Huge first half for luxury home sales, challenges ahead
It is time once again for our tip of the hat to Robin Leach, the late, great host of “Lifestyles of the Rich and Famous,” as we offer up another toast of “champagne wishes and caviar dreams” by taking a look back at the booming Cape Coral luxury home market in the first half of 2022.
We have posted a record number of luxury home sales during the first six months of this year, along with seeing a continued surge in the number of luxury homes being listed for sale in the Cape, all in the face of growing challenges for the market in the second half of this year. For the record, our definition of the single-family luxury home market segment in Cape Coral consists of homes that have sold for $1 million and above.
The biggest near-term challenges for all segments of our local real estate market would seem to be the Jerome Powell-led Federal Reserve’s commitment to fight the high levels of price inflation in consumer goods and in asset prices caused by its loose money, zero interest rate policies. Throw in a bunch of other contributing factors, from the usual wild and wasteful levels of government spending to what one could argue were a wide array of policy errors from the Oval Office, along with the tragic, costly war in Ukraine, and we could be perched on the economic brink. With the Fed trying to solve its (now our) problems through a calculated level of demand destruction likely orchestrated through another large interest rate increase at the end of this month, as its attempt to engineer a soft landing by trying to slowly let the air out of asset prices and the economy.
For those wanting to sell their homes, we are reminded of the old market saying, “Don’t fight the Fed,” meaning the high sales price you could have received for your home three to five months ago is not what you can get for your home today. And who knows about tomorrow? That’s how demand destruction is likely to work as a policy when the Fed sets its mind on a new path.
In the first half of this year, there was a record total of 241 luxury homes sold in the Cape at prices ranging from $1 million to $4.3 million, with a six-month median luxury home sales price of $1,355,624. A total of 126 of these sales occurred in the second quarter, and the median sales price came in slightly lower in the April through June time frame, at $1.318 million. The number of luxury home sales peaked in the month of March with 56 closed sales, closely followed by 53 sales in April and 45 sales in May, before dropping off to only 28 closed sales in June of this year. By comparison, the number of closed luxury home sales were 53.9 percent lower over the first six months of 2021, with a total of 111 sales at prices ranging from $1 million to $2.85 million, and a six-month median sales price of $1.315 million last year. There were 67 luxury homes sold in the second quarter of 2021, or 46.8 percent less than in the second quarter of this year, and the peak sales month last year was in April with 24 sales, followed by 21 sales in May and 22 sales in June.
Through June 30, there have been a total of 3,582 closed single-family home sales overall in the Cape during 2022, with the 241 luxury home sales making up 6.7 percent of our market share. As of June 30 a year ago, the 111 luxury home sales made up 3 percent of the record level 3,672 total home sales in Cape Coral during the first half of the year. To illustrate the booming level of luxury home sales in the first six months of this year, we have already almost matched the total of 245 luxury home sales for the entire year in 2021. The combination of booming sales, all-time record high prices and growing economic concerns has led to an influx of million dollar-plus homes being listed for sale, as we now have 186 luxury homes listed for sale in Cape Coral through a Realtor, down from 193 active listings a week ago, with current list prices ranging from $1 million to $5.995 million.
Looking back about three months ago on April 12, there were a total of 519 single-family homes listed for sale in the MLS in Cape Coral, with 95 of these listings priced at $1 million and above. Going back about a year ago on July 20, 2021, there were a total of 466 active listings in the Cape, with only 58 priced at $1 million and above. Right now, there are currently 33 homes under contract as pending sales at $1 million and above, while back in April of this year there were 83 pending home sales at $1 million and up, which, when combined with the increased number of active listings, is indicative of a slowing market.
The highest-priced single family home sale in Cape Coral during the second quarter of this year was for a 4,781-square-foot riverfront home built in February 2021, off of Savona Parkway in the Southeast Cape. This custom home was listed for $4.495 million on March 28 of this year, and it went under contract with a buyer on May 5, before closing at $4 million on June 1. So the final sales price came in 11 percent below the list price and the home was sold partially furnished in a cash deal.
The history of this large riverfront location, with the lot totaling 32,365 square feet or 0.74 acres, provides some insight into our past real estate markets. Back on April 5, 2005, this property was sold with its original three-bedroom, two-bathroom, 2,902-square-foot home that was built in 1967. This older home was advertised as being beautifully updated and it sold for $1.3 million. About two years later in March 2007, a demolition permit was obtained and the home was torn down. The newly vacant riverfront lot with a dock and seawall went on the market on April 11, 2007, for $1.995 million. At that point in time, local real estate prices were in the relatively early stages of topping out and declining, but very few people anticipated the looming disaster with the mantra of that era being that “real estate never goes down in value.” Somehow, the fact that people could qualify for a mortgage on multiple homes by simply fogging a mirror did not strike anyone as a potential problem.
Long story short, in 2008 the price on this vacant lot was reduced to $1.795 million without being sold, before eventually being listed in 2014 at $1.149 million, and eventually down to $1,049,700 in 2018. There was one more price reduction to $989,900 before the lot was sold for $850,000 on March 15, 2019. The new owner pulled a permit for new home construction in December 2019, and here we are today.
Along with the 4,781 square feet of living area, this home has 12,064 square feet of total area, including a 1,516-square-foot garage large enough for at least five cars, plus a boat, and an 1,800-square-foot lanai with a full outdoor kitchen. Add in an oversized 38-foot by 15-foot saltwater pool with a spa, along with a new 120-foot seawall and composite boat dock with lifts, plus a large sundeck, and this home presents outdoor living at its finest. The home was built on 59 concrete 10-inch by 10-inch, 8 to 10-ton pilings driven into the ground for added structural support and it is topped off with a metal roof. Entering the home through the huge steel front doors, you are greeted by expansive river views through 80 feet of impact-resistant, 10-foot-tall sliding doors throughout the living area. There is much more, but we’ll wrap up by saying our pal Robin Leach would have loved everything about this luxury home.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of July 11, 2022, 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 42 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.