Geri and Bob Quinn

Our theme last week was that we had entered into the Road Runner phase of the market, with buyers turning into the Wile E. Coyote’s of real estate in their attempts to catch that ever elusive home in Cape Coral. We also discussed the noticeable shift in the demeanor of buyers in our market from their patient, rational approach towards buying a home over the past several years, to their much more aggressive, even borderline irrational approach to making offers on homes in the past 3 to 6 months. There are a lot of factors behind these more aggressive offers, which are usually being made within days of a home or condo coming onto the market, and often for amounts that are well above the initial list price. This frantic buyer activity, which has also spread to vacant lot purchases, seems to have become a normal part of the new abnormal, now that we have moved into year 2 AC (After COVID). 

However, after seeing a recent news report about a 1,400-square-foot home listed for sale at $399,900 in a suburb of Sacramento, California, it seems that what we were considering to be borderline irrational buyer behavior in our market, appears to be anything but. According to various media reports, this California home received 122 offers (not a typo) in one weekend before going under contract with a buyer for well above the list price. To top it off, one offer on this home was said to be for over $500,000. Based on this standard, buyers in our market could still be considered to be acting in a fairly rational manner within the context of this new abnormal, as we have yet to see that type of barnstorming home activity here in the Cape.  

Although things here are clearly not as crazy as in the above example, we have been experiencing our own real estate market “fast money” conditions, as the record number of closed home sales have combined with a record low level of inventory, thus squeezing our median sales prices up to new all-time record highs. As we have been discussing in this column, when a new home listing comes onto our market priced properly to the current and quickly shifting market conditions, it is not only immediately swarmed with showing appointments, but it will receive multiple full-price and above full-price offers right away. In this ultimate version of a seller’s market, if we run a comparable sales price analysis on your home and neighborhood, and if you decide to list your home much more than several weeks after we provided you with this information, we run a new price check on your home and consider increasing the initial list price before putting it on the market. Things are that fast. 

All of this — the multiple offers, the frantic buyers, the frequently updated price checks for home sellers — has led to one of the most frequently asked questions we are now receiving from both potential buyers and potential sellers of Cape Coral real estate. That simple, yet complex question is, “Do you see this market slowing down anytime soon?”

To us, this question is just a more politely subtle way of asking us if we think we are either currently in, or likely heading into, another housing market bubble? Is all of this a sign of a rapidly approaching market top? As a buyer, if we hold off on making a purchase now, will we get a better deal a year from now, or just end up paying even more for a home? All great questions with no simple answers.

We can find various market experts and pundits on the national level who are writing articles and appearing on various financial shows, coming down on both sides of the “blowing a larger bubble” debate. There is a strong argument out there that the Jerome Powell-led Federal Reserve has simply continued the policies of manipulating the interest rate markets, and has thereby artificially goosed the housing market and stock market higher. Others argue, “Don’t fight the Fed,” and point out that Chairman Powell is committed to keeping interest rates artificially low for at least several more years. These experts insist that if long-term interest rates start moving higher because of inflation, the Fed will intervene to prevent mortgage rates from spiralling out of control and out of reach to the masses.   

Right now, we could take you to an article written by a well-respected, independent market analyst, that would show you that based on multiple sets of housing market data, home prices have moved too high compared to various ratios. His research clearly shows that when the ratios of home prices reach these levels, they will “revert to the mean,” which indicates the growing likelihood of a looming decline in the average national home price to the tune of some 20 percent. We can also show you the work of another expert housing market analyst who points out that the continued shortage of homes available for sale in “desirable” parts of the country compared to the oversupply of buyers looking to move away from the now suddenly “less desirable” parts of the country, indicates home prices are likely to continue moving higher. A higher price as a pure function of supply versus demand ratios.  

We see both sides of these very legitimate market arguments on the ground here every day in Southwest Florida. There are also plenty of other issues out there which could impact the housing market, not the least of which involves the COVID vaccines and the COVID variants, along with the other clouds out there on the horizon, such as with the potential forbearance storm which could lead to a rash of foreclosures both here and around the country. As we said in this column during the fourth quarter of 2019, in looking ahead to our 2020 market projections, about the only thing that looks like it could disrupt the momentum of our local real estate market in 2021 will be some sort of “unexpected outside surprise” that could have a negative influence on the economy. 

To give you a better sense of our market, we had an out-of-town buyer here last week looking to buy a home. We have been working with them via the Internet for about 15 months and this was their second trip into town this year to look at homes in person. They have been searching for a gulf access canal home at a price point that is well above the median sales price and they have looked at existing homes, as well as for a vacant residential lot on which to build a new home. They are ready to buy, but have struggled to find exactly what they are looking for as they try to determine what trade-offs they will be willing to accept. They have been pre-approved for a conventional mortgage and have more than enough cash on hand to make a large down payment. We were mostly looking at homes that were just coming onto the market as new listings and they found that any of the nicer homes priced properly to the market went into multiple offer situations right away.

It was also not uncommon to have other agents in line with their buyers waiting for us to complete our showing appointment. Our buyers made a very solid, well above list price offer on their favorite home, only to lose out to another buyer making an equally competitive cash offer. There were at least five offers made on this home, so buyer demand remains strong.   

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of April 12, 2021. It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral single-family homes, and does not include condominiums, short sales or foreclosures, unless otherwise noted. The data and statistics are believed to be reliable, however, they could be updated and revised periodically, and are subject to change without notice. The Quinns are a husband and wife real estate team with the RE/MAX Realty Team office in Cape Coral. They have lived in Cape Coral for over 41 years. Geri has been a full-time Realtor since 2005, and Bob joined Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.