Cape Home Prices Drop – Inventory Rises To “Neutral” Level
Sometimes I wish I was wrong in my projections, but unfortunately, MLS indicators rarely are wrong. We’ve seen the continuing rise in home inventory, which inevitably leads to lower prices. For the first time in over a decade, October’s inventory reached the commonly held “neutral level” of 6 months, which favors neither buyer nor seller.
On the pricing side, October came within $2,000 of the lowest point in the new cycle, and Lee County dropped $4,000 below the previous low. The only positive I can take from this is that if the C.C. home price was any lower, I would have to start using October as the low-point of the cycle instead of last December. Based on Pending Sales it appears that December, 2022 will remain the low-point of this cycle.
For our existing clients who may be looking to sell soon I have some positive news. First, based on the first week in November, it seems home prices are slightly rising and as I’ve been predicting (hoping I was right), more $1M+ homes are going under contract. Notice the low number of $1M+ homes that sold in October.
I’m no Nostradamus - I have only been projecting what has been the annual norm in SWFL of increased activity and higher pricing as seasonal homeowners and potential waterfront buyers return to the area. Now let's see if the norm holds true this winter/spring.
Cape Coral Dec 2022 vs. October 2023
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Dec 2022 (Low Point This Cycle) |
October 2023 |
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Cape Coral |
351 Sales $465,000
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366 Sales $467,000
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Lee County Dec 2022 vs. October 2023
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Dec 2022 (Low Point This Cycle) |
October 2023
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Lee County |
987 Sales $547,000 |
968 Sales $543,000
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December 2022 vs October 2023 Sales Stats: The number of Cape Coral/Lee County sales and prices for October were so close to December that we didn’t report the insignificant percentage.
Inventory: As reported above, we’ve reached 6 months of inventory for the first time in many years. Gone are the times when we measured inventory in weeks, and even days not so long ago. The next three months will be very telling as to which direction inventory goes.
Cape Coral Gulf-Access Homes:
September: 66 Gulf Access Sales w/Avg Price of $852,000
October: 50 Gulf Access Sales w/Avg Price of $846,000
September: 18 $1M+ Sales w/Avg Price of $1,336,000 – Highest $2,150,000
October: 12 $1M+ Sales w/Avg Price of $1,450,000 – Highest $3,250,000
This is by far the fewest Cape Coral $1M+ home sales since....I don't remember when!
SWFL/Cape Coral Draw Ample New Accolades
Wallet Hub: Cape Coral Ranks 16th Safest City in U.S. WalletHub compared over 180 cities across 41 topics, from traffic fatalities to unemployment rates. C.C. was rated the safest city in Florida and 16thsafest in the country.
Cape Coral: Best Canal City in The Country: Traveling Rauf rated the Cape as the Top Canal City in the U.S. Fort Lauderdale was #2, and St. Augustine #9. Hurricane Ian left Cape canals littered with debris and junk. The city has removed 750,000 cubic yards of debris thus far with a goal of removing all hurricane-related material by the end of 2023.
Lee Among Top 4 U.S. Markets to Watch; Collier One of 3 Counties Drawing Wealthiest Americans: SW Florida is still one of America’s hottest housing spots despite an overall slowdown nationally.
Insurify, an online insurance agency used permits, population change, and demographic stats from the Census Bureau to rank the 75 most populated metropolitan statistical areas in the U.S. Cape Coral//Ft Myers ranked #4 in the country.
Collier County, with prices up 88% from pre-Covid to today, was the #3 county to attract wealthy movers in America. Collier County home owners are looking at approximately $250,000 in wealth gain since pre-Covid. Naples is ranked the wealthiest city in Florida.
Redfin: Cape Coral #8 Top U.S. Move-To Hotspot: About one-quarter of homebuyers looked to different parts of the country in the third-quarter of 2023. This is based on a two million home search conducted by Redfin’s website.
Florida had 5 of the top 10 go-to metros, with Cape Coral coming in at #8. Chicago, N.Y. City, Washington D.C. Los Angeles and Boston all occupied the top 10 move-from cities.
How Did Hurricane Ian Affect SWFL Housing Market?
Currently, Lee County has seen a year-over-year decrease for approved residential units under construction, attributed to Hurricane Ian’s September 2022 battering. However, like Collier County, Lee County still has a large number of abodes being built compared to nearly the rest of the continent, and strong data in other categories helped lead Lee to a high ranking, according to Insurify, a Massachusetts company that helps people find the lowest insurance rates.
Insurify researched that Lee had the second highest number of new residential units under construction when accounting for existing population, with 191 residential units under construction for every 100,000 residents. Jenna: As Realtors, it’s music to our ears that so many new homes are being built. As residents, it’s not the most relaxing music to hear.
Do People Really Move Because of Taxes?
Florida touts its no-income-status, but moving is complicated and buyers consider many variables. Still, it appears that lower taxes carry notable weight, and all things being equal, people prefer lower taxes. The most recent IRS data seem to show a direct connection between taxes and migration:
· Nine of the top states with the largest population gains from 2019 to 2020 have no or low individual income tax.
· Of the states that saw more income tax filers move in than out, 80% had below-average state and local tax collection in 2020
· 19 of the 28 states with more people moving in than out had a top marginal income tax rate below the national median, while 16 of the 22 states, plus D.C., with more people moving out than in had above-median income tax rates.
Most studies have found that state and local taxes affect migration, and the effect seems to have become stronger over the years, probably because technology has made it easier for people and businesses to move. For example, in 2021, California and New York lost $29 billion and $25 billion in AGI, respectively, while Florida gained $39 billion. Tom: This disparity will eventually cause an even higher mass exodus from high-tax states.
Owners Not Selling? ‘Lock-in Effect’ Not Only Reason
While owners don’t want to give up 3%-ish mortgage rates, a survey from Fannie May found that’s a secondary concern to low inventory challenges making it harder to find a place to go. The results suggest that the lock-in mortgage-rate effect is less than most people think.
Homeowners’ Reasons for Staying in Place:
· 29% of people with a mortgage and 29% of outright owners said that they plan to stay in their home longer than originally intended.
· However, 45% of mortgage borrowers and 49% of outright owners do not plan to stay in their home longer than originally intended.
· 21% of mortgage borrowers said being “locked-in” to a low mortgage rate was the leading reason for staying longer, but “I like my current home” (19% and “home prices are too high” (13%) were close behind. Lisa: Locally, high insurance rates and low inventory are even larger obstacles than interest rates for buyers
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Facts & Stats and Tom's Musings
2023 Home Sales Likely the Lowest Since Housing Bust: Highest mortgage rates in two decades have started to take a toll, and by the end of next year, total existing-home sales will likely be the weakest for many years according to economist forecasts. Redfin estimates that the existing-home sales for 2023 will be around 4.1 million, the lowest mark since 2008.
Fewer Retirees Downsizing Due to Finances: Older adults once downsized to reduce monthly costs, but facing few small properties for sale and higher interest rates, many now feel locked into their current home. The top reasons older Americans give for downsizing are wanting to be close to family and friends, having less house to manage, and becoming empty-nesters.
Upside to Current Market? Increase in First-Time Buyers: A pullback in move-up buyers and investors has helped first-timers become 50% of the homebuyer market, a jump from 37% in 2021, and the highest share Zillow has ever recorded. High mortgage rates and a shortage of inventory is keeping would-be repeat buyers in their current homes, but the larger share of first-time buyers is filling the gap.
1 in 5 Couples Include ‘Home Fund’ in Wedding Registry: On wedding website The Knot, 20% of couples ask for home down payment money – a level that has risen 55% over the past five years. Only ‘Honeymoon Fund’ ranked ahead of ‘Home Fund’.
Cape Coral Homes Have Increase in Days on Market: The year-to-year DOM in Cape Coral is 43 days, 19 days longer than a year ago