Sept. 29, 2023
Slight Drop in Cape Home Prices - Bump in Inventory
As expected, and reported in our last few reports, July experienced the typical summer slowdown in home prices. MLS Pending Home Sales prepared us for prices to fall below the $500K mark, with MLS indicators showing that trend will continue for at least the next few months.
August, Sept, and October will likely have the lowest home prices of the year and probably the lowest prices of this current cycle. Not until we enter the late fall/early winter buying season and/or interest rates begin to drop can I foresee any increase in SWFL home prices.
Cape Coral Dec 2022 vs. July 2023
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Dec 2022
(Low Point This Cycle)
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July 2023
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Cape Coral
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351 Sales $465,000
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407 Sales $488,000
+ 15 % + 5 %
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Lee County Dec 2022 vs. July 2023
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Dec 2022
(Low Point This Cycle)
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July 2023
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Lee County
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987 Sales $547,000
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1073 Sales $584,000
+ 8 % + 6 %
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C.C. Inventory: Cape home inventory spiked to 4.5 months in July, the first time in years inventory has been over 4 months in C.C. This key indicator will dictate prices going forward
Cape Gulf-Access Homes: July’s Gulf Access home sales mirrored June’s at $900,000. There were 60 gulf-access home sales in July, 13 less than in June
Cape Coral $1M+ Homes: Luxury market prices remained solid with 15 upper-end homes averaging $1,571,000. This represents an 8.5% price increase over June’s $1M+ homes @ $1,444,000. The highest price Cape home sale in July was $3,300,000
5 FLA. Cities Top List for First-Time Home Buyers
What makes a city “best” for first timers? WalletHub looked at 22 key indicators in 300 U.S. cities, such as attractiveness, affordability, cost of living, real estate taxes, property-crime rate and quality of life.
Florida cities, both large and small, took the top 5 spots for first-time homebuyers, with our very own Cape Coral nabbing the #2 top spot. More impressively, the Cape ranked #1 in midsize city rankings (out of 99 U.S mid-size cities).
Top Cities for First-Timers:
1. Palm Bay
2. Cape Coral
3. Tampa
4. Port St Lucie
5. Orlando
Two cities in AZ, and one each in Idaho, VA, and NV rounded out the top 10. On the flip side, nine cities in CA and Anchorage, Alaska were the 10 worst places for first-time homebuyers.
Disappointed Buyers Ask, ‘Where’s the Housing Crash?’
Someday a buyer’s market will return, but it’s not today and it won’t be tomorrow. In some U.S. metros bidding wars have returned and some are still seeing rising prices. After a record-breaking run that saw mortgage rates plunge to all-time lows and home prices soar to new highs, the U.S. housing market finally started slowing down in 2022.
Real estate economists lamented a “housing recession” and home prices seemed poised for a correction. But a strange thing happened on the way to the housing crash: Home values started rising again. According to the latest Case-Shiller home price index, U.S. housing prices have increased for three months in a row. Yes, home values were down nationally compared to April 2022 – but only by a mere 0.2%. In other words, the housing boom might be over, but this pause in the real estate market isn’t shaping up as a crash.
One obvious difference between now and the Great Recession is that homeowners’ personal balance sheets are much stronger than they were 15 years ago. What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes. Tom: Please note that this is a national article and not reflective of our local SWFL real estate market, which definitely marches to its own drummer. IMO, this is a prime time for buyers to purchase a home in our local market.
When to Buy? It’s Not Just an Investment Decision
People need a roof over their heads, make a “home” a life necessity and also, on the side, a good investment. As a result, buying sooner is better than later. For the vast majority of Americans, their home is their greatest life time investment. The real advantage of putting money into homeownership is that you have incentive to ride this investment through ups and downs, because not only is it an investment – it’s also a place where you live.
Housing is a market just like stocks. Since we see stock prices reported every day, we are more aware of the swings. And it’s easy to liquidate a stock position at a very low cost. But home prices move in longer waves, though they are also impacted by the economy and interest rates.
Are we about to see another housing downturn? Despite a doubling of mortgage rates in the past year, home prices have remained fairly stable. In fact, the Case-Schilling home price index recently ticked up. The popular explanation is a lack of supply. Homeowners with a low interest rate just aren’t willing to give up those super-attractive interest rates. But builders are responding to demand, setting a 13-month high for new housing starts in May. Lisa & Jenna: Many buyers cannot wait the 18+ months it takes to build a new home and these are the buyers we see actively looking to purchase now.
Repairing vs. Replacing Appliances: How to Decide
It’s often cheaper to fix an appliance than buy new. And while new ones tend to be more energy efficient, their high-tech features mean more things can go wrong. Manufacturers have been incorporating more technology and new features into their products.
Today’s smart refrigerators, for example, might offer an interior camera so you can peek inside while you’re at the grocery store, or it might have a screen that allows you to stream movies while you cook. But more features on new appliances mean more things that could break, and the fixes may require more specialized knowledge, which can translate into higher costs to repair.
Consumers’ expectations of how much use they’ll get out of a typical appliance have declined substantially. Previous generations may have anticipated that their washers, dryers, and ranges would last for decades, but consumers today think the typical appliance lifespan is about 10 years and many manufacturers agree.
The Association of Home Appliance Manufacturers was a bit more optimistic. Here are their findings:
Gas Range: 14.2 years
Electric Range: 11.6 years
Top-freezer refrigerator: 14 years
Side-by-side refrigerator: 11.1 years
Dryer: 13. 4 years
Top-load washer: 11.2 years
Front-load washer: 9.1 years
Dishwasher: 12 years
In the past, Consumer Reports advised replacing products when the repair exceeded 50% of the cost of buying a replacement. Consumer Reports now offers interactive tools that take into account the appliance’s purchase price, age and cost of repair, as well as estimates of the appliance’s “depreciation rate” – basically how much useful life a typical appliance in that category would have left.
In general, the more you spend on an appliance upfront, the more likely the Consumer Reports’ tool will recommend repairing over replacing. Sue: I was actually pleasantly surprised by these statistics. I would have guessed the lifespans for most of them would have been much shorter.
Facts & Stats and Tom’s Musings
The 10 Fastest Towns in Fla. Everyone is Talking About: Fort Myers was atop the list with 24,798 new residents over the past decade. With so many great perks, Fort Myers has often found itself on the lists for the best places to retire. If you’re still working, then this could also be your future home because it boasts one of the best job growth rates in the U.S. Bonita Springs rounded out the list at #10 with 5,707 new residents in 10 years.
Analysis: U.S. Needs More than 4M Homes: Buyer demand remains high, in part, because so many young adults lived with parents during the pandemic. Americans seeking to move out on their own outnumbered available housing by almost two to one in 2021. According to Zillow, there were roughly 8 million individuals or families who lived in another person’s home in 2021 and just 3.7 million homes for rent or sale. This stat reinforces that the shortage of supply will keep prices from drastically falling.
Builders Don’t Hate High Mortgage Rates: Homeowners with mortgage rates too low to give up aren’t listing their homes, pushing buyers to the new-home market – an economic boon for builders. Even at higher rates, people still want to buy a home, and many are cash buyers, unconcerned with mortgage rates. They include older adults who have paid off their mortgages, and are now looking to downsize or move to more pleasant climates.
Lee County 15th Highest Property Insurance Premiums: At $3,021 average property insurance, Lee County ranked 15th highest in the state. That may seem steep except when compared to Monroe County, which at $7,584 has the highest insurance premium out of 67 counties in the state. Collier County (Naples, Marco Island, etc) had the 6th highest property insurance in Fla. at $4,610.
