Homing In | Cape’s luxury home sales, prices sluggish, but treading water
It is time once again for our tip of the hat to Robin Leach, the late great host of “Lifestyles of the Rich and Famous,” as we offer up another toast of champagne wishes and caviar dreams by taking a look back at the Cape Coral luxury home market for the first nine months of 2023. For the record, our definition of the single-family luxury home market segment in Cape Coral consists of homes that are at prices of $1 million and above.
Looking back to our column from about 15 months ago, on July 15, 2022, we were noting our concerns about the market shifts we were already seeing on the ground in Cape Coral, along with the looming challenges that the real estate market was facing in the second half of last year. At that time, the Federal Reserve was in the early stages of its then newly declared war on inflation as it moved to aggressively increase interest rates.
The landscape in our local market changed quickly as home prices started softening from their peak levels, the supply of homes listed for sale and sitting unsold on the market started to increase rapidly, while the number of closed home sales declined. One of the biggest changes we were seeing back then was with the attitude of potential homebuyers who suddenly realized they could take their time to look for the “right home at the right price,” without blindly rushing to make aggressive above-list-price offers. On the other hand, home sellers struggled to adjust to the fact that buyers were no longer willing to buy their home at “any price.”
The headline of our July 15, 2022, column read, “Huge first half for luxury home sales, challenges ahead” as we recapped the luxury home sales results for the first six months of last year. The “challenges ahead” part of that headline have since come true and they are showing up in the market numbers shown below. Right now, instead of posting record sales numbers and new all-time record high sales prices, the leading indicators in our housing market consist of sellers making price reductions, less traffic in the form of showing appointments and longer days on the market to get a home sold.
Realtors have gone back to holding more open houses and looking for buyers after several years of juggling multiple offers. For their part, new home builders are aggressively competing for buyers by offering more discounts and increasing their incentives as they hope to lure buyers to their growing supply of spec homes and away from the existing home market. It is important to note that homes are still being sold, but the pressure has shifted to the seller’s side of the equation and their willingness to be more aggressive in pricing their home to the current market.
In the first nine months of 2023, there have been a total of 190 luxury single-family homes sold in Cape Coral at prices ranging from $1 million to $3.925 million. This was a decline of 35.6% from the 295 luxury homes sold in the first nine months of 2022, when sales prices ranged from $1 million to $5.3 million. The median sales price in our luxury home segment came in at $1.275 million over the first nine months of this year, which was down 3.8% compared to the median sales price of $1.325 million from January through September 2022. A total of seven of the 190 luxury home sales so far in 2023 were sold at prices of $3.175 million and above, while eight homes were sold at $3.1 million and above in the first nine months of 2022, with four of those sales at $4 million and up.
Breaking these luxury home sales down on a quarterly basis, the number of closed sales hit their peaks during the second quarter in both years. In 2022, there were 129 sales recorded in the second quarter as the “post-COVID” sales boom was quickly winding down. In the third quarter of 2022, sales plunged by 60.5% from the second quarter, dropping to only 51 sales as the impact of the Federal Reserve’s interest rate hikes hit the market along with Hurricane Ian on Sept. 28. This year, the number of closed luxury home sales reached their peak level of 75 sales in the second quarter, before declining by 29.3% to 53 closed sales in the third quarter, as mortgage rates suddenly spiked above 7%.
As of Tuesday, Oct. 17, the number of active listings in the Multiple Listing Service for Cape Coral single-family homes climbed to a total of 2,177 homes on the market ranging in price from $249,900 to $11.9 million. The median list price dipped a bit to $504,900 from $512,999 on Oct. 10. As a point of reference, based on our weekly market survey, the median list price hit its peak level of $610,000 on April 19, 2022. There are currently 247 active listings in the Cape for homes priced at $1 million and above, which is up from 242 homes a week ago. Back on Jan. 3 of this year, we had a total of 1,330 active single-family home listings, which included 151 homes on the market for $1 million and above.
The number of homes currently under contract with buyers as pending sales as of Oct. 17, totaled 610 homes at prices ranging from $175,000 to $3.395 million, with the second lowest-priced pending sale at $215,000. The current median pending sales price was at $400,000. Of the 610 pending sales, a total of 18 luxury homes were under contract at $1 million and above. Back on Jan. 3 of this year, there were a total of 522 pending home sales in the Cape, with 23 luxury homes under contract at $1 million and above.
One of the more notable items regarding our luxury home market was that the second highest priced home currently listed for sale in Cape Coral had a price reduction back on Oct. 10. This new construction riverfront home was initially listed for sale on Aug. 14 at $7.59 million, and after 57 days on the market the list price was lowered by $690,000 to $6.9 million. This 9.1% price reduction is just one of the many illustrations of the downward pressure on home prices that is occurring on a daily basis throughout Southwest Florida.
The highest priced closed home sale in the third quarter of this year was for $3.3 million, which put it into a tie for the second highest priced home sale in the Cape so far in 2023. This was a new construction home built in 2023, located off of the east side of Chiquita Boulevard and just north of El Dorado Parkway, W. The seller actually purchased this direct sailboat access canal property, which included an older 1981 built home, back in June 2021 for $550,000. A demolition permit was issued to tear down the old home in August 2021, and a new home construction permit was issued in March 2022. Based on the records, it looks like the new home was first listed for sale in August 2021, while it was under construction at an initial price of $2.59 million. The price was increased to $2,799,995 six days later, with the home eventually taken off of the market unsold in December 2021. It came back on the market for $3,799,995 on Sept. 2, 2022, and was again taken off of the market unsold in December 2022. It went back on the market for $3,499,995 in January of this year, with a price reduction to $3,399,995 in April, before going under contract with a buyer on July 4 and closing in a cash deal for $3.3 million.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, FL, as of Oct. 15, 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 44 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.