Despite several interest rate hikes and the negative effect that the red tide/algae problem had on our local economy in 2018, our real estate market had another positive year…. the eighth straight year of rising prices. The charts below will illustrate more precisely how our 2018 local real estate market fared.
Tom: Cape Coral home prices had several months in 2018 in the $295,000 range and I expect some months this year to reach that price level, and maybe even surpass the $300,000 mark. But, as I stated in our 2019 SWFL "Timing" report, my expectation is that overall home prices for this year will be close to 2018's average $283,000 home price (+/- 3%). Economists predict that national home prices will increase by 2.2% - 3. 8%
Tom: This price differential has remained fairly constant for several years. And for those very wealthy buyers, Naples & Marco Island waterfront home prices are about 400% higher than Cape Coral. Most of the waterfront price differential is because of the amount of waterfront each city has, with Cape Coral having far more miles of canals than these cities or any city in the world. Gulf-access home prices in Cape Coral increased from $480,000 in 2017 to $501,000 in 2018, the 9th straight year of gulf-access home price increases ($307,000 in 2010).
Tom: In our annual “Timing the 2019 SWFL Real Estate Market” I covered in depth my projections for 2019, but here are some key points:
1. We will have more home inventory this year than in the past few years. In 2019, home inventory should be in the 5 to 7-month range. This is a neutral level, favoring neither buyer nor seller, unlike past years when inventory was so low (4-month range) that it was mostly a seller’s market. Right now, before "high-season" sets in is one of the most favorable timeframes a buyer will have
2. In 2018 we entered the traditional “Shift” in a real estate cycle. I expect prices to stay fairly stable this year, but to resume the upward trend in 2020. My reasoning for this projection is that I feel 2019 will be a year in which incomes will have a chance to catch up a little with rising prices and that buyers will accept that 5% - 5 1/2% interest rates are not really so bad, and still far below historical rates. Also, there is still a pent-up demand for housing, especially by millennials
3. Whenever a real estate market is in a Shift and prices stay relatively stable that is a very welcome and positive sign, especially compared to the last Shift….aka “Crash”, and more in line with a normal real estate cycle
4. Because 10,000 new residents (not counting seasonal owners) are projected by the U.S. Census Bureau to relocate to Cape Coral each year, interest rates are still historically low, and new construction has not caught up to demand, it is very difficult to foresee a 2007 – 2009 type downturn occurring.
5. There are two more key factors that point to a more normalized “Shift”. One is that builders and investors have not overbuilt new homes as they did in 2005 & 2006. We are averaging about 200 new homes a month in Cape Coral, whereas builders/investors were putting up over 500 homes a month in the last peak cycle, far too many for the number of buyers. Equally important is that lenders are not giving out home loans willy-nilly to borrowers that should never have qualified at the last peak.
Million dollar homes continue to sell well in SWFL. Here is a synopsis:
Cape Coral: 46 homes sold at $1 M or higher, at $1,445,000 average sales price. This was 4 more sales and $73 K higher average luxury home price than in 2017. Sue: we were fortunate to have sold $1 M + Cape Coral homes in 2016, 2017, and 2018.
Ft Myers/Ft Myers Beach: 105 $1 M + home sales w/ $1,718,000 average sales price. This was 9 more luxury home sales than in 2017 and a whopping $138,000 higher price
Bonita & Estero: 94 luxury home sales versus 84 in 2017, and the average sales price stayed relatively stable at $1,885,000
Recently, while in Bonita Springs, Gov. DeSantis followed up on a campaign promise to make the environment a priority by signing an order to tackle Florida's problems with algae in its rivers and red tide off its coast. DeSantis will seek $2.5 billion over the next four years for Everglades restoration and water resources. One of the priorities will be to reduce nutrients flowing into Lake O and to treat them before they flow downstream, where algae feed off the pollutants
On the same day, DeSantis demanded the resignations of all nine members of the South Florida Water Management District, which oversees the Everglades area. The board in November extended a lease with sugar farmers for land needed for a reservoir that is key to water purification efforts, angering DeSantis.
The order also directs the Department of Environmental Protection, Department of Health and the tourism agency Visit Florida to work together to address algae problems. Tom: it is most encouraging that a serious and ongoing effort is taking place to finally address our water issues.
If you bought a Florida home or condo in 2018 and it will be your primary residence don’t forget to file for your Homestead Exemption with the Assessor’s Office by the end of March. Homestead is one of the many outstanding tax benefits for Florida residents, so don’t let it slip by. Click here for further information regarding Homestead filing on the Lee County Property Appraiser's website.
Chiquita Boat Lock Decision Delayed: There has been a challenge to the Florida DEP's approval of the removal of the lock by the Matlacha Civic Association. A hearing has been scheduled for early March. A vast majority of our waterfront clients living behind the lock want it removed but some folks don't want it removed and prefer for a high-speed new lock to be installed. Many of the people dissenting live in Pine Island.
Single Women Buying More Homes: Single women are the fastest growing demographics in home ownership, now owning 22% of all homes, while single men own 13%. Sue: Why the big differential favoring women? Hmmmm! Could it be that women are better money managers?
Florida Realtors 2018 Homebuyer Profile: Average Florida buyer is 57 years old with an income of $85,000, versus 46 years old and a $91,000 income for U.S. buyers.
Fed Unlikely to Raise Rates Soon: The Federal Reserve's December meeting minutes suggest that interest rate hikes are unlikely in the next several months so that policymakers can gauge the economy and recent stock market instability.
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