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Homing In | Cape’s 2023 luxury home sales post a sluggish normalization

By GERI and BOB QUINN - Homing In | Jan 12, 2024

Geri and Bob Quinn

Looking back on the year that was 2023, in our tip of the cap to the late Robin Leach of “Lifestyles of the Rich and Famous” fame, the Cape Coral luxury home market posted what one could argue was a return to a more normal, albeit seemingly sluggish year. For our purposes, the Cape’s luxury home market is for homes at $1 million and above.

The part of the story involving the return to a “more normal” year was the dramatic decline in the number of luxury home sales compared to the peak of the post-COVID market frenzy that occurred in the first half of 2022. As we have previously discussed, the record level market peak in home sales and the subsequent plunge back to normal coincided with the launching of the Federal Reserve’s well-publicized war on that pesky little bout of “transitory” inflation that continues to slam our household budgets today. Hurricane Ian compounded the impact already being felt in our local real estate market from the rate hike actions of the Fed. The “sluggish” part of the luxury home sales equation showed up in the second half of 2023, when mortgage rates spiked into the 8% range, effectively putting a wet blanket over the housing market until the recent decline in mortgage rates back below 7%.

Fortunately, this sudden decline in interest rates is coming at the perfect time as we head into our historically strong seasonal home selling months. In most years, the number of closed home sales usually reach their peak levels in our market sometime between the months of March and May. Since most homes generally go under contract with a buyer some 30 to 45 days before being finalized as a closed sale, it means that we should be entering our yearly “mini-boom” where sales begin ramping up right about now. To that end, we have noticed a sudden increase in buyer activity recently, and other Realtors we talk to say they are seeing the same thing. The key to it all will likely hinge on mortgage rates remaining below 7%, and ideally moving more towards the 6% range.

With all of the conflicting information about the economy and the housing market out there in the media, a Jan. 5, 2024, article written by Ben Eisen in the Wall Street Journal may have summed up the state of the real estate and mortgage markets the best. He wrote, “The mortgage industry has been in a deep freeze. The rapid rate increases of 2022 quickly swung the industry from boom to bust.” He added, “At current rates, bankers say there is still not likely to be huge mortgage demand.”

To that point Eisen quoted Thuan Nguyen, owner of the California-based mortgage broker, the Loan Factory, who said, “It’s (mortgage rates) not low enough to induce more consumers to buy more houses. We aren’t out of the woods yet.”

To that end, with the rising number of homes coming onto our local market, the competition between sellers, in what has clearly become a buyers market in Cape Coral, will likely intensify in the coming months. Sellers who grasp this fact and get a little more aggressive than other sellers will stand the best chance of attracting a buyer and getting their home sold.

In 2023, there were a total of 227 luxury homes sold in the Cape, with 138 of these sales occurring in the first half of the year and 89 sales in the second half. This was down about 31% from the 327 luxury homes sold in the Cape in 2022, when a total of 244 sales occurred in the first half of that year and only 83 sales took place in the second half of the year after we were impacted by the aggressive Federal Reserve interest rate hikes and Hurricane Ian. By comparison, back in 2021, there were a total of 246 luxury homes sold in the Cape, with 111 sales occurring in the first half of that year, followed by 135 sales in the second half of 2021. This included 86 closed sales in the fourth quarter of that year as our market boom was ramping up from the growing number of people who were looking to escape to Florida and moving away from living in the more restrictive COVID-era states.

Currently, as of Tuesday, Jan. 9, there were 2,572 single-family homes listed for sale through a Realtor in Cape Coral, up from the 2,442 active listings on Jan. 1, when a number of listings expired at year’s end. Right now, list prices are ranging from $260,000 to $11.9 million, with the median list price remaining at $500,000. Almost 40% of the homes in the Cape, totaling 1,017 listings, were at $450,000 and under, while 319 homes, or 12.4% of our market are in our luxury home segment at list prices of $1 million and above. One year ago on Jan. 10, 2023, there were 1,310 active single-family Cape Coral homes listed for sale in the MLS, ranging in price from $274,900 to $4,849,999 with the median list price at $500,000. A total of 532 homes were listed at $450,000 and under, with 156 luxury homes on the market for $1 million and above. A little over two years ago, on Dec. 28, 2021, there were a total of only 498 single-family homes listed for sale in Cape Coral through the MLS, with 70 of these homes priced at $1 million and above.

As of Jan. 9, there were a total of 445 single-family homes in Cape Coral under contract with buyers as a pending sale at prices ranging from $215,000 to $3.5 million, with the second lowest-priced pending sale at $250,000. The median pending sales price came in at $420,990 and a total of 272 of the 445 pending sales, or 61% of our market, were at $450,000 and under, while there were 32 pending sales in our luxury home market at $1 million and above. One year ago on Jan. 10, 2023, there were a total of 577 single-family homes under contract with buyers as pending sales through the MLS in the Cape, with 369 of these pending sales, or 64%, at $450,000 and under. At that time, there were a total of 27 luxury homes in the Cape under contract at $1 million and above.

The highest-priced Cape Coral home sale in the second half of 2023 closed on Nov. 16 for $3.7 million, making it the second highest-priced home sale in the Cape behind the top sale of the year at $3.925 million back on June 15. This second place finisher was a 3,426-square-foot new riverfront home built in 2023 in the Palaco Grande neighborhood in the southeast Cape. It was a custom luxury coastal contemporary designed home with 12 to 16-foot high ceilings, a gourmet kitchen featuring a Wolf gas cooktop, quartz countertops and a hidden door leading to a butler’s pantry. The home has four ensuite bedrooms, plus a half bath and a den, along with an outdoor space combining elements of fire and water, with a pool and spa, along with a gas fire pit and separate gas fireplace.

According to the records, the vacant riverfront lot was purchased for $545,000 on Dec. 30, 2019, after being initially listed for sale on Feb. 11 of that year for $799,900. Construction of the new home started in 2022, and it was listed for sale on March 30, 2022, at $2.85 million while still under construction. The home went under contract on June 30, 2022, and the first sale of the home closed on April 29, 2023, after likely delays due to Hurricane Ian, as a cash sale for $2.7 million. The new owner put the home back on the market for $3.895 million on Sept. 14, 2023, with it going under contract about one month later, before closing for $3.7 million on Nov. 16.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Jan. 9, 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.