Traditional, normal seasonal market slowdown is upon us
After several years of abnormally hot market conditions from roughly June 2020 through June 2022, we have returned to somewhat slower, more “normal” looking seasonal market conditions. In many respects, we are now posting closed home sale numbers that are beginning to look a lot more like they did back in 2019, but with 2023 prices. By that, we mean that our market has come down off of all of the record highs that were set over the past several years for the number of closed home sales and down from the record peaks in sales prices, without crashing. At the same time, the number of closed home sales and median sales prices have recovered from the lows set in the immediate aftermath of Hurricane Ian.
We have also seen our market shift away from the record low number of active listings in the Multiple Listing Service over the past several years, to a substantially higher level of inventory as we quickly transitioned from a seller’s market to a buyer’s market in 2022. As we have noted recently, we are in what we would call a “Goldilocks” market right now, where things are not too hot and not too cold, while our market is taking a pause to refresh and consolidate all of the gains that seem to be just the right temperature.
Anecdotally, on the ground in our market we are back to the days when “price matters most” for sellers trying to attract buyers. Basically, clean, uncluttered, well-maintained and updated homes that are move-in ready and priced properly to the current market will attract a flurry of immediate interest from potential buyers as soon as the home comes on the market as a new listing. These types of homes are likely to receive a solid offer from a buyer or two within the first several days or weeks on the market. Legitimate offers are tending to range anywhere from about 10 % below list price with the likelihood of negotiating a higher price, on up to full-price offers. Unlike several years ago when we were in the red hot seller’s market, if a home is priced properly in the current market, it will most likely not generate a bidding war between multiple buyers and it will do well to get anywhere near a full-price offer.
However, if a seller has their home overpriced to the current market, it will generate few, if any, showing appointments from potential buyers and it will most likely not receive any offers. Overpriced homes are likely to sit on the market unsold for an extended period of time, until the seller starts making adequate price reductions to bring the list price in line with the market. It can take longer for higher priced homes to attract a buyer, while homes in the Cape priced from about $450,000 and under should draw interest pretty quickly with things likely moving even faster at lower price points.
Based on the preliminary sales results for the overall Cape Coral single-family home market for the month of May, we are seeing more confirmation that our market is settling into its new sales equilibrium. The number of closed home sales in May will be at the highest level since June of last year and may end up settling in somewhere close to the 574 closed sales from back in May 2019, but well below the peak levels from the first half of 2022. As we discuss below, the numbers seem to be pointing towards a somewhat slower market in the coming months.
For its part, the preliminary median home sales price for the month of May continues on the somewhat softer side while leveling out in the $420,000 range. This is down from the peak prices of 2022, but still well above the prices registered in all other years. In the first five months of this year, the average home sales price is at $505,362 per month, down 6.6% from $540,981 per month over the first 5 months of 2022, which also reflects a softening in home sales prices, but nothing even remotely close to prices crashing, as some buyers have been waiting for.
Moving over to the number of active listings in the MLS for Cape Coral single-family homes, as of June 6 they have continued to increase. There are now 1,656 homes available on the market compared to 1,616 listings two weeks ago on May 23, and up from 828 listings about one year ago on May 31, 2022. The current active listings range in price from $250,000 to $3.995 million, with a median list price of $525,000. Two weeks ago the median list price was $530,000 and we have spent the past several months with median list prices in a tight range between $525,000 and $538,000 based on our weekly market surveys. Median list prices have climbed up from $504,990 back on Jan. 1 of this year. One year ago on May 31, 2022, list prices ranged from $259,900 to $5.995 million in the Cape, with the median list price at $570,000 after hitting its peak at $610,000 on April 19, 2022.
Also of note, the number of homes currently listed at $400,000 and under in the Cape has increased to 416 homes on the market this week from 378 homes on May 23, for a 10% rise. Back on May 31, 2022, there were only 130 homes listed for sale in this price range. By contrast, there are currently 227 homes listed for sale in the Cape at $1 million and above, the same number as two weeks ago, but up from the 155 homes listed at $1 million and above back on May 31, 2022.
As the current number of active single-family homes listed for sale in the Cape is increasing, the number of pending home sales has been decreasing. This week on June 6, there were a total of 761 homes under contract with buyers as pending sales at prices ranging from $149,900 to $4.15 million. It should be noted that the lowest priced pending sale is a special situation, and the second lowest priced pending sale is at $215,000. Just two weeks ago on May 23, there were 857 homes under contract in the Cape, and looking back seven weeks ago on April 18, there were 925 pending sales in our weekly market survey. So the number of pending home sales has declined by 17.7% over the last seven weeks. A year ago on May 31, 2022, we had 933 pending home sales in the pipeline. Right now, 377 of the total of 761 pending sales, or 49.5% of the market, are priced at $400,000 and under, with the median pending sales price at $403,900. At the other end of the price spectrum, there are only 35 pending sales at $1 million and up versus the 227 active listings in this price range.
In analyzing this data, the current median list price for homes in the Cape is at $525,000 and the current median pending sales price (as of June 6), which is indicative of the upcoming closed home sales prices in the next 30 to 45 days, is at $403,900. We also know that the preliminary median sales price for the month of May, which is mostly made up of homes that went under contract with buyers over the prior 30 to 45 days, will be around $420,000. So for now, it appears that there will continue to be some downward pressure on list prices as a number of homes are likely to go under contract for less than the list price. Also, the current drop off in pending home sales over the past seven weeks is most likely due to our return to a more traditional seasonal market slowdown as we head into our summer months.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of June 6, 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.
To reach GERI and BOB QUINN, please email news@breezenewspapers.com