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Homing In | Cape’s 2023 luxury condo market weaker than last year

By GERI and BOB QUINN - Homing In | Jan 22, 2024

Geri and Bob Quinn

This week we will examine the performance of the Cape Coral luxury condo market for the year that was 2023 compared to 2022, in our salute to the Champagne wishes and caviar dreams of Robin Leach, the late great host of “Lifestyles of the Rich and Famous.”

This past year was a wild one with mortgage rates rocketing higher into the 8% range before dropping back to the 6.7% range as oil prices plunged late in the year and the rate of inflation eased. Many economists believe the rampant inflation that caused prices on most goods and services to skyrocket over the past several years has been permanently reset at these higher price levels, putting pressure on household budgets. For their part, home and condo prices have continued to soften as sellers are forced to compete aggressively with other sellers on pricing in order to attract interested buyers. Our luxury condo market, which we define as condo units listed and sold in the Cape for $500,000 and above, saw the number of closed sales decline in 2023 with sales all but drying up in the third quarter before rallying a bit in the fourth quarter.

As we noted in this column back on Nov. 10, the number of closed sales in our luxury condo market went into a slow down in the first half of 2023 with a total of 31 sales, compared to 43 sales in the first half of 2022. Then the luxury market went into an all-out “breaking bad” mode in the third quarter of last year with only three luxury units being sold. To be fair, the slowdown in the first half of last year was more of a return to normal coming off of the red hot market conditions in the first half of 2022. But the plunge to only three sales in the third quarter of 2023 was far worse than the 13 closed sales in the third quarter of 2022 and the 9 post-Hurricane Ian sales in the fourth quarter of 2022.

Even with the fourth quarter rally, the second half of 2023 finished with a total of 15 luxury condo sales, down 31.8% from the 22 sales in the second half of 2022. For the year in 2023, we registered a total of 46 luxury condo sales, down 29.2% from the 65 luxury units sold in 2022.

As far as actual sales prices were concerned, the median sales price in our luxury condo market dipped to $620,000 for the 46 units sold in 2023, compared to $635,000 for the 65 sales in 2022. Last year, seven of the 46 condos sold in the Cape went for more than $1 million, with the three highest-priced sales ranging from $1.7 million to $2 million. All three of the highest-priced sales occurred in the first quarter of 2023, with the fourth highest-priced condo sale last year closing in October for $1.65 million. Back in 2022, a total of 13 of the 65 condos sold were at $1 million and above, with the three highest-priced sales coming in at $1.495 million to $1.5 million. So the highest-priced luxury condo sale in 2023 went for 33% more than the highest-priced sale in 2022, while the median sales price for the luxury condo segment in the Cape declined by 2.4%, with the number of million dollar-plus condo sales dropping by 46% year-over-year from 2022 to 2023.

As of Tuesday, Jan. 16, there were 381 active condo listings in Cape Coral through the MLS at list prices ranging from $150,000 to $3.9 million. The median condo list price is at $299,000 with a total of 232 condos, or 61% of our market, priced at $325,000 and under, including 37 units priced below $200,000. At the other end of the spectrum, a total of 45 condos are listed for sale meeting our luxury definition of $500,000 and above, including 13 units priced at $1 million and above. The number of active condo listings is up from the 362 listings from our market survey on Jan. 2, when the median list price was also at $299,000 and there were 44 condos priced at $500,000 and above including 14 units listed above $1 million. Just over one year ago on Jan. 5, 2023, there were a total of 171 condos in the Cape listed for sale through the MLS at prices ranging from $176,100 to $1.9 million and the median list price was at $320,000. Only 8 condos were listed for less than $200,000 and a total of 23 condos were on the market at $500,000 and above, including 7 units priced above $1 million.

Shifting over to pending condo sales in the Cape, as of Jan. 16, there were 50 condo units under contract with buyers in the MLS at prices ranging from $150,000 to $1.39 million, with a median pending sales price of $294,000. A total of 33 of the 50 pending condo sales, or 66% of the market, were priced at $325,000 and under, including 13 units under contract for less than $200,000. Only seven condos in the Cape were pending in our luxury market, with four units under contract from $629,000 to $699,800 and three units pending from $1.049 million to $1.39 million.

The number of pending condo sales is up from 42 on Jan. 2, when there were 4 luxury units under contract at $629,000 and above, including one unit priced above $1 million. Back on Jan. 5, 2023, there were a total of 54 Cape Coral condos under contract with buyers as pending sales, including four luxury units pending at prices from $725,000 to $2.195 million, with the other two priced at $1.55 million and $1.65 million, respectively.

Since we have already featured the highest-priced condo sale of the fourth quarter in our column back on Nov. 10, we thought we would show an example of the conflicting reports we keep coming across about the state of the real estate market. We frequently hear various real estate experts and economists discussing the “strength of the real estate market” on a national level and how the lack of inventory is supporting higher home prices. We realize there are some pockets around the country where the real estate market may be holding up, but here in Cape Coral we do not have a shortage of homes and condos listed for sale and our market has clearly softened. Locally, we have shifted from what was a booming sellers market to a much slower rising inventory buyers market, while list prices and final sales prices have generally continued to move lower.

To help illustrate some of the weaknesses we are seeing on a national level, here is an overview of a recent sale of a New York City penthouse condo. This information is from an article written by E.B. Solomont in the “Mansion” section of the Wall Street Journal on Jan. 13, 2024. In the article, Solomont notes that this 3-bedroom, with a separate media room, Manhattan penthouse condo spans the top three floors of the building with 5,500 square feet of living area. It comes complete with a landscaped rooftop and a 21-foot-long rooftop infinity pool and Jacuzzi, along with an outdoor shower, kitchen and grill.

According to Solomont, the records show that the seller invested in the project when it was built in 2011, and paid $8 million to keep the penthouse. He reportedly spent another $5 million customizing the unit, eventually renting it out for $85,000 per month in 2020 after he moved to Miami. Solomont’s article said the seller eventually listed the penthouse for sale in June of 2022 at an initial list price of $30 million and he most recently reduced the price to $20 million. It was recently sold for $18.75 million in a cash deal, which was $11.25 million or 37.5% less than the initial list price. This sale shows how much some markets have changed since June of 2022.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Jan. 16, 2024, unless otherwise noted. It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral condominiums, townhouses, and villas and it does not include any single-family homes, 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.