Cape’s luxury home sales slump in second half of 2022
The once booming Cape Coral luxury home market segment, which we define as single-family homes selling for $1 million and above, slowed dramatically with the market shift that occurred in the second half of 2022. Since, by our definition, most of our luxury homes tend to be either riverfront properties or are located on prime, gulf access canals, sales of these homes slowed even further in the wake of Hurricane Ian. To get a clear picture of the current condition of our luxury home market, we will look back at the data for the past two years.
First, back In 2021 there were a total of 246 homes sold for the year in this segment, with 111 of these sales occurring in the first half of that year, before ramping up to 135 sales in the second half of the year. This included having 86 closed sales, or 35 percent of the year’s total, occurring in the last three months of 2021. Million dollar-plus home sales in the Cape then continued to accelerate to 244 closed sales in the first half of 2022, which included 115 sales in the first quarter, followed by 129 sales in the second quarter. So the number of luxury home sales in the first three months of 2022 topped the number of sales in the first six months of 2021, while the total of 244 sales in just the first half of last year nearly matched the full year total of 246 closed luxury home sales in 2021 in only six months.
Cape Coral was clearly in the middle of an epic sized housing boom in the first half of 2022. But unlike the last boom time some 15 years ago, which was driven by speculative home flippers and “fog a mirror” mortgage qualification standards, this post-COVID boom was attracting a lot of “end users” who were actually moving to Southwest Florida and becoming Florida residents.
With the number of luxury home sales hitting what turned out to be their peak in the first half of 2022, the number of active listings started to spike higher as more sellers decided they wanted to join in on the wild party. The simple market numbers tell the story. Going back to Dec. 28, 2021, there were a total of 498 single-family homes listed for sale in Cape Coral through the MLS, with 70 of these homes priced at $1 million and above. On March 29, 2022, there were 469 active home listings with 80 of these homes in the Cape listed at $1 million and above. As median list prices and sales prices continued moving higher, a surge of new listings came onto the market in the second quarter of 2022, with the number of active listings reaching 1,031 by June 21 of last year, which included 177 homes with asking prices of $1 million and above. At that time, there were 839 Cape Coral homes under contract with buyers as pending sales (down from 1,016 pending sales on March 29), with 40 of these pending sales at $1 million and above. The shift in our market numbers was coinciding with the Jerome Powell-led Federal Reserve launching a series of aggressive 75 basis point interest rate hikes beginning last June, as they declared their war on inflation and made it clear they wanted to slow down the U.S. housing market, among a host of other things.
By Sept. 20, 2022, with the Fed continuing to jack up interest rates and just eight days prior to Hurricane Ian ripping a path through Cape Coral and Southwest Florida, there were 1,411 Cape Coral single-family homes listed for sale through a Realtor in the MLS, with 174 of these listings priced at $1 million and above. At that point in time, the number of pending home sales in the Cape had decreased to 762 homes with 36 of these pending sales at prices of $1 million and above. About a month after Ian, on Nov. 1, the active listings in Cape Coral stood at 1,262 homes on the market as 400 listings had been terminated and withdrawn, while another 130 listings expired, more than offsetting the 235 new listings that came on the market between Sept. 28 and Oct. 31. A total of 130 of the 1,262 listings were for homes priced at $1 million and above. The number of pending sales in the Cape declined to 542 with 22 homes under contract at $1 million and above.
Currently, as of Jan. 10, 2023, there were 1,310 active single=family Cape Coral homes listed for sale in the MLS, ranging in price from $274,900 to $4,849,999 with the median list price at $500,000. A total of 532 homes, or 40.6 percent of our market, were listed at $450,000 and under, including 22 homes priced below $300,000. At the other end of the spectrum, there were 156 luxury homes listed for $1 million and above, totaling 11.9 percent of the active listings. There were a total of 577 single=family homes under contract with buyers as pending sales through the MLS in the Cape, with 369 of these pending sales, or 64 percent of the market at $450,000 and under, including 24 homes priced below $300,000 with eight of these 24 homes under contract at $250,000 and under. In our luxury market, there were a total of 27 homes in the Cape under contract at $1 million and above.
For an added frame of reference, according to recently released statistics from the Naples Area Board of Realtors for the month of November 2022, the number of active single-family home listings was up 85.4 percent compared to November 2021, while the number of closed homes sales was down 40 percent. The average days on the market for listings was 91.7 percent higher than a year ago, so this slump in home sales is not isolated to Cape Coral. As with our market, at least for now, median sales prices in Naples remain above 2021 levels.
Another interesting data point in the Cape Coral luxury market is that the highest priced home sale in 2022 occurred on July 25 at $5.3 million, with the 13 next highest priced home sales all taking place in the first and second quarters of last year. These 13 other highest priced sales all closed for between $2.835 million and $4.3 million. The 15th highest priced sale last year, closed at $2.8 million on Sept. 22, just six days before Ian hit.
The highest priced closed home sale in the Cape post-Ian, was on Nov. 17 at $2.775 million, making it the 16th highest priced sale in 2022. This direct sailboat access home in the Southwest Cape, described as a “luxury villa” in a high-end vacation rental program was being sold turnkey. It was built in 2019-20 with 2,511 square feet of living area on an oversized cul-de-sac lot and it went under contract as a pending sale in a cash deal on Sept. 19. This home was initially listed for $3.15 million on March 20 of last year, and it had a price reduction to $2.95 million on May 22. So it was on the market for about six months before attracting a buyer with the final sales price coming in at $375,000 or 11.9 percent less than the initial list price.
In summary, 14 of the 16 highest priced home sales in Cape Coral went under contract and closed prior to the Federal Reserve changing the real estate landscape on June 15 of last year when they started aggressively raising interest rates, and 15 of these luxury sales closed prior to Hurricane Ian.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Jan. 7, 2023, 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 43 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.