×
×
homepage logo
STORE

Cash is king again in a low home supply seller’s market

By BOB & GERI QUINN - Homing In | Apr 29, 2021

Geri and Bob Quinn

The fact that we have just experienced a record low level in the first quarter supply of unsold single-family homes in Cape Coral, locking us deep within a seller’s market, has once again reinforced the age old saying that “cash is king.” Although there are always cash buyers floating around in our market, the record low mortgage rates over the past few years provided cash buyers with a great incentive to borrow “cheap money” to finance their home purchases, while saving their cash for other purposes.

Now, with multiple buyers often battling each other in trying to buy the same home in our highly competitive real estate market, having a bundle of cash on hand has re-emerged as a major advantage for buyers in the eyes of many sellers. The main difference for a cash buyer now versus in year’s past is that paying cash for a home today does not enable the buyer to negotiate a discounted price, but rather allows them to pay a premium while offering a cleaner and faster deal to the seller. It is not that a buyer needing to use mortgage financing is being completely eliminated from the home buying process, but it can make a financed offer less competitive in the mad dash often required to buy certain homes.

As a case in point, we had a buyer in town recently who made as strong of an offer on a home as we have ever seen. Their one weakness was they were financing their purchase with a mortgage. This buyer offered well above the list price and they were pre-approved for an 80/20 conventional mortgage loan for an amount in excess of their offer. They also committed to cover any appraisal shortfalls with a significant amount of extra cash, along with providing additional incentives to the seller, but they still lost out to a cash buyer. There were also five other buyers who made offers at, or above, the list price on this home, which indicates the pool of potential buyers remains very active and strong. 

As of April 28, there were 345 active single-family homes listed for sale through a Realtor in Cape Coral (347 if we include foreclosures) at list prices ranging from $178,000 to $5,995,000. Of these 345 active listings, 197 of them, or 57.1 percent, were priced below $500,000 with 83 of these homes, or 24 percent of our market, listed for sale below $300,000. This price group also included only four homes with list prices below $200,000. There were another 98 homes, or 28.41 percent of the Cape’s single-family home market, listed for sale in the Multiple Listing Service at prices ranging from $509,000 to $999,800. The high-end of our market included 50 homes at list prices of $1 million and above, making up 14.49 percent of our total single-family home market in Cape Coral.

There were 1,252 homes under contract with buyers as pending sales (1,260 including short sales and foreclosures), most of which are likely to be recorded as closed sales within the next 30 to 60 days. The monthly supply of unsold single-family homes for each of the Cape’s separate market segments are shown below.   

In the overall Cape Coral single-family home market, the monthly level of unsold supply came in at 3 months in March, which was 40 percent lower than the 5 months of unsold supply in March 2020, and 25 percent below the 4 months of supply in February of this year. In the first quarter of 2021, the monthly average level of unsold supply was 3.67 months, which was 44.98 percent less than the average of 6.67 months of supply in the first quarter of 2020, but up 10.21 percent from the average of 3.33 months of unsold supply in the fourth quarter of 2020. 

Indirect gulf access canal homes

In the Cape Coral single-family indirect gulf access canal home segment (meaning with bridges in the canal system), the monthly level of unsold supply came in at 2 months in March, which was 66.67 percent lower than the 6 months of unsold supply in March 2020, and 33.33 percent below the 3 months of unsold supply in February of this year. In the first quarter of 2021, the monthly average of unsold supply in this segment was 2.67 months, which was 69.2 percent below the average of 8.67 months of supply in the first quarter of 2020, and even with the 2.67 months of unsold supply in the fourth quarter of 2020. 

Direct sailboat access canal homes

In the Cape Coral single-family direct sailboat access canal home segment (meaning no bridges in the canal system to get out to open water), the monthly level of unsold supply came in at 3 months in March, or 57.14 percent lower than the 7 months of unsold supply in March 2020, and even with the 3 months of supply in March of this year. In the first quarter of this year, the monthly average of unsold supply in this segment was 3 months, or 62.5 percent less than the average of 8 months of supply in the first quarter of 2020, and 18.26 percent below the average of 3.67 months of unsold supply in the fourth quarter of 2020. 

Freshwater canal homes

In the Cape Coral single-family freshwater canal home segment (meaning landlocked canals and lakes with no gulf access), the monthly level of unsold supply came in at 3 months in March, which was 25 percent lower than the 4 months of unsold supply in March 2020, and even with the 3 months of supply in February of this year. In the first quarter of 2021, the monthly average of unsold supply in this segment was 3 months, which was 59.07 percent below the average of 7.33 months of supply in the first quarter of 2020, but 12.36 percent higher than the 2.67 months of unsold supply in the fourth quarter of 2020. 

Dry lot homes

In the Cape Coral single-family dry lot (non-canal) home segment, the monthly level of unsold supply came in at 3 months in March, which was 25 percent lower than the 4 months of unsold supply registered in both March of 2020, and in February of this year. In the first quarter of 2021, the monthly average of unsold supply in this segment was 3.67 months, which was 35.27 percent below the average of 5.67 months of supply in the first quarter of 2020, but 10.21 percent higher than the 3.33 months of unsold supply in the fourth quarter of 2020. 

The sales data for this article was obtained from the Florida Realtors® Multiple Listing Service Matrix for Lee County, Fla., as of April 19, 2021, unless otherwise noted. 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. 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 with Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.