Geri and Bob Quinn

The New Year is, if nothing else, shaping up to be an interesting one. Call us crazy, but with what will likely prove to be a wild presidential election year, combined with multiple global hot spots that have the potential to quickly spiral out of control, and this could easily become a chaotic year. Add in the fact that a recent U.S. Treasury report showed total U.S. government debt topped $34 trillion for the first time ever, with deficit spending by the politicians in Washington, D.C., at record levels, while the interest payments alone just to service the federal government’s debt now exceeds $1 trillion per year. What could go wrong?

On a national level, there are continued concerns about the commercial real estate market.

According to data from the Mortgage Bankers Association, some $117 billion in commercial real estate debt in the office space segment will need to be repaid or refinanced this year. Most of this debt, as reported on in the Financial Times, is concentrated in major cities such as Manhattan, San Francisco, Chicago and Los Angeles. With current interest rates that are much higher now than when these loans were taken out and tighter lending standards in place following some of the regional bank collapses last year, one is left to wonder if more bank bailouts will be on the way. We are also seeing a lot of “under the radar” reports and anecdotal evidence of looming foreclosures in the housing related markets, although our local foreclosure numbers have remained minimal. The concern is that the out-of-control rising costs on just about everything over the past three years is starting to take its toll.

We also continue to see a lot of conflicting news about the housing market, with the main theme in the national media harping about the lack of inventory being the main cause for home prices remaining so high. At the same time, another email hits our inbox from a home builder offering incentives to real estate agents in the form of higher 5 and 6% commissions if we bring buyers to see their existing inventory of new homes that are sitting unsold in developments throughout Southwest Florida. In addition, many home builders are continuing to slash their prices on newly built “spec” homes in an effort to attract buyer traffic into their developments. These national builders are also offering potential buyers aggressive below market mortgage rates, waiving HOA fees for a period of time and throwing in “free” upgrades to homes that they have under construction. These new construction homes have become a major form of competition to the average homeowner who has been trying to sell their existing home over the past year and we expect to see this competition continue between home sellers during 2024, in what has become a higher inventory buyers market.

In addition, we see the changing market conditions occurring throughout the country, and they are impacting sellers of all types. For example, in an article written by Phil Hall for WRE News on Dec. 27, he quoted a new list put together by Kiplinger that highlighted the celebrities who enjoyed the greatest profits on their real estate transactions in 2023. According to the article, at the top of the list was actor Mark Wahlberg who sold his 30,500-square-foot mansion in Beverly Park, California, for $55 million. They indicated that Wahlberg bought the 6.2 acres of vacant land for $8.25 million and they did not say how much money he put into building the mansion, but we would guess he still walked away with a tidy gain on this sale. The more interesting part of the story to us was the fact that he initially listed the property for $87.5 million, so he ended up selling it for $32.5 million below his initial list price.

Despite all of this, Wall Street is convinced that the Jerome Powell-led Federal Reserve has engineered a soft landing to the economy with the expectation that the Fed will be lowering interest rates multiple times in 2024. With mortgage rates now hovering in the 6.67% range, down from the recent peak of around 8%, we are seeing signs that some buyers are returning to the market. The preliminary sales numbers for Cape Coral homes in December remained sluggish, but above November’s dip. Median sales prices were still soft.

As of Monday, Jan. 1, the number of active listings in the MLS for Cape Coral single-family homes, based on our weekly market survey, pulled back to 2,442 homes on the market from 2,513 listings two weeks ago. This drop in active listings was caused by a jump in “expired listings” that coincided with the turning of the calendar from 2023 to 2024, and it appears to already be reversing, climbing back to 2,482 active listings in our early morning check of the market on Jan. 3. We are expecting that the annual influx of new listings by the return of our “seasonal sellers” will begin hitting our market much like the Annual Return of the Swallows to Mission San Juan Capistrano. This will likely push the number of active listings in the Cape back above 2,500 homes on the market and well beyond in no time flat.

On Jan. 1, the asking prices for the 2,442 active single-family home listings in the Cape ranged from $264,900 to $11.9 million, with the median list price at $500,000. Roughly 40% of these active listings, or 973 homes, were priced at $450,000 and under, including 35 homes priced below $300,000. At the other end of our price spectrum, a total of 295 homes were listed at $1 million and above. Of the 2,442 active listings, 665 of them, or 27% of the market, were new construction homes built in 2023, with a very competitive median “new home” list price coming in at $490,000.

The number of homes currently under contract with buyers in the Cape continued to soften, with 427 pending sales in the pipeline at prices ranging from $215,000 to $3.5 million on Jan. 1. The median pending home sales price was $414,990 and there were 269 pending sales, or 63% of our market, under contract at $450,000 and under, including 19 homes priced below $300,000. A total of 28 of the 427 pending sales were priced at $1 million and above. Two weeks ago, there were a total of 484 pending home sales in the pipeline with a median pending sales price of $405,000. Of the current 427 pending sales, 149, or about 35% of our market, were new construction homes built in 2023 with a median pending home sales price of $404,000.

By comparison, one year ago on Jan. 3, 2023, there were 1,330 active listings for single-family homes in Cape Coral through the MLS at prices ranging from $274,900 to $4,949,999 and the median list price was $509,973. As we have noted previously in this column, the all-time high median list price, based on our weekly market surveys, was $610,000 on April 19, 2022. One year ago, a total of 531 of the 1,330 active listings were priced at $450,000 and under, including 19 homes priced below $300,000. Back then, 151 homes in the Cape were on the market for $1 million and above. There were 522 pending home sales in the pipeline one year ago, with pending sales prices ranging from $129,999 for a fire-damaged home to $3.29 million. The second lowest-priced pending home sale was at $170,000 and a total of 347 homes, or 66.5% of our pending sales, were priced at $450,000 and under, with 23 homes under contract at $1 million and above. As a side note, a number of storm damaged homes were being sold “as is” at below normal market prices a year ago.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Florida, as of Jan. 1, 2024, 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.