Cape Coral/Fort Myers Area Ranks Seventh in the World for Housing Affordability

Cape Coral, FL (February 4, 2010) – The Cape Coral/Fort Myers, FL market is seventh in the world for affordable housing, according to the 6^th Annual Demographica International Housing Affordability Survey: 2010 Ratings for Metropolitan Markets. The survey is based on 3^rd quarter 2009 data. Cape Coral was the number one city listed in the southern United States. David Diaz, a real estate broker and chief operating officer for Carney Properties and Investment Group, Inc., in Cape Coral, advises that this positioning further indicates that now is the time to invest in Southwest Florida real estate.

Carney Properties pays careful attention to surveys like this one because they track the status of the local market and provide insight into what may lie ahead. Carney Properties is the number one purchaser of court auction homes in Lee County, and part of their normal routine includes daily due-diligence research on properties in the foreclosure cycle and generating comparable reports (or “comps”) on property values before they go to court auction. Relative housing affordability conclusions in the survey are based on median home price as compared to the median income and both foreclosure and short sale comparables influence this price.

Local experts say it’s a great time to buy

Demographica findings point to the losses suffered by banks due to risky mortgages in the so-called bubble markets. The average home had become unaffordable to the majority of area residents. “The end of the boom was well-marked by the peak housing price versus average household income,” said Diaz. “If these historical metrics can help us mark reasons why the bubble burst, we owe it to ourselves to look at these same metrics to realize when it makes sense or is opportunistic to buy.”

Concurring with the affordability rankings, it seems more Lee County home owners are able to avoid foreclosure. In January 2010, 1,321 foreclosure filings were reported, down from 1,616 in December 2009. In comparison, there were 2,074 foreclosure filings in January 2009. This is good news for the housing market, Diaz said. “We still have more foreclosures to come and it could be a while before we see real appreciation. Today’s low interest rates and solid rental environment make purchasing today… an attractive bet in my opinion. If we do hit an inflationary cycle, bricks and mortar are much safer investments than equities or cash,” Diaz explained. Housing sales seem to be making a gradual comeback, according to the Florida Realtors Association, which credits the federal homebuyer tax credit, low property prices and low mortgage rates for the increase throughout 2009.

To view the full survey report visit http://www.demographia.com/dhi.pdf. Below are a few selected highlights, culled from the 57 page report.

·         The Survey covers urban housing markets in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States. This edition includes 272 metropolitan markets, providing standardized comparisons of housing affordability between international housing markets, assessing the international housing affordability at the metropolitan market level.

·         The Survey assesses housing affordability by rating a “Median Multiple” (median house price divided by gross annual median household income; Also called the price to income ratio.).

·         Survey Co-author Hugh Pavletich provides the following definition of housing affordability:

“For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household income. To allow this to occur, new starter housing of an acceptable quality to the purchasers with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual household income of that urban market. The fringe is the only supply or inflation vent of an urban market.

·         Affordable Markets: All of the 103 affordable markets (having a Median Multiple of 3.0 or below) were in Canada and the United States (Table 4). There were 98 affordable markets in the United States and 5 affordable markets in Canada. The most affordable major market (population over 1,000,000) is Detroit, which along with South Bend has a Median Multiple of 1.6. Fort Wayne, Lansing and Youngstown each had a Median Multiple of 1.7. These Median Multiples are the lowest ever recorded in the Survey.Each of these five most affordable markets were in the “Rust Belt,” which has been hit particularly hard by unemployment, especially in the automobile manufacturing sector. [Ed. Note: Ranking just below the Rust Belt leaders is Cape Coral, Florida.]

·         United States: Housing in the United States is rated as affordable, with the Median Multiple of 2.9.The recent house price declines have restored U.S. housing affordability to the below 3.0 historic     norm (last achieved in the early 2000s), as the price bubble burst in many plan-driven markets. The United States had 98 affordable markets, 58 moderately unaffordable markets, 8 seriously unaffordable markets and 11 severely unaffordable markets. For the first time, none of the four least affordable markets were in the United States.

·         To Avoid the Next Bubble: Further, plan-driven land regulation could lead to yet another destructive housing bubble. The world is only beginning to recover from the devastating financial and social impacts of the economic downturn. The Great Recession was generated by the burst of the housing bubble in the United States, which resulted from the intensity of mortgage losses in the prescriptively regulated bubble markets. The restoration of near historic housing affordability in some markets provides an opportunity to repeal more prescriptive land regulation policies, which would not only minimize the potential for future busts, but would also ensure housing affordability for future generations.

Edited list from the Housing Affordability Rankings

Using Median Multiple (Median House Price/Median Household Income)

2009 – 3rd Quarter

About Carney Properties: Carney Properties and Investment Group, Inc. is a leading real estate acquisition and renovation company, specializing in foreclosure renovations, in Southwest Florida since 1999. Its affiliate, Carney Realty and Associates, Inc., is a team of dedicated Realtors who match home seekers and investors with the properties that meet their needs. The signature CarneyHome^TM brand features superb craftsmanship in home renovations and researched and vetted investor-ready properties. Visit www.carneyproperties.com for more information.

Contact Us Today, Or Call 239.677.3064!