Geri and Bob Quinn

We continue to see reports in the financial media stating that a lack of inventory is the primary problem for a housing market struggling with lower sales. These reports also cite problems with high mortgage interest rates, and they usually throw in something about the higher costs for insurance impacting certain parts of the country.

Although many of these economists and market experts are still predicting relief in the form of much lower interest rates sometime this year, some are beginning to acknowledge that mortgage rates may remain closer to the current higher levels, which are considered “more normal” by historical standards. Basically, some experts are beginning to believe that the “era of free money” in the form of record low interest rates is over and homebuyers will need to step-up to adjust to the new normal of higher interest rates. The other side of this equation, which we have been seeing in our local market, is that our high and rapidly growing inventory of homes listed for sale combined with the end of the low interest rate “free money era,” is forcing many home sellers to lower their prices in the hopes of attracting a buyer.

To be sure, there are “pockets” around the country where a low inventory of homes is continuing to support localized real estate markets. For instance, we were in Connecticut recently and there are some popular towns there that have virtually no homes on the market. So when a home pops up for sale on the MLS, we were told it often sells in a matter of days for above the list price.

At the same time, we are constantly coming across articles from around the country reporting about slow sales and lower prices. For example, E.B. Solomont wrote an article in the March 1 edition of the Wall Street Journal about a Beverly Hills, Calif., mansion that recently sold for $30.2 million after sitting on the market for three years. This home reportedly ended up selling for 24% below its initial list price of $39.9 million.

Along this same line, as we pointed out in last week’s column, the highest-priced home listed for sale in the Cape joined a long list of sellers who have lowered their asking price at least one time in their effort to attract an offer from a buyer. In this case, they reduced their price by 8.4% from $11.9 million to $10.9 million after spending 145 days on the market unsold. Only time will tell if this $1 million price reduction will do the trick, or if they will need to make additional price cuts to get this new construction riverfront home sold.

This fits the narrative of our market that we have been pointing out now for months, which is that the number one leading daily market statistic in our Multiple Listing Service continues to be the number of price reductions being made by homeowners trying to sell their home. In a market snapshot we took this past Tuesday, the market statistics in the MLS showed that in the previous 24-hour period there had been 72 price decreases on single-family home listings in the Cape, along with 45 new listings coming onto the market, 29 new pending sales and 22 closed sales. In addition, 11 homes came back onto the market, nine listings were extended, and there were 12 price increases. Simply put, price reductions have been the dominant market statistic as the inventory of homes sitting on the market unsold has soared.

To be clear, homes are still being sold in Cape Coral and in Southwest Florida, and as we pointed out last week, the number of closed home sales recorded in Cape Coral this past February actually made it the third best month of February ever in the history of the city. But it left a lot of sellers completely frustrated as roughly 86% of the people in Cape Coral who have their homes listed for sale in the MLS failed to find a buyer last month.

According to a recent Bloomberg article written by Michael Sasso in mid-February, this problem is not just in Cape Coral. Sasso noted that, “homeowners from Sarasota south to Naples are having a tougher time selling their properties, and the buildup in inventory has caused home prices (in Southwest Florida) to fall at some of the fastest rates in the nation.” The article discussed that the high costs for insurance, among other things, is causing Southwest Florida coastal communities to lose some of their decades long, hot market, “boomtown swagger.”

One of the other “hidden” issues that is impacting the average local homeowner trying to sell their older existing home is the quietly fierce competition from the new home construction segment of our market. When we factor in the fact that some 40% of the current number of pending home sales in Cape Coral are for new construction homes, it means that the activity in our existing home segment, composed of “older” homes, is being squeezed even tighter.

In one of the endless number of daily emails we receive from various new home builders from throughout Southwest Florida, one spec home from The National Golf and Country Club at Ave Maria in Naples, built by a national builder, caught our eye. This brand new 2,395-square-foot “Estate Home” was first offered by the builder for $773,922 back on June 3, 2023, and as of Dec. 3, 2023, it was priced at $688,922. The price on this home was just reduced again to $670,922 and the builder is offering to contribute 2% or $13,418 towards a buyer’s closing costs, along with throwing in a free social membership. So in less than a year, the price on this spec home was reduced by $103,000 or 13.3%. This home is part of what is likely a massive amount of “ghost inventory” in that it is not listed in the MLS, but it is being marketed directly by the builder to the public and to Realtors via email without showing up anywhere in the market statistics for active listings, inventory, or price reductions. Our guess is that there are a lot of “ghost homes” out there.

As of Tuesday, March 12, the number of active Cape Coral single-family home listings in the MLS jumped to 2,840 from 2,775 a week ago. List prices ranged from $249,900 to $10.9 million, with the median list price continuing to hover in a tight range at $499,900. The number of active listings on the market has doubled from 1,418 homes one year ago on March 14, 2023, when the median list price in our weekly market survey was $525,000. Currently, there are 1,154 active listings in the Cape priced at $450,000 and under, which equals 40.6% of our current market, including 50 homes priced for less than $300,000.

At the other end of the price spectrum, we currently have 359 homes listed at $1 million and above. One year ago, there were 516 listings at $450,000 and under, including 19 homes priced under $300,000 with 182 homes listed at $1 million and above. A total of 883 of the current 2,840 active listings are new construction homes built in 2023 and 2024.

On Tuesday, March 12, there were 824 homes in Cape Coral that were under contract with a buyer as a pending sale, up slightly from 819 pending sales last week. Current pending sales prices are ranging from $179,900 to $2.8 million, with a median pending sales price of $419,000. One year ago on March 14, 2023, there were 872 pending sales in the pipeline ranging in price from $250,000 to $3.9 million, and the median pending sales price was $414,500. A total of 491 of the 824 currently pending sales are priced at $450,000 and under, including 37 homes priced below $300,000 to go with the 56 homes under contract at $1 million and above. Of the current 824 pending sales, 331 of them are for new construction homes. Back on March 14, 2023, a total of 538 of the 872 pending sales in the Cape were priced at $450,000 and under, including 34 homes priced below $300,000 with a total of 52 homes priced at $1 million and above.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of March 12, 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 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 Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.