2016 Year End Report & 2017 Projections
SWFL Real estate started strong in 2016 and remained very strong throughout the entire year. Below are some highlights and our projections for 2017.
In 2016, Cape Coral received an impressive number of accolades from various prominent sources such as Forbes.
There were enough national commendations to make an entire state proud, but these honors were all for our wonderful City of Cape Coral. If you would like to read the entire list click here
AVERAGE CAPE HOME PRICE PASSES $280,000 - 1st Time in 9 Years
Cape Coral home prices averaged $282,000 in December. This is the first time in almost a decade that prices have reached this level.
2017 Projection: We expect that Cape Coral home prices will surpass the $300K mark at least once this year. We also predict that $150,000, possibly even $160,000 will be the very bottom for home prices by year's end. Just a few years ago there were a few hundred homes priced under $100,000, and now there are only a handful of homes below $150,000. During the last peak, $300,000 was the bottom price for Cape homes, but we don't expect to see that level until our local market hits the next peak.
CAPE CORAL HOME PRICES INCREASE 10% IN 2016
Average Cape Coral home prices were $256,344 in 2016, a 10% increase over 2015 prices ($232,000). Our 2016 Projection was that prices would increase by at least 10%, so we barely hit that prediction.
2017 Projection: Despite six strong years of appreciation, I'm going out on a limb and predicting that Cape home prices will again increase by 8 - 10%. This is significantly higher than the 2 - 3% home price increase that national economists are predicting for the country as a whole.
CAPE HOME PRICES RISE 72 STRAIGHT MONTHS
December 2010 was the bottom of our local real estate market. Beginning in January 2011, same month year-over-year prices have increased for 72 straight months (U.S. home prices have risen for 58 straight months). Six years of continuous price increases is almost unheard of, and unlikely to continue unabated for the next 12 months. 2017 Projection: We expect eight to ten months out of this year will exceed same month prices of 2016, but our market is so strong we wouldn't be shocked if all 12 months once again saw higher prices than the same month in 2016.
NEW HOME PERMITS SKYROCKET IN CAPE CORAL
New home permits in 2016 jumped to 1,420, from 937 in 2015, a phenomenal 51% increase. This follows a 58% increase in permits from 2014 to 2015. If the U.S. Census Bureau is accurate in their population predictions, Cape Coral will need beetween 3,000 & 4,000 new homes a year to satisfy expected housing demand over the next decade. We are not even half way to the needed number of new homes. Interesting facts: In 2005, the top of the local market, new permits were 7,694. As the market plunged, new home permits plummeted to only 169 in 2009.
Projection: We strongly believe new home permits will increase by more than 20%, and Cape Coral will have at least 1,700 new homes built in 2017, with the number more likely to hit 1,850 - 1,900. The strong demand for new homes is a big reason I suggest waterfront lots as an investment option this year.
MASSIVE INCREASE IN LOCAL BUILDERS - BUYERS BEWARE!!!
There are now 165 companies building homes in Cape Coral, with new builders starting up practically each week. This compares to less than 100 builders at the start of 2015, and less than 50 in Jan 2014. SOME OF THESE BUILDERS ARE NOT REPUTABLE, RELIABLE OR SOLVENT. Several builders closed their doors in 2016 (sometimes overnight), leaving homeowners with a substantial forfeited deposit and an unfinished home. Don't contact a builder until you've been in contact with us if you want to avoid this fate. We'll guide you toward highly reputable builders that offer good value and service. Additionally, we'll be able to assist you with home features and finishes that are most popular and yield the greatest return should you ever sell the home.
RENTAL HOMES & RATES
Last year Cape Coral/Ft Myers had the highest rental rate increase in the nation (25.4%) for the second straight year. This is simply astounding when you consider how many cities there are in the U.S. Both annual and seasonal rental homes are in extremely high demand, and we once again advise you that if you want to book a waterfront rental home during season of 2018 you should do so now, before the selection is slim and rental prices rise even more.
Projection: This one is tough to predict based on the last two years of unheard of rental price hikes, but I expect rent prices to rise by 7 - 10% in 2017.
INTEREST RATES & UNEMPLOYMENT
Always a lot of guesswork on interest rates, so we'll take a calculated guess that interest rates will be between 5 and 5.5% by year's end. Last year we predicted rates would rise to 4.5% - 5%, and they ended the year at 4.32%, so we came close. Unemployment rate
in Lee County is dropping every quarter. Our lowest unemployment rate during the year is naturally during tourist season. We predict that at some point this year Lee County unemployment will drop below 4%, and will remain below the national unemployment rate during the entire year. During the last real estate boom, Lee County's unemployment rate was as low as 2.5%, meaning if someone was breathing they could secure a job.
Lee County averaged close to 4.5 months of home inventory in 2016, and Cape Coral averaged about 3.7 months of inventory (our 2016 projection was under 4 months for Cape Coral). Home inventory in 2016 was well below a balanced market of 6 months.
2017 Projection: We expect the number of homes for sale here (especially in the Cape) to remain low, meaning a continued seller's market. We hope there is a wider selection of homes than last year. 5 to 7 months of inventory would be ideal, but unless builders start constructing more spec homes we don't expect inventory to be sufficient to meet demand.
$1 M CAPE HOME SALES RISE BY 75%
28 Cape Coral homes sold for $1 M or more in 2016 (our great clients enabled us to sell two of them). This was a 75% jump from 2015, when 16 homes reached the $1 M mark. 2017 Projection: We anticipate over 35 Cape homes (possibly close to 50) reaching the $1 M threshold this year.
Facts & Stats
High Demand Features on Gulf-Access Homes: 3-car garages are becoming increasingly important to homebuyers, more for storage than for a third car. A den or 4th bedroom, outdoor kitchen, boat lifts and high-end kitchens are also becoming increasingly popular with waterfront homeowners.
Only 3% Chance of Florida Home Values Dropping: According to the latest Arch Risk Index, there is only a 3% chance of Florida home prices dropping in 2017. As a numbers guy, I really like the 97% odds for the state, and I believe it's even less likely that our area home prices will drop. Across the U.S., the odds of home prices dropping are 4%, a significant drop from two years ago when the likelihood was 8%.
95% of Foreign Buyers Will Spend More in U.S. in 2017: According to a survey by Foreign Investors in Real Estate (AFIRE)
Millenials Finally Get Off Sidelines: Millenials have been relatively quiet regarding real estate purchases, but many economists believe 2017 will be the year they jump in. Employment improvement will be a major impetus for Millenials entering the housing market. Tom: Millenials entering the market will create added competition for entry-level homes, which will in turn spur sales at all price levels. Real estate has always been generated from the bottom.
Major Cape Coral Projects We'll be Watching in 2017
There are many exciting Cape Coral projects scheduled to start this year. Among the major developments that will have a big impact on the city and its residents & visitors are: Bimini Basin Project, Chiquita Boat Lock Removal or Widening, The Seven Islands Project, The Golf Course (possibly re-zoned for a large residential development by D.R.Horton), widening of Burnt Store Road to improve traffic flow between Cape Coral and Charlotte County, and the North 2 utility expansion (north of Pine Island Road). We will be reporting on the progress of these and other projects during the year.
Seven Islands Project OKd by Cape Council - SW FL Now Has 12 Month Real Estate Season - U.S. Home Prices Pass Pre-Recession Peak
Inventory Shortage Eases Slightly But Not Prices - Upscale Duplexes Being Built on Cape Coral Lots - Homebuyers Losing Taste for McMansions
Cape Coral Again Leads Nation in Highest Rental Rate Increase - Environmental & Political Pressure to Clean Caloosahatchee River - Protect Your Florida Homestead
Fla Has 4 Top 10 Retirement Cities - Unique Condo Community Being Developed in Downtown Fort Myers - Update on Chiquita Boat Lock Removal
Atlanta Braves Eye Training Camp In Collier County - Frontier Airlines Will Service Punta Gorda Airport - Cape Coral Mid Year Stats
Assessed Property Values Released By Appraiser - Caloosahatchee Releases Update - National Builder Eyes Former Cape Golf Course
Too Soon To Retire But Don't Want To Pay Future Higher Prices? - Real Estate Owned Via Self Directed IRAs - Flipping Is Out; Long Term Investing In
Cape Coral Racks Up More Top 10 Ratings - Gallup Survey: RE The Best Investment - Retirees Come to Cape Coral In Droves
Cape Coral 2nd Highest Growth Rate in U.S. - Red Sox & Twins Spring Training Brings Buyers to SWFL - Forbes Ranks Cape Coral 8th Best in Nation for Retirement
Lake Okeechobee Update - Naples Happiest City In U.S. - Cape Coral Burrowing Owls
6 Reasons FLA Is Best State For Retirement - Forbes Names Cape Coral In Top 10 Best Investment City For 2016 - Population Stats Cape Coral.
2015 Real Estate Highlights - FL Tops List Of Most Desirable States - National Accolades For Cape Coral
TIMING THE REAL ESTATE MARKET 2017