Good News/Bad News: Cape & SWFL Home Prices Soar
But So Does Inventory
As projected last month, C.C. and SWFL home prices took off in January after a dismal, cycle-breaking low in December. As you'll read below, even with MLS stats to help guide me, I did not expect this big of a jump in January prices over December's. Nor did I anticipate such a rise in inventory, which typically translates to lower prices, not higher prices.
If you’re scratching your head, I’m right there with you. As longtime clients know, inventory and prices almost always go in opposite directions. The only possible explanation for the abnormality of rising prices at the same time as inventory is also increasing is that we are entering “high-season”, combined with a drop in interest rates.
Cape Coral January 2023 vs. January 2024
Jan 2023
Jan 2024
Cape Coral
326 Sales $489,000
269 Sales $530,000
+ 8 %
Lee County January 2023 vs. January 2024
Jan 2023
Jan 2024
Lee County
887 Sales $573,000
749 Sales $634,000
+ 10 %
Cape Coral Gulf Access Homes: Dec: 42 Gulf Access Sales, Avg Price: $908,000
Jan: 61 Gulf Access Sales, Avg Price: $915,000
Cape Coral $1M+ Homes: Dec: 12 $1M+ Sales, Avg Price: $1,422,000 Highest: $3,300,000
Jan: 17 $1M+ Sales, Avg Price: $1,526,000 (+ 7 %) Highest: $3,420,000
Although I can't say for certain that prices over the next few months will be at January’s level, I fully expect that December 2023 is truly the lowest point of this current cycle, at least for the next several months.
Inventory: Available homes for sale in the Cape rose from 7 months in Nov & Dec to 10 months in January. This is the highest inventory in C.C in several years.
Notes: Cape Coral home prices in January were a whopping 19% higher than December's prices. Notice that both C.C. and Lee County had significant year-over-year price jumps, but fewer sales. It will be interesting, surprising, and unusual if this trend continues. It's my expectation that inventory will slowly recede over the next several months, which will put added pressure on prices.
Real Estate Trends: What’s in Store for 2024
Florida Realtors Chief Economist, Dr. Brad O’Connor: “Watch for the state market to reignite over the next several months. We have weathered the worst of it.” O’Connor believes that the Florida real estate market will slowly start growing this year as interest rates flatten and consumers begin realizing what they’re seeing is the new normal in prices and interest rates.
Florida saw almost $200 billion in closed sales in 2023, which wasn’t far off from 2022, a super-strong sales year post-pandemic. Mortgage rates have likely peaked, and there’s a very good possibility that the Fed could begin cutting rates in the coming months – and that could reinvigorate buyers. O’Connor speculated a cut below 6% could be in the forecast with the first relief possibly coming in May.
A few of the factors buffering Fl. real estate from some national economic trends:
* The state’s labor market is strong. (Paychecks are still coming in)
* Florida’s population growth remains strong at about 1,000 new people a day
* The state is still attractive to “untethered” remote workers
* Retirees with home equity looking to relocate are unfazed by high interest rates
Six New Insurance Companies Coming to the Sunshine State
At the start of the 2024 legislation session, state leaders touted six new private insurance companies have entered the state’s insurance market, as a sign things are slowly turning around. Companies will start writing new policies in the first quarter of this year.
Citizens, the state-backed insurance carrier of last resort, will transfer 76,000 policies to private insurers this month, and 338,000 policies by the end of the year. On December 31, 2023 Citizens had 1,228,718 policies or about 18% of Florida’s insurance market.
Mark Friedlander, spokesperson for the Information Insurance Institute, states “These companies will be providing insurance products for consumers and giving homeowners choices, something we haven’t seen for years”. “We were told these companies weren’t going to jump in before hurricane season ended.” Jenna & Lisa: As insurance is the single biggest sales obstacle facing us today in SWFL real estate sales, even more crucial than interest rates, these new insurance companies bring a huge sigh of relief to buyers as well as existing homeowners.
Could Multigenerational Housing Help Supply Issues?
At a recent National Association of Realtors panel, industry experts said that when multiple generations live together, it can help address affordability concerns and homeownership gaps. A panel member began the discussion with the topic of the pandemic and the years following when many families chose to move in together. Trends of elderly parents moving in and younger people staying home longer grew, and so did the prevalence of multigenerational housing.
Intergenerational living or multigenerational living is here to stay, and it’s here to stay because it’s being consumer-driven. One member of the panel noted, “we live in a society where there is a stigma that is sometimes associated with multigenerational living, and that it is a burden. But, there’s nothing wrong with a multigenerational household. It’s the future of housing”.
U.S. Real Estate Investors Optimistic About The Future
According to a 2023 Investor Sentiment Survey, 72% of the nation’s real estate investors say the market is as good or better than it was last year, and 75% expect stability or improvements over the next six months.
The high cost of financing was the biggest issue among investors, being mentioned by 76%, while lack of inventory was mentioned by 42%. Most focus close to home: 44% purchase within their hometown, and 79% within their home state. There wasn’t a significant difference in purchase distances between fix-and-flip and rental property investors.
Is Self-Storage the Right Solution?
Self-storage can be a practical and simple solution for homeowners and renters who have too much stuff and not enough space. Such facilities can accommodate individuals in various situations, making this an ideal option for anyone looking to organize their homes without getting rid of their possessions. Some beneficial situations:
· Organizing a Home
· Renovating a Home
· Selling a Home – Tom: I’ve often suggested renting a storage space during the sale period so that a home and/or garage will look bigger and less cluttered.
Facts & Stats and Tom’s Musings
FEMA: Roofs Built After 2015 Fare Better: When Hurricane Ian struck SWFL in 2022, homeowners’ roofs built after 2015, when new building codes took effect, experienced significantly lower damages than older roofs. The new building codes require roofs to be attached to homes in a sturdier way and have special coating to prevent water leakage.
FEMA’s figures showed 90% of asphalt roofs installed before 2015 were badly damaged, compared to just 28% of those installed or replaced after. Older metal roofs fared a bit better, with 79% of pre-2015 roofs surviving without visible damage, versus just 10% of asphalt roofs.
Buyers Gained Purchasing Power with Lower Rates: Redfin said buyers can afford a more expensive home since mortgage rates have dropped from nearly 8% in October. A $3,000 monthly budget will buy a $453,000 home with a 6.7% mortgage rate, compared to the $416,000 home the same buyer could have purchased in Oct with a rate of 7.8%.
What Area of FLA. Are New Residents Moving to? A recent Redfin report showed that more people across the country researched Miami property listings than other metro areas in the U.S. Cape Coral, Tampa, Orlando, and North Port/Sarasota also made the top ten.
Gen Zers Outpace Others in Homeownership: Most adult Gen Zers are tracking ahead of where their parents were at the same age, likely because they bought when rates were near record lows.
Redfin reports that a decline in rental prices means Gen Zers can put more money toward savings for a down payment. Plus, the job market is strong, and career opportunities have become less concentrated in expensive cities during the remote work era, meaning Gen Zers can choose to live somewhere more affordable.
Redfin: Lock-In Effect Loosening: A growing number of homeowners with low interest rates aren’t waiting to move until rates drop. Sellers understand that rates aren’t dropping back to 3% anytime soon. So, they’re increasingly opting to move into new homes and take on higher interest rate mortgages. The share of homeowners with a rate below 6% has fallen to 88.5%, down from its record high of 93% in mid-2022.
Empty Nesters Lead in Owning Large Homes: Empty-nest boomers own 28% of the nation’s large homes, while millennials with kids own 14%. A decade ago, young families were just as likely as empty nesters to own large homes, but over the past 10 years a larger share of empty nesters now own the bigger homes.
