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Digging into home prices and how long it takes to sell

By BOB and GERI QUINN - HOMING IN | May 11, 2023

Geri and Bob Quinn

Last week we discussed how our real estate market reached its new equilibrium in April of this year based on the number of closed sales and the increase in the number of active listings in our single-family home market over the past year. As we pointed out, the beginning and end of the recent real estate boom were directly correlated to two points in time — when Florida reopened from the COVID lockdowns on May 4, 2020, and when the Federal Reserve launched its most aggressive interest rate hiking campaign in history beginning in March 2022. Our market then put in a near-term bottom in the number of closed home sales during the fourth quarter of 2022 in the aftermath of Hurricane Ian, and it has climbed up from those lows to a level that is more in line with our “normal” pre-COVID markets, but still well below the market peaks of 2021 and 2022. Today we are going to take a look at the new equilibrium in median sales prices and the metrics for how long it takes to sell a home.

In the months of March and April of this year, the median sales price for single-family homes in the overall Cape Coral market was lower compared to the same two months in 2022. In March, the median sales price was 1.2% lower than it was in March 2022, and in April it was 10.6% below the all-time single month high of $470,000 in our overall market in April of last year. This was the first time since March and April of 2011 and 2012 that we had back-to-back months of a year-over-year decline in the median sales price in our overall single-family home market. At this point, it is just a case of median sales prices leveling out at their new lower equilibrium based on the dramatic economic changes over the last year and the post-hurricane impact on our market. The wildcard for the direction of our home prices for the remainder of this year will likely be tied to how things shake out with the Federal Reserve on interest rates and a possible recession, government spending and inflation, and geopolitical risks. Add in the question marks about tighter lending standards due to the turmoil in the banking industry and we would be content with a mostly flat trading range type of real estate market that takes some time to consolidate the price gains of the past several years.

To crunch the numbers, in April the median sales price in our overall single-family home market came in at $420,000 compared to $470,000 in April 2022, and 335,000 in April 2021. Back in April 2020 the median sales price was $250,000 and in April 2019 it was $252,433. So we had a 1% dip from 2019 to 2020, followed by year-over-year gains of 34% from 2020 to 2021, and 40.3% from April 2021 to April 2022. We have also edged higher from being stuck at $400,000 for three consecutive months from November 2022 through January of this year. When all things are considered, it is fair to say that our market has held up incredibly well.

Another interesting market statistic is the metric for “days to sell,” which measures how long it takes for a home to go under contract with a buyer as a pending sale. We will begin with the “median days to sell,” meaning the number of days it takes for half of the homes to go under contract in fewer days and half the number of homes to go under contract in more days. This April the median days to sell a single-family home in the overall Cape Coral market came in at 28 days, so half of our homes went under contract in less than 28 days and half went under contract in more than 28 days. Looking back at our red hot market conditions in April 2021 and April 2022, the median number of days it took for a home to go under contract with a buyer was only 5 days. Going back to April 2020 it was 37 days, and in April 2019 it was 43 days. So our new equilibrium remains pretty solid at 28 days to sell compared to the more normal and typical pre-COVID market conditions.

As we noted in the first paragraph of this column, there was a distinct market correlation to the COVID reopening as measured by the number of days it took for a home to go under contract with a buyer, along with the end point of the booming market that was tied to rising interest rates. Going back to August 2020, the median days to sell dropped to 22 days from 41 days in July 2020, as home sales were starting to ramp up, before the days to sell plunged to only 11 days from December 2020 through February 2021. By March 2021, the median days to sell (i.e., days to go under contract) dropped to only 6 days in what turned into a string of 17 consecutive months of single digit median days to sell, before the hot market streak reversed with a “jump” to 15 days in August 2022. By December 2022, we were up to 30 days to sell, before topping out at 33 days to sell in February of this year.

In a nutshell, when it comes to the number of days for a home to go under contract with a buyer, lower priced homes and homes priced properly to the current market conditions are typically selling quicker than higher priced homes. Again, compared to the normal market conditions that existed in the pre-COVID world, we are still in pretty good shape despite being in a somewhat slower market right now.

Next week we will take a look at the average time it is taking for homes to go under contract, along with the cumulative days it is taking for a home to go under contract and become finalized as a closed sale. This should help sellers in setting realistic expectations with their time frames. We will wrap up today with a look at the current number of active home listings and pending sales in the Cape.

As of Tuesday, May 9, there were 1,536 active listings in the Multiple Listing Service for single-family homes in the Cape at prices ranging from $260,000 to $3.995 million. The number of active listings edged higher from a week ago when there were 1,523 Cape Coral homes on the market through a Realtor. Of note, the number of active listings has climbed about 112% from the 725 homes on the market back on May 17, 2022. Based on our weekly market surveys, which we run every Tuesday, the median list price has been treading water at $535,000 since April 11. A year ago on May 17, 2022, the median list price for Cape Coral homes stood at $575,000 after hitting a peak of $610,000 on April 19 of last year. Currently, there are 534 homes in the Cape, or 34.8% of our active listings, priced at $450,000 and under, including 11 homes on the market for less than $300,000. At the other end of the price spectrum there were a total of 220 homes listed at $1 million and above on May 9, which was up a tick from the 219 such homes on the market a week ago. The number of active listings has jumped up by 65.4% from the 133 homes on the market in the million dollar plus segment from back on May 17, 2022.

The number of pending home sales on the books was at 883 on May 9, down a tick from 884 a week ago. The pipeline of pending home sales is ranging in price from $215,000 to $4.15 million, with the second lowest priced home pending at $235,000. The median pending sales price dipped to $401,999 this week from $410,000 a week ago. A total of 572 of the 883 pending home sales in the Cape are under contract at $450,000 and under, which includes 31 pending sales below $300,000. In our luxury home segment, there are currently 36 Cape Coral homes under contract at $1 million and above.

(The sales data for this article was obtained from the Florida Realtors® Multiple Listing Service Matrix for Lee County, FL, as of May 8, 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 Quinn’s 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 with Geri as a full-time REALTOR® in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.)