Homing In | Rising inventory, high interest rates, affordability haunt market
Today we will be wrapping up the September and third quarter single family home results from last week, with the numbers for the Cape Coral freshwater canal and lake home segment, along with the data for our dry lot home segment. But before getting into that, we thought we would continue to address more about the conflicting reports regarding the current state of the housing market. As our inventory continues to rise in the current high interest rate environment, home affordability has become an even bigger problem for a lot of potential buyers. Escalating global conflicts and wars, along with the growing threat of terrorist attacks, combined with what some are describing as a looming debt crisis are adding a lot of wildcards that could end up shocking the system and haunting the economy.
We continue to see various media reports stating that one of the big problems with the housing market is that there is not enough of an inventory of homes available for sale on the market to meet all of the buyer demand. At the same time, with the latest spike higher in mortgage rates, now hovering in the 8 percent range, buying a home has become even less affordable for a growing number of potential buyers, eliminating a large and growing segment of our population from being able to qualify for a mortgage. This is compounded by the fact that a sizable segment of current homeowners in this country who would consider selling their existing home and buying another home, have existing mortgages below 3.5 percent. Many of these people would be unable to afford a “new” home with an 8 percent mortgage rate at today’s home price levels. Simply put, the pool of qualified and willing buyers has been shrinking, which has been effectively slowing down the housing market. In order to prevent the current real estate slowdown from turning into a deep freeze, it would seem that something “needs to give,” meaning that either home prices or interest rates need to come down from their current levels. If home prices or interest rates come down sometime soon, the cause of how it happens – softly or through a sudden shock to the economy – will be critically important to the housing market and the economy.
In Cape Coral, a lack of inventory is not the issue. To this point, here is a snapshot of our recent market history dating back to March 15, 2022, which was just before the Federal Reserve changed the game and started jacking up interest rates. This is based on our weekly market surveys, which showed that our local real estate market probably hit its peak sometime in April of 2022. Looking back to March 15, 2022, there were only 430 active listings in the MLS for single family homes in the Cape with a median list price of $595,000, as most new listings that came onto the market were immediately snapped-up in bidding wars between multiple buyers that drove our home prices to all time record high levels. At that time, there were 1,034 pending home sales in the pipeline. By Sept. 20, 2022, with interest rates surging higher and a week before Hurricane Ian impacted our lives, the number of active listings for Cape Coral homes in the MLS had climbed to 1,411 homes on the market with the median list price dropping down to $525,000 and 762 pending sales in the pipeline. On Jan. 3 of this year, as the hurricane recovery and repairs continued, there were 1,330 active listings in the Cape with the median list price at $509,873 and 522 pending sales. By Aug. 1 of this year, there were 1,768 active listings with the median list price at $529,450 and 786 pending sales.
This week, as of Tuesday, Oct. 31, the number of active Cape Coral single family home listings in the MLS continued their climb, reaching 2,259 homes currently on the market. So there are now 27.8 percent more homes on the market now as compared to the 1,768 active listings about three months ago on Aug. 1, and the number of active listings in the MLS are up about 70 percent from the 1,330 homes on the market about ten months ago on Jan. 3 of this year. Our active listings range in price from $269,000 to $11.9 million, with the median list price currently at $505,175. We now have 873 homes listed at $450,000 and under, along with 266 homes listed at $1 million and above. Back on Jan. 3 of this year, there were 531 homes in the Cape listed at $450,000 and under, to go with the 151 homes listed for $1 million and above. Currently, there are 588 homes under contract with buyers as pending sales at prices ranging from $215,000 to 3.895 million. The median pending sales price on Oct. 31 was $400,000. A total of 380 of the 588 pending sales, or 64.6 percent of the market, were at $450,000 and under, with 22 pending sales at $1 million and above.
Freshwater canal and lake homes
In the Cape’s single family freshwater canal and lake home segment, which includes landlocked canals and lakes with no boating access to open water, there were 36 closed sales in September. This was 12.2 percent below the 41 sales in September of 2022, and 30.8 percent below the 52 sales in August of this year. In the third quarter, there were 140 closed sales in this segment, or 12 percent more than the 125 sales in the third quarter of 2022, but 1.4 percent lower than the 142 sales in the second quarter of this year. In the first nine months of this year, there were a total of 409 freshwater canal and lake homes sold in the Cape, down 20.1 percent from the 512 sales in the first nine months of 2022.
The median sales price in the Cape Coral single family freshwater canal and lake home segment came in at $525,000 in September, which was down 4.5 percent from the $550,000 posted in September of 2022, and 8.6 percent below the $574,500 in August of this year. In the third quarter, the median sales price in this segment averaged $529,563 per month, or 2.2 percent lower than the average of $541,667 per month in the third quarter of 2022, but 3.7 percent above the average median sales price of $510,583 per month in the second quarter of this year. In the first nine months of 2023, the median sales price averaged $515,604 per month in this segment, which was 2.3 percent less than the average median sales price of $527,983 per month in the first nine months of 2022.
Dry Lot Homes
In the Cape’s single family dry lot (non-canal) home segment, there were 311 closed sales in September, which was 10.7 percent higher than the 281 sales in September of 2022, but 15.3 percent below the 367 closed sales in August of this year. There were a total of 985 closed sales in this segment during the third quarter, or 2 percent above the 966 sales in the third quarter of 2022, but 10.5 percent less than the 1,100 closed sales in the second quarter of this year. In the first nine months of 2023, a total of 2,945 dry lot homes were sold in the Cape, for a decrease of 14.2 percent versus the 3,432 sales in the first nine months of 2022.
The median sales price in the Cape Coral single family dry lot home segment was $372,999 in September, down 0.5 percent from $374,999 in September of 2022, but up 0.8 percent from $370,000 in August of this year. In the third quarter, the median sales price in this segment averaged $372,666 per month, or 3.7 percent below the average of $386,831 per month in the third quarter of 2022, and 1.9 percent less than the average of $379,825 per month in the second quarter of this year. In the first nine months of this year, the median sales price averaged $374,396 per month in this segment, for a 1.6 percent decrease versus the average median sales price of $380,649 per month in the first nine months of 2022.
The sales data for this article was obtained from the Florida Realtors® Multiple Listing Service Matrix for Lee County, FL, as of Oct. 23, 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 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.