Geri and Bob Quinn

We continue to see a decent level of buyer interest in our real estate market, with just enough buyers needing to buy something now propping up our market, while another group of buyers are watching and waiting in the wings. This latter group of potential buyers seems to fall into the camp of wanting to buy a home in Southwest Florida, but they are hoping that home prices and/or interest rates continue to head lower so they can afford to buy the home they want. If mortgage rates can reestablish themselves back below 7% and preferably into the 6.5% or lower range, many experts think buyers will pile into the market again.

As we drive around our neighborhood and throughout Cape Coral on our day-to-day business travels, we see plenty of undeniable anecdotal evidence everywhere about the current state of the real estate market. Many of the for sale signs posted in front yards seem to have been there for months on end, while a new for sale sign pops up in the front yard of yet another home. On the weekends, open house signs have become dominant on street corners, virtually squeezing out the yard sale signs and the “we buy houses” signs.

Just a mere two years ago, lines of buyers were forming outside of homes the moment they came on the market as a new listing. Within 30 minutes of a new listing hitting the MLS and the internet, agents would call the listing agent asking if they had any offers on the home yet, followed by a desperate plea that their buyer had been beaten out on five other homes and they really want to buy this home. Today, the roles have been reversed as many frustrated sellers wait, hoping to get a showing appointment scheduled that leads to a decent offer.

The undeniable anecdotal evidence has also shown up in the market statistics in the form of the steadily increasing number of active listings that seem to be on a path towards 3,000 single-family homes on the market in the Cape within the next month or two. At the same time, the number of pending sales has continued to soften, along with the number of closed home sales and median sales prices, as we have moved firmly into a higher inventory buyers market. Also, as we have been noting in this column, the leading daily market statistic in the MLS has been the number of price reductions being made by sellers, with the number of daily new listings coming on the market sitting in second place. The number of new pending and closed sales are usually rotating between a distant third place finish or “out of the money” in the Cape’s daily market statistics. One can try to spin this data into some sort of a positive narrative, but these market facts are not indicative of a currently strong market.

Another piece of anecdotal evidence pointing to the slow market conditions in our area are the incentives being offered by the big national homebuilders operating in Southwest Florida.

In our recent business travels around parts of Lee County, it was amazing to see the amount of dirt being pushed around preparing large tracts of raw land for the new infrastructure required in the many new housing developments sprouting up out of the ground. At the same time, we are receiving multiple emails from these builders every day offering Realtors aggressive, above normal market commissions and bonuses if we bring qualified buyers to the builders sales offices. These builders are also making price reductions on their current supply of move-in ready or nearly completed new homes in an attempt to attract buyer traffic to their developments. They are also offering a variety of buyer incentives, including lower mortgage rates or rate buydowns through their lenders, paying closing costs for buyers, waiving HOA fees for the next year or two or “throwing in” any number of upgrades to homes that are in progress.

These types of price reductions and incentives on new homes in new developments simply do not happen in a strong real estate market. Buyers clearly have the upper hand right now in the negotiation process, and these new construction homes are providing formidable competition to the average homeowner trying to sell their existing home.

One of the other anecdotal things we come across on a regular basis are what we would call the “average” homeowners who are being squeezed by the high overall cost of living due to the rampant inflation of the past several years. Hurricane Ian placed an additional financial and emotional strain on a lot of people, and the out-of-pocket storm repair costs combined with rising costs for necessities such as homeowners, flood and car insurance, utility bills, HOA fees, etc., are causing affordability issues for a growing segment of homeowners. If something doesn’t change with the economy that provides relief sometime soon, more middle class people may be forced into the choice of selling their homes and moving away.

As of our most recent market survey Tuesday, Dec. 12, the number of active listings for Cape Coral single-family homes through a Realtor in the MLS continues its relentless march higher, while the number of pending home sales in the pipeline continues to decline. One could make the argument that this is merely the “old” normal, pre-COVID historical seasonal market pattern for this time of year when the number of pending and closed sales softens, and the number of active listings begins to surge higher.

We hope that this is the case, however, anyone who has been paying attention also knows these market patterns have been in place for much longer than something that is just a typical “seasonal effect,” and they are being heavily influenced by the actions of the Federal Reserve. The substantially higher interest rates in the past 18 months, combined with the higher, albeit somewhat softer home prices, are creating affordability issues for a lot of potential buyers.

The current number of active listings for Cape Coral single-family homes climbed to 2,518 homes on the market, up 2.8% from 2,459 listings one week ago, and 11.5% higher than the 2,259 listings six weeks ago on Oct. 31. Our list prices currently range from $250,000 to $11.9 million, with the median list price virtually unchanged from a week ago at $499,999 and down by 1% from $505,175 six weeks ago.

The makeup of the 2,518 active listings now includes 1,001 single-family homes, or about 40% of the market, with list prices of $450,000 and under, with 308 homes equalling 12.2% of the market listed at $1 million and above. Six weeks ago there were a total of 873 Cape Coral homes listed at $450,000 and under, and only 266 homes on the market at $1 million and above. A total of 701 of our 2,518 active listings are new construction homes built in 2023.

There are currently 472 single-family homes in the Cape under contract with buyers as pending sales at prices ranging from $200,000 to $1.999 million. The number of pending home sales in the pipeline is down from 500 homes one week ago, and it is 19.7% lower than the 588 pending sales from six weeks ago on Oct. 31. The median pending sales price of $403,240 is up from $400,000 six weeks ago. Currently, 323 of the 472 pending sales, or 68.4% of the market, are priced at $450,000 and under, while only 14 pending sales are priced at $1 million and above. Six weeks ago, 380 of the 588 pending sales in the Cape were priced at $450,000 and below, with 22 homes pending at $1 million and above. A total of 185 homes, or just under 40% of the current number of pending home sales, are new construction homes built in 2023.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Dec. 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 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 Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.