Cape Coral home price and home inventory facts and myths
On an almost daily basis we continue to see national media reports about the generally slowing number of sales in the real estate market, typically followed by comments that sales prices are remaining high because of a lack of both new and existing home inventory throughout the country. Basically, the consensus view seems to be that there are simply not enough homes available on the market for the number of people wanting to buy a home, and therefore, home prices are remaining high. Locally, we have seen some recent media reports that the Southwest Florida real estate market is experiencing the same thing – a low supply of homes listed for sale on the market causing home prices to remain high. So today, we will dig a bit deeper into local home prices and our housing market inventory.
First, as we have been tracking on a weekly basis in this column, we do not have a lack of supply in the number of homes available for sale in Cape Coral. In fact, the inventory of homes listed for sale in the Multiple Listing Service has gone up substantially over the past two years, and it continues to climb on a weekly basis. At the same time, the number of homes going under contract with buyers as pending sales has been softening lately, while the number of closed home sales have returned to something more in line with the pre-COVID levels of 2018 and 2019. Settling back into these more “normal” market levels after the post-COVID sales frenzy, which ended about 15 months ago, is healthy for our market. We seem to have returned to our more seasonal, historical market trends, where the number of closed home sales slows down in the summer and fall months, before ramping back up during tourist season.
The reason we say that we have “seemed” to return to our more seasonal market trends, is that we are not completely sure that the impact from the recent spike up to some of the highest mortgage interest rates in the last 20 years is fully baked into the market numbers yet. If mortgage rates remain higher for longer above the 7 percent threshold, there could be some additional fallout on the way when it comes to the housing market and home prices. The recent data is already showing fewer people are applying for mortgages due to the higher financing costs, not to mention the increased costs for homeowners and flood insurance, all of which is reducing the purchasing power of buyers who can still qualify for a mortgage. Unless interest rates drop, this is likely to put a further squeeze on home prices.
Speaking of home prices, we have been noting a “softness” in prices for more than a year, as our local prices are down below their peak levels from back in the first half of 2022, while not collapsing as much as some potential buyers were hoping for. Some market experts have been saying they believe home prices have already put in a bottom, while others are still predicting home prices are still likely to drop sharply from their current levels. Who knows? But we are noticing what we will call some concerning cracks in the foundation of home prices as our supply of homes continues to grow and more homes sit on the market unsold. Momentum has been building in the number of daily and weekly price reductions being made by sellers hoping to attract a buyer to their home as they compete with other sellers. There are also some less visible things going on under the surface of the market, such as existing homes having to compete with a fairly robust new home construction market in the Cape, with a growing number of home builders offering various incentives and discounts to buyers.
One example of what is happening with home prices is from a 2.38 acre, 11,190 square foot estate home built back in 2002 by a highly successful former professional athlete in a gated community in South Fort Myers. This property has about every bell and whistle one would expect, and it was initially listed for sale at $8.5 million back in February of this year. After two price decreases down to $7 million,they took it off the market in July, before coming back on the market for $6.85 million on September 6. Doing the math, that is a total price reduction of $1.65 million on this home, bringing the current list price 19.4 percent below their initial list price. We plan to monitor this listing to see what it eventually sells for, but it is just one example of many homes struggling to find a buyer in the current market conditions.
To our other point from above regarding the competition between the existing home market segment in Cape Coral versus the new construction home market, potential homebuyers are faced with a variety of trade-offs when choosing between these segments. Aside from the fact that new construction homes will be built to all of the new building codes, they are often built at higher elevations and with brighter, more open concepts making them an attractive option. However, some of these new homes may be located in less populated areas that are on well water and septic. In some cases, these new homes are priced competitively with older existing homes. The trade off is that many “older” existing homes tend to be located in what some buyers would consider more convenient, established areas that already have city water and sewers. In addition, many of these existing homes have been updated and remodeled, making them attractive to a lot of buyers, but some of these homes may not “show” as well as a new home. Again, it is generally a series of trade-offs for buyers.
Here is a breakdown of new homes built in 2023 versus the existing home market in Cape Coral. As of Tuesday, September 12, there were 540 active listings in the MLS for new construction homes priced from $309,990 to $7.59 million. The number of these new construction homes for sale totaled 27.75 percent of the total number of 1,946 homes listed for sale in the Cape that range in price from $258,000 to $7.59 million. The overall median list price for the 1,946 single family homes on the market in the Cape was $512,675 versus a median list price for the 540 new construction homes of $499,900. There were a total of 675 homes under contract with buyers as pending sales at prices ranging from $175,000 to $2.299 million, with 300 of these 675 pending sales for new construction homes, equalling 44.4 percent of the total number of pending sales. The prices for the new construction pending home sales ranged from $304,990 to $1.449 million. The median pending sales price for the total number of the 675 pending sales was $398,885 as of September 12, while it came in a bit lower at $379,995 for the new construction homes.
The location of the active listings for the 540 new construction homes showed 255 homes or 47.2 percent in the Northwest Cape; 152 homes or 28.2 percent in the Southwest Cape; 110 homes or 20.4 percent in the Northeast Cape; and 23 homes or 4.3 percent in the Southeast Cape. The breakdown for the current number of 300 pending sales in new construction homes was 135 homes or 45 percent in the Northwest Cape; 91 homes or 30.3 percent in the Northeast Cape; 61 homes or 20.3 percent in the Southwest Cape; and 13 homes or 4.3 percent in the Southeast Cape. The Southeast Cape was the first area developed in Cape Coral, so it has the fewest available vacant lots for building new homes.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, FL, as of Sept. 12, 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 Geri as a full-time REALTOR in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.