Naples, Cape Coral Rank in Top 10 in Forbes Job Report
According to Forbes Magazine, Cape Coral is one of the top ten cities in America for future job growth. Florida added retail jobs at the fastest rate of any state last year, and that trend is expected to continue. Naples ranked #1 in the entire country in future job growth. The report states that burgeoning home sales is largely responsible for the job spurt, and there are also a lot of jobs in health care, leisure and hospitality in our area. Sue: we always knew Cape Coral, Naples and other local towns were a great place to live, play, and vacation – the news about future jobs is one more reason so many of us love Southwest Florida.
Cape Home Inventory Drops Below 4 Months…In Summer!!!
Considering that we are well past our peak real estate season in SW Florida, it is most surprising that home sales remain so strong during the slow summer months. Home inventory is now under 1,500 homes, about 130 fewer, or 8% less than just a month ago. Although strong sales activity and decrease in inventory in our traditionally slow season speaks volumes about the desirability and affordability of Cape Coral, it also “wake-up call” for some real estate concerns:
* With foreclosures and short sales diminishing, new construction will have to increase significantly in order to keep pace with local housing demand (see article below about new construction permits).
* Re-sale homes, along with lots and new construction spec homes are going to substantially rise in value, especially once “high season” arrives and Snowbirds and retirees descend on our tropical Paradise to purchase their retirement home or second home.
Tom: my concern is that we will have unsustainable price increases if home inventory drops much lower, without adequate new construction to fill the void. This has already happened in San Francisco and other cities, and prices in those cities are skyrocketing. Experience tells us that unsustainable price increases lead to a “Housing Boom and Bust”, which we do not want to experience here again….once was enough!!
New Home Permits Highest Level in Over 7 Years
The City of Cape Coral had 73 construction permits pulled in July, which is the highest amount since May of 2007. The higher number of permits coincides with the low inventory level, and reinforces our expectations for even more new construction in the coming years.
In a normal market builders will secure about 250 construction permits per month in the city. During the Boom years of 2005 – 2006, there were months of over 500 new permits per month. We expect to see the 100 mark reached in the coming year, and possibly as many as 150 by the end of 2015. What we hope not to see again are new construction permits at over 300 per month.
It’s because of the low inventory and new home permits that we’re still so bullish on our area, despite 43 months of improvement from the bottom of the market (December 2010). We feel that homes and prime lots have a long way to go before reaching the next peak.
Tom: the inevitable need for new housing for several years is the main reason I recommend (and have purchased) waterfront lots for investment.
Monthly Facts & Stats
* Foreclosures at lowest level since 2006: According to Realty Trac, U.S. foreclosures dropped 16% from a year ago, and hit the lowest level since June 2006. Tom: fewer foreclosures and short sales definitely is the case for our area as well. The only foreclosures coming on the market are those that have been in the court process for a long time. More distressed sales would actually help boost our low inventory
* Low interest rates actually hurting home sales: Over 1/3 of U.S. homeowners have an interest rate below 4%, with some as low as 3.3%. This is causing many homeowners to hold on to, or stay in their home, even when circumstances (job change, new child, etc) traditionally dictate they would move
* New household formations very low: New household formations usually average 1.4 million per year. For the past several years the rate has been in the 500,000 – 700,000 range, which will eventually cause a severe housing shortage. First-time buyers generally make up 40% of home buyers. Lately the share has been closer to the 35 – 36% range
* Multigenerational Households Reach Record High: According to the Pew Research Center, a record 57 million Americans – 18.1% of the population – lived in multigenerational households. This housing trend spiked during the Great Recession of 2007 – 2009
* Average Age of U.S. Homes: 40 is the median age of U.S. homes. 15% of current U.S. housing was built before 1940. Tom: although I don’t have exact figures, Cape Coral has a younger median home age than the nation as a whole, as the city didn’t start building until around 1960, and a lot of new homes were built in the last 10 – 20 years.
* 19 % of U.S. – 30% of Florida homeowners still underwater: Tom: as more out-of-state homeowners rise above water they will be able to relocate or buy a second home in Florida.
* Same month year-to-year home prices drop in Cape: For the first time in 43 consecutive months the same month year-to-year median home price dropped in Cape Coral. Please read the full explanation on our blog as to why this is not only something to not worry about, but is actually a welcomed relief.
Blogs/Client Questions of the Month
– Which area 0f Cape Coral do you see having the most growth/appreciation in coming years?
– Since Cape Coral home prices had the first price drop in 3 1/2 years, does this mean the real estate recovery is over?
– How much are typical closing costs on the sale/purchase of my waterfront home?
– Can we use our out-of-state lender to buy a home in SW Florida?
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