Bob and Geri Quinn

Locally, we are seeing real estate activity tick a bit higher into mid-January, as the number of showing appointments with potential buyers has increased along with the Internet inquiries we are receiving from new out-of-town buyers interested in Cape Coral. In addition, we are getting calls from buyers who are back in town to look for a home after being shut out in their attempts to buy something last winter, with other buyers telling us they will be coming to town over the next few months, hoping to buy a home.

We have also seen some homes that have been sitting on the market for several months going under contract with buyers after making some price reductions, along with being involved in a multiple offer sale on a home that had just come onto the market this week.

The number of active listings and pending home sales also continue to edge higher as storm recovery efforts continue for many homeowners.

But to be clear, the level of activity is not even close to what we were seeing a year ago and it has been abnormally slow so far compared to our “typical” busy season. Closed home sales in December remained low, but they continued improving after putting in a post-Hurricane Ian bottom in October, while closed sales in the fourth quarter of last year were dismal, as expected. We have more on the quarterly sales numbers below, and will have our full December and year-end market update next week.

One of the things we have been writing about in this column on an ongoing basis over the past eight months or so was the subtle shifts we saw in our local market beginning last April. At that time we noticed that the attitude of buyers began changing and the market shift has since become obvious to anyone who has been paying attention. Prior to that, in the first quarter of 2022, we were experiencing what can now best be described as the last gasps of the market frenzy where buyers rushed to see just about any new listing the moment it hit the market and sellers still found themselves fielding multiple offers that were usually at or above full price. Back then, most homes were going under contract within a matter of days, but we were noticing a growing number of buyers stepping aside and refusing to continue participating in the process as sales prices surged higher. By the time the month of May rolled around the conversations of the Jerome Powell-led Federal Reserve had turned substantially more hawkish, indicating they were serious about getting much more aggressive about fighting the out of control levels of inflation by raising interest rates.

In our market, it was almost as if someone flipped a switch in the minds of potential home sellers, as the number of active listings in the MLS surged 60 percent from 519 homes on the market on April 12 of last year to 828 homes on the market on May 31. By June 21, which was the week after the Fed started to jack up interest rates to show the world it was taking the free money punchbowl away from the markets, there were 1,031 homes listed for sale in Cape Coral through a Realtor. So in a mere 10 weeks from April 12 to June 21 of last year, our supply of homes on the market increased by 99 percent and continued moving higher as a new rush of sellers piled into our market expecting to cash in at the recent peak sales prices that for the most part no longer existed. When one looks at these numbers, combined with the actions of the Federal Reserve, it was no coincidence that the median list price hit its peak of $610,000 on April 19 of last year and then started to decline as the inventory of homes increased sharply.

As is often the case when market momentum begins to shift, one side tends to be slow in recognizing that the playing field has changed. In this case, home buyers were quick to notice the subtle market shift back in April and May, as they were rapidly gaining confidence in making offers below list price and mostly holding their ground on the price they were willing to pay for a home. Even as buyers recognized they were gaining the upper hand in price negotiations, the vast majority of home sellers refused to accept the new market realities of their now overpriced homes.

As the number of closed home sales started to decline in the third quarter of last year, the general consensus in our local real estate market was that things were simply returning to our “normal” market patterns from the abnormal post-COVID market patterns. Historically, the number of closed home sales in our market usually hit their peak levels sometime between the months of March and June, with the most closed sales occurring in the second quarter of the year. Then the number of closed sales in Cape Coral normally declines in the third quarter of the year as a part of the seasonality of our real estate market. As we have discussed multiple times in this column, as much as we hoped things were “just getting back to a normal pattern,” our big concern was that the slowdown in sales was being more heavily influenced by the actions of the Federal Reserve, inflation and all of the economic turmoil.

To illustrate our historical “seasonal” market patterns, in the past 17 years from 2006 through 2022, the number of closed home sales have decreased from the second quarter of the year to the third quarter in 15 of these years. The two years in which the third quarter sales were higher than the second quarter occurred back in 2009, and most recently in 2020 when the economy was hammered by the COVID-19 shutdowns in the second quarter of that year. This was followed by the post-COVID housing boom beginning in the third quarter of 2020 after Gov. DeSantis bucked the system and reopened the state of Florida for business while other states remained closed. Third quarter sales then rocketed 38 percent higher than the second quarter sales in 2020, and the red hot housing market boom took off.

Last year, we experienced the single largest decline in the number of closed home sales in Cape Coral from the second quarter to the third quarter of the year in the last 17 years, and the second largest decline on a percentage basis. We went from 1,856 closed sales in the second quarter of 2022, which was the second highest number of quarterly sales ever (only behind the 2,095 sales in the second quarter of 2021) to 1,277 closed sales in the third quarter of 2022, for a decline of 579 sales and a drop of 31.2 percent, which was the second worst percentage decline (only behind a 35 percent decline in 2010). This was the lowest number of third quarter sales since we posted 1,273 sales in the third quarter of 2018. Since the number of closed sales in the third quarter of 2022 were mostly in the books prior to the hurricane hitting on Sept. 28, the biggest influence on this sales decline can likely be attributed to the actions of the Federal Reserve and the resulting sharp rise in mortgage interest rates last year. The huge decline we experienced in fourth quarter sales, which dropped to only 854 closed home sales from October through December, was directly related to the storm damage from 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. 17, 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.