Friday, March 20, 2015

Let's Talk... Hot Off the Press
NABOR® Report Indicates Healthy Market Trends Continue
Naples, Fla. (March 20, 2015) - An increase in the number of home sales in the over $300,000 price categories, overall rising median closed prices, and an increase in inventory in most price segments were just some of the trends included in NABOR's February 2015 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island). But the best news? These trends are expected to continue.
"We saw year-over-year growth in our overall median closed prices throughout 2014; and with February getting off to a similar start, we expect that trend will continue," Vice President and General Manager of Downing-Frye Realty and NABOR®'s 2015 President Mike Hughes said. "Our inventory remains low yet we ended February with 1,280 sales pending. This indicates a healthy market."

According to Kathy Zorn, broker/owner of Florida Home Realty, "February's activity revealed that sellers may not be sitting on the fence anymore. It's been 10 years of recovery and many homeowners who've weathered it may be at a place where they feel satisfied their property's value has recovered."
While overall closed sales activity for single-family homes remained even in February 2015 compared to a year ago, its inventory grew by 6 percent from 2,305 homes in February 2014 to 2,449 homes in February 2015. "I don't think the increase in inventory is necessarily all due to bracket creep," said Zorn. "Homeowners keep an eye on their property values. When they presume their home has rebuilt equity, many will contact a REALTOR® to confirm the increase in value. If the equity is confirmed, they're likely to put their home on the market."
Wes Kunkle, a commercial broker at Kunkle Realty, said the resale market's recovery will likely affect new home construction prices. "The report shows a trend of increased inventory in single-family homes that I believe will begin to put pressure on new home construction prices. We may see a pricing peak in the new home market sooner than later."
However, as indicated in the February report, the condominium market is not performing as well as the single-family home market. Closed sales for condominiums decreased 17 percent from 395 in February 2014 to 329 in February 2015. As expected, this decrease may be a result of a 16 percent decrease in condominium inventory, which fell from 2,328 units in February 2014 to 1,957 units in February 2015.
"Condos are not recovering as well as single-family homes because they are at the whim of certain financing obstacles," said Cindy Carroll, SRA, with the real estate appraisal and consultancy firm Carroll & Carroll, Inc. "Getting a bank to approve a loan on a condo is more difficult because they typically rely on extenuating factors such as the financial health of the homeowners' association, the age and structural state of the building, and a requirement to receive Fannie Mae approval."
Despite these obstacles, broker analysts think the condominium market's activity in the last year is an indication of its potential for an increase in value. For example, pending sales for condominiums in the $300,000 - $500,000 price category increased 87 percent from 79 units in February 2014 to 148 units in February 2015 and overall, the median closed price jumped 14 percent during that time period. "We've seen a recovery and stellar activity in the single-family home market. It wouldn't surprise me if condominiums became the new exchange," said Carroll. "And may experience the same type of recovery as the single family home market."
The NABOR® February 2015 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. The NABOR® February 2015 sales statistics are presented in chart format, including these overall (single-family and condominium) findings: 
  • Overall pending sales increased 3 percent from 1,244 in February 2014 to 1,280 in February 2015.
  • Overall closed sales decreased 1 percent from 9,808 in the 12-months ending February 2014 to 9,720 in the 12-months ending February 2015.
  • Closed sales for single-family homes decreased 1 percent from 4,682 homes in February 2014 to 4,612 homes in February 2015.
  • Closed sales for condominiums decreased less than a percent from 5,126 condominiums in February 2014 to 5,108 in February 2015.
  • Overall median closed price increased 12 percent from $245,000 in the 12-months ending February 2014 to $275,000 in the 12-months ending February 2015.
  • Overall inventory decreased 5 percent from 4,633 homes in February 2014 to 4,406 homes in February 2015.
  • Inventory for single-family homes increased 6 percent from 2,305 homes in February 2014 to 2,449 homes in February 2015.
  • Inventory for condominiums decreased 16 percent from 2,328 in February 2014 to 1,957 in February 2015.
  • Average days on market for February 2015 were 93. 
There are 3,027 homes for sale in the Naples area that are priced above $300,000. This comprises about 66 percent of the market. If you are a homeowner that sat steady while the market recovered, find out whether your home has gained equity by contacting a REALTOR®. A REALTOR® has the experience and knowledge to do provide an accurate market comparison that will help you determine whether now is the right time to sell your home and ensure your next sale or purchase in the Naples area is a success. Contact a REALTOR® on®.
As always if you have any questions please feel free to contact me by calling 239.404.7787 or by e-mail at
I hope you have a fantastic weekend,
To view the entire report, visit

We are the OneGroupNaples!  
Michelle J. DeNomme, REALTOR, GRI
Cellular Phone:  239.404.7787
Berkshire Hathaway HomeServices Florida Realty
Office: 239.659.2400
E-Fax Number:  239.236.5550
Twitter Me: DeNommeRealtor

Wednesday, March 18, 2015

Let's Talk...

Winners and losers if the Fed hikes rates

NEW YORK (AP) – March 18, 2015 – Interest rates could soon rise in the U.S. for the first time in almost a decade, and that's shaking up financial markets.
If you own stocks of Coca-Cola or Procter & Gamble, you may already see the impact in your 401(k). And if you're making plans to visit Europe, you've probably noticed the dollar has surged against the euro.
These shifts can all be traced back to the Federal Reserve and what it decides to do with rates.
Since December 2008, the central bank has held its benchmark rate close to zero to support the economy by encouraging borrowing and spending. It's been even longer since the Fed actually raised the cost of borrowing. That was back in June 2006.
The Fed wraps up a policy meeting Wednesday and investors will be watching closely for any hints about whether the central bank is weighing a rate hike. Areas of the economy appear to be stuttering, but the jobs market has strengthened, and some analysts think the Fed could lift rates as soon as June. Higher rates are meant to combat inflation, which is a risk if wages and prices start to edge higher along with the jobs market.
But investors aren't waiting for the Fed to move. They're already favoring stocks they think will do well under an improving economy – and the higher rates that come with it. They're also steering away from investments they think will suffer.
Russ Koesterich, chief investment strategist at Blackrock, the money manager, says investors should expect "bigger drops and bigger swings" in the market as people scramble to adjust their portfolios after six years of near-zero rates. "This is going to be a change in the environment."
Here's how the prospect of higher rates is shaping stocks, bonds, borrowing and saving:
LosersPeople holding utility stocks have suffered losses this year. Utilities as a group have slumped 7.1 percent in 2015, the biggest loss among the 10 industry sectors that make up the Standard & Poor's 500 index.
These stocks typically pay dividends that are high relative to their companies' share prices. They were in demand last year, when government bond yields fell, and investors wanted them for the level of income they were no longer able to get from bonds.
Now, as yields on those ultra-safe bonds have edged higher, these stocks are less attractive. The yield on the 10-year Treasury note, which had dropped as low has 1.64 percent in January, has climbed to 2.06 percent. Dividend-rich stocks, which carry more risk than Treasurys, look less attractive.
Other stocks that traditionally pay big dividends to investors, such as telecommunications companies, have also started to struggle. Telecoms have fallen 3 percent this month.
Possibly the biggest impact on stocks has been from the currency market, where the dollar has surged.
The dollar index, which measures the strength of the U.S. currency against a basket of others, is up 10 percent this year.
As the U.S. currency climbs, companies that rely on overseas sales for a large portion of their revenues have seen their stocks slide.
Investors who own Coca-Cola, which derives more than a third of its sales from outside the U.S., have seen the stock slump 4.2 percent this year. Procter & Gamble, owner of the Gillette and Crest brands, is down 9 percent. The S&P 500 index is flat over the same period.
WinnersStores, restaurants and media companies should be among the better performers this year as the U.S. economy continues to strengthen and hiring picks up. Low gasoline prices will put more money in people's pockets, also helping consumer-focused stocks.
Consumer discretionary stocks are the second-best performers of the sectors that make up the S&P 500. The industry group is up 4.5 percent since the start of 2015.
Americans' willingness to spend "isn't going to be much affected by the rise in interest rates, it will be more impacted by the fact that the economy is getting better," says Karyn Cavanaugh, senior market strategist at Voya Investment Management. "It's a better economy, it's a better job market, and that's why the Fed is raising rates."
LosersThe biggest threat to investors from rising rates could come from the investment considered the safest, namely U.S. Treasurys, says Jim Paulsen, chief investment strategist & economist at Wells Capital Management.
Prices for Treasury notes have rallied since the start of 2014, sending their yields lower. The trend surprised many analysts who expected bond prices to fall as the Fed wound down a massive bond-buying program that was part of its effort to boost the U.S. economy. But as economies in other parts of the world struggled or slowed, investors bought more ultra-safe Treasurys, and drove prices higher.
Treasury prices are "very, very much out of line," given the relative strength of the economy, says Paulsen. The unemployment rate has fallen to a seven-year low of 5.5 percent, and most economists expect the economy to grow around 3 percent this year. At 2.06 percent, the yield on the 10-year Treasury note is lower than 3 percent level from six years ago, during the recession.
"The message from the bond market, supposedly, is that the world today is worse than it was than at any point during the Great Recession, which is nonsense," says Paulsen.
His expectation is that Treasury prices will fall sharply, pushing the yield on the 10-year note as high as 3.25 percent by the end of this year.
WinnersOf course, not all bonds are the same.
Junk bonds, riskier securities that pay higher yields than Treasurys, traditionally do well in a rising rate environment, says Rob Waldner, chief strategist at fund manager Invesco.
The bonds are issued by companies that have a relatively high amount of debt compared their earnings. The earnings of these companies typically rise when the economy is improving, and that offsets the impact of higher interest rates.
Junk-rated companies also tend to lock in their borrowing costs for a couple of years when they sell bonds, says Martin Fridson, chief investment officer at Lehmann Livian Fridson Advisors LLC. That means they are protected from the impact of higher rates, at least initially.
Since the start of the year, junk bonds have handed investors a 2 percent return, according to the Barclays US High Yield index, which tracks the performance of the securities.
Municipal bonds, issued by local governments, also tend to do well for the same reason as junk bonds.
"In a rising rate environment, you have good growth going on and you have good credit quality," says Invesco's Waldner. "High yield almost always outperforms."
SaversIf you're relying on savings, you'll probably welcome higher interest rates. The best rates on one-year certificate of deposits are about 1.2 percent, according to That means for every $1,000 you save, you will make $12 a year. Higher rates will boost your income.
BorrowersAs rates rise, people with large credit card balances may face higher payments. So could those looking to buy a home.
Mortgage rates, which are linked to Treasury yields, will climb should bond yields start to rise. The average 30-year mortgage rate is at about 3.7 percent, according to Freddie Mac. That compares with about 5.9 percent a decade ago and 7.9 percent in 1995.
Dave Roda, regional chief investment officer for Wells Fargo Private Bank, says that consumers should assess their finances and try to lock in their borrowing costs now while rates are still low.
"We probably won't see rates this low again, maybe in our lifetimes," he says.
Copyright 2015 USA Today, Steve Rothwell