homeowners are carrying less debt and have more equity ownership of their homes now than during the bubble, which helps to alleviate any fears of a repeat.

A limited inventory of homes available has helped increase prices, but there are signs that builders focused on the new home market will be addressing the inventory issue.

Though further increases in inventory are needed, there were 265,000 new homes for sale at the end of January, up nearly 11 percent from a year earlier and the most in nearly eight years.

February 2017 Southwest Florida Regional Economic Indicators Report

According to the Southwest Florida Regional Economic Indicators report for February 2017, prepared by Florida Gulf Coast University, Southwest Florida’s regional economy was generally strong in January. Positive trends included a three percent increase in seasonally-adjusted regional taxable sales from the prior year and a three percent increase in total airline passenger activity.

The seasonally-adjusted regional unemployment rate for the five county region held at 5.0 percent in December 2016. Seasonally-adjusted employment for the region increased by 2,807 from November 2016, while the number of unemployed decreased by 147. Compared to December 2015, employment increased by 11,957 and unemployment by 551.

Other highlights from this report include:

·        A 6-percent decrease in single-family home sales by Realtors® in December 2016 compared to December 2015, and a 7-percent decrease for the full year.

·        December-to-December increases in Consumer Price Indices exceeded 2 percent for the first time since 2011.

·        Single-family building permits were down 27 percent in the coastal counties from December 2015 to December 2016, however Hendry County issued 54 permits in 2016, which is three times the total recorded for all of 2015.

·        A month-to-month increase of 0.5 points in the Florida Consumer Sentiment Index for January 2017, to 97.8, while the national Index of Consumer Sentiment reached its highest level since February 2004.

The national Index of Consumer Sentiment rose 0.3 points to 98.5 from December 2016 to January 2017, maintaining a significant upward movement starting in October.  The January number was also 6.5 points higher than the number recorded in January 2016.  The January 27, 2017 issue of Survey of Consumers noted that, “Consumers expressed a higher level of confidence January than any other time in the last dozen years.  The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years.”

The Florida Consumer Sentiment Index continued its upward trend, increasing 0.5 points to 97.8 in January 2017 compared to the prior month.  The January 2017 number was also 5.4 points higher than the 92.4 recorded for January 2016, marking the highest recording of the index for the state since March 2002.  “Perceptions of current conditions improved among Floridians in the last month as a result of the positive economic picture that prevailed in the state during the last year,” Hector H. Sandoval, Director of the Economic Analysis Program at University of Florida BEBR said in the January 31, 2017 issue of Florida Consumer Sentiment Index.  “Floridians are optimistic about their own finances.  The recent surge in the level of confidence comes from perceptions and expectations about Floridians’ individual financial situations.”

A Deeper Look at Return on Investment Prior to Renovations

Whether you are considering the purchase of a new home or preparing to sell the home you currently own, putting some thought into home improvements in order to increase the value and appeal of the home is common and smart.  Gathering information including how much the project could cost, how long it should take to complete, and the possible return on investment and then evaluating whether taking the project on is worth it is a must.

See below for an evaluation of a few midrange remodeling jobs, which typically offer the highest return.

Remodeling Job                                 Estimated Cost          Return on Investment

Entry door replacement (steel)       $1,137                        85.6%

Deck addition (wood)                       $9,327                        77.3%

Garage door replacement                $1,497                        75.7%

Minor kitchen remodel                     $18,527                      75.4%

Window replacement (wood)          $10,708                      73.3%

Attic bedroom                                   $47,919                      72.9%

Sliding replacement (vinyl)              $11,192                      72.9%

Window replacement (vinyl)           $9,770                        71.2%

Basement remodel                            $61,303                      70.3%

Major kitchen remodel                     $53,931                      68.9%

Not all remodeling projects are created equal.  “People buying a house look first at kitchens and baths,” says Kermit Baker, Director of the remodeling futures program at the Joint Center for Housing Studies at Harvard University.  So, why these rooms can be the most costly to redo they are more likely to pay for themselves when you resell the property.  Adding rooms, such as a family room or a new master bedroom, also tend to do well for resale value, since larger homes equals higher asking price. 

Other points to take into consideration:

·         Swimming pool additions rarely return their cost, because buyers are typically not willing to spend the higher amount for a feature that will result in higher maintenance costs.

·         Higher cost for a renovation project does not necessarily equal a higher return on investment, as minor improvements (such as painting, refinishing surfaces, and upgrading appliances) can often yield major dividends.

The key to spending money and time on a renovation/upgrade project is to spend wisely, take great care in design and product selection, and consider styles that will stand the test of time.  Aim for classic or neutral colors and styles that will be more likely to attract a wider array of potential buyers. 

Welcome Readers

I am a 4th generation native Floridian and has lived in Naples since 1977. Growing up in the area has afforded me a deep, intimate knowledge of Southwest Florida and everything it has to offer to residents and visitors – especially in the residential real estate market.

I have been a licensed REALTOR® since 1993. I've bought and sold residential real estate all over Southwest Florida from Marco Island to Cape Coral, and everywhere in between. My focus is concentrated on vacation and second homes, investment homes for the golf enthusiast, and those desiring the waterfront lifestyle. I specializes in resales, renovations, pre-construction and new construction homes.

I attended the University of South Florida with studies in Business and hold a Bachelor of Science Degree in Business Administration from Hodges University.

When I'm not serving clients, I take advantage of Southwest Florida’s world-class dining and shopping, and is an avid boater as well. Additionally, I am very active in the community, attending and organizing social activities for many local causes.

I've been married to my husband, Rich, for over 23 years and have two sons who attend local schools.