CAPE CORAL/SWFL 2017 RECAP & 2018 PROJECTIONS
TOM: Cape Coral home prices increased for the seventh straight year. The 7.7% increase for 2017 was on target for my projection at the start of last year.
2018 Projection: Although I expect home prices in the first quarter of this year to be about the same or even a little lower than the first quarter of 2017, I project Cape home prices will increase 5 to 8% for the year, and land to increase at a little higher rate. I believe that sometime during the year Cape home prices will reach $300,000 . . . which hasn't been achieved in over a decade.
Interesting Note: There are currently only 10 Cape Coral homes priced under $150,000, and 10 more homes priced under $160,000. At the start of 2017 there were 10 homes priced under $100,000 and 56 homes priced under $125,000. There was a substantial jump in the lowest priced homes in just one year, and I anticipate that at the start of 2019, $175,000 will be the new "bottom feeder".
TOM: For the first time in 84 months year-over-year same month home prices dropped in Cape Coral. Seven straight years of price increases was one long stretch, the longest I've witnessed in my four-plus decades in real estate. Some of the price drop was just economic reality setting in. Hurricane Irma exacerbated the price slowdown when higher priced gulf access home sales fell dramatically over the last quarter of 2017.
2018 Projection: Due to high demand, low inventory, improving economy and stock market, high consumer confidence, still relatively low interest rates, Millennials starting to buy homes, and the brutally cold start to winter up north . . . gulf access homes are starting to sell at a good pace again. Thus, average SWFL home prices will increase in a few months as today's Pending Sales become tomorrow's Closed Sales. We have already heard from clients up north who had not planned to buy here for a few more years, but the severe cold weather has them "crying uncle". This is especially the case when technology enables people to work anywhere they choose. Pending Home Sale prices are higher and New Listings are coming on the market at higher prices.
TOM: This chart reveals how far we've come from the bottom of our local real estate market (December 2010), and how far we still have to go to reach the last peak (January 2006). Over a third of the country has reached their previous peak prices, and at some point I expect Cape Coral/SWFL to reach previous peak prices. It won't be this year or next year, and there are too many unknown variables for me to confidently predict when we might reach our next peak. If overall U.S. home prices don't reach previous peak prices, it will be the first time since real estate records have been compiled.
TOM: Out-of-area buyers often question me when I advise them about the steep price difference between Cape Coral gulf-access homes compared to prices in other surrounding waterfront towns. The main reason for the price difference is supply and demand; Cape Coral has more gulf access canals than the other towns combined.
2018 PROJECTION: Ft Myers gulf access homes will continue to be 20 - 30% higher than the Cape, Bonita/Estero gulf access homes will be 200 - 250% more expensive, and highly desired Naples will be five to six times the cost of comparable Cape Coral gulf access homes. Cape Coral will continue to be one of the most affordable waterfront communities in Florida.
WILL TAX REFORM AFFECT SW FLORIDA REAL ESTATE?
TOM: I believe that Tax Reform will have a major impact on SWFL real estate, and I've held this opinion early on when the Senate and the House were still debating the final amendments. On a national level, I believe that residents of high-tax states like NJ, NY, Calif, Illinois, etc., will finally say enough is enough. High income earners who have mortgages higher than $750,000 and/or more than $10,000 in property and state taxes (which is easily reached in high tax states) may feel that passage of Tax Reform was the final straw. High income earners will be seriously considering one of the seven states with no income taxes . . . and Florida will be very high on the list of states in consideration. It's definitely the no-tax state with the best weather.
On a local level, I believe that people considering buying a home in higher priced towns like Naples, Marco Island and Bonita will now take a much closer look at Cape Coral and Ft Myers, where housing costs are considerably lower, especially waterfront homes. It's quite doable to buy a nice gulf-access home in Cape Coral/Ft Myers with a mortgage below $750,000 and property taxes below $10,000. Tax consequences will be a serious consideration for buyers, and even for existing homeowners in the high-priced SWFL cities . . . especially after April 15th, when income tax returns are filed.
CAPE CORAL RATED #1 "BOOMTOWN" IN U.S. - SmartAsset
Our "Hidden Paradise" is no secret anymore. SmartAsset rated Cape Coral the #1 "Boomtown" in the entire country out of 581 metropolitan areas. SmartAsset used five factors: 1. Influx of new residents (net migration) 2. Safety 3. Housing Growth (7.1%) 4. Unemployment (under 3.5% in Cape Coral) 5. GDP (Gross Domestic Product)
The Cape ranked very high in all five factors, but especially strong in unemployment, GDP and net migration. From 2012 Cape Coral's GDP has been 5.2%, about double the national average. Only Bend, Oregon had a larger net migration relative to population. Cape Coral, which was ranked #3 Boomtown in 2016, was one of eight Florida cities ranked in the top ten in 2017. Quite impressive for one state.
SUE: I don't have a grasp on numbers and stats the way Tom does, but I do know that I love living in Cape Coral, for so many reasons.
Homeowners Staying Put For Ten Years: Partly due to feeling that low inventory will make it difficult to find reasonably priced housing if they move, homeowners are staying in their homes an average of ten years now. From 1985 to 2008 (prior to Great Recession) people stayed in their homes for six years. People staying in their homes longer contributes to the low inventory in SWFL and in many other places around the country. Another consideration is that some homeowners don't want to give up low mortgage rates.
Mortgage Banker Association - Mortgage Rate Projection: The MBA forecasts that 30-year mortgage rates will increase to 4.6% in 2018, 5% in 2019, and 5.3% in 2020. The MBA feels that although Federal Reserve rates will increase three to four times this year, 30-year mortgage rates will likely remain below 5%.
Florida Economy To Hit $1 Trillion in 2018 - Florida Chamber Foundation: And, the Sunshine State will create 180,000 jobs this year - outpacing the U.S. in job growth for the eighth straight year. Since the recession, Florida has created an average of 1 in every 10 jobs in the U.S. 800 from other states move to Florida each day.
Homestead Filing: For property owners who bought a Florida home in 2017, don't forget to file your Homestead Exemption by March 1st.
Why Aren't Homeowners Becoming Sellers? - Profile Of International Buyers In Florida - Local Home Market Synopsis
Interesting Florida/Cape Coral Population Stats - Despite Irma, Local Unemployment Rate Drops to 3.5% - Bubble? Nowhere in Sight for U.S. Housing Market
Irma Slows Down Sales But Not Prices - Nor-Tech Hi-Performance Boats To Locate World Headquarters In Cape Coral - Homesteaded Properties Will See Assessed Values Increase by 2.1%
Cape Coral Dodged A Bullet - Some Lenders Will Stop Requiring Traditional Appraisals - Homeowners Only Break Even By Selling Their Home Without A Realtor
Can't Find the Perfect Model Home to Build? - We Have Solutions - Investors Focusing on Build-to-Rent Homes - Cape Coral in Top 100 Cities For First-Time Homebuyers
Be Very Careful When Selecting A Local Builder - Cape Home Inventory Drops To Three Months - Zero Down Loans Make A Comeback
Home Sales Still Strong For Low & Mid-Priced Homes - Cape Coral Named One of the Best U.S. Cities for Boaters - Homeowners Sue Zillow Over Low Home Value Estimate
Cape New Construction Permits Spike - Rise In Cape Coral Million Dollar Home Sales - Increased Importance Of Third Car Garage
Cape Home Prices Rise by 18% / Inventory Drops Below 4 Months - Cape Coral Already Making Top U.S. Lists in 2017 - Rising Home Prices & Increase in Interest Rates Will Make Home Buying More Costly in a Year
Forbes Names Cape Coral #1 For Potential Growth . . . Again - Lee County Crime Rate Drops in 2016 - Royal Tee Golf Club to Re-Open
SW Florida Home Prices Keep Rising - But Inventory Finally Improves - Cape Royal Homeowners Buy Royal Tee Golf Course - Florida's Population Keeps Rising, But 8 States Lose Residents
Cape Coral Home Prices Increase 10% in 2016 - Cape Coral Home Prices Rise 72 Straight Months - New Home Permits Skyrocket