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Homing In | Cape’s first quarter 2024 luxury home sales up from last year

By GERI and BOB QUINN - Homing In | Apr 18, 2024

Geri and Bob Quinn

It is time once again for our quarterly tip of the hat to the late, great Robin Leach, and our Cape Coral version of “Lifestyles of the Rich and Famous,” as we review the first quarter sales results of our luxury home segment. For our purposes, our luxury market in the Cape includes homes selling for $1 million and above.

Overall, the Cape’s luxury single-family home market posted solid first quarter results this year with a total of 71 closed sales, including 17 sales in January, 26 sales in February and 28 closed sales in March. The 71 sales were an increase of 14.5% over the 62 luxury home sales closed during the first quarter of 2023, when our market was still bouncing back from Hurricane Ian.

By comparison, in the first quarter of 2022, there were 115 luxury home sales as the post-COVID real estate boom was unknowingly approaching its peak. The 2022 numbers blew away the 44 closed luxury home sales from the first quarter of 2021 by a whopping 161%. For the record, back in 2020 there were only 12 first quarter sales in the Cape’s luxury home segment, as the first phase of the COVID shutdowns kicked in during mid-March of that year, highlighted locally when Major League Baseball called an abrupt end to spring training games and put their regular season on hold.

The highest priced single-family home sale in Cape Coral during the first quarter of this year closed for $3.42 million on Jan. 24, and there were two sales of $3.1 million and $3.3 million this past February. The top home sale in the Cape this March was for $2.55 million. One year ago, in the first quarter of 2023, the highest-priced home sale was on Jan. 10, at $3.25 million, and the top sale back in the first quarter of 2022 was at $4.3 million.

Looking ahead based on the current number of pending home sales in the pipeline, we appear to be on track with the historical market trends where the peak in closed sales for the year is reached in the second quarter before softening in the third and fourth quarters. As of Tuesday, April 16, there were a total 863 pending home sales through the MLS in the Cape ranging in price from $225,000 to $3.799 million, including 61 homes under contract with buyers at $1 million and above. The current median pend ing sales price has drifted lower to $407,170 from $419,000 two weeks ago. One year ago on April 11, 2023, there were 915 total pending home sales in the Cape ranging in price from $175,000 to $3.9 million, with 48 of these homes under contract at $1 million and above. Two years ago on April 12, 2022, there were 1,024 single-family homes in the Cape under contract with buyers as pending sales, with 83 of these homes under contract at $1 million and above.

Briefly, as of this past Tuesday, April 16, there were 2,827 active listings in the MLS for Cape Coral single-family homes, which includes 350 luxury homes listed at $1 million and above. The current median list price is at $499,900 and 1,138 homes, or 40.3% of the active listings, are at $450,000 and under. About one year ago on April 11, 2023, there were a total of 1,461 active listings through a Realtor for single-family homes in the Cape with a median list price of $534,900 and 208 of these listings were priced at $1 million and above Going back two years to April 12, 2022, there were a total of 519 active listings in the MLS for Cape Coral single-family homes, at a time when most homes went under contract with a buyer in a matter of days. Only 95 of those 519 listings were priced at $1 million and above, and the peak median list price based on our weekly market surveys hit $610,000 on April 19, 2022.

Going back to the highest-priced home sale in the first quarter, this home is located on an oversized pie-shaped lot on intersecting indirect gulf access canals south of Cape Coral Parkway and in between Agualinda and Sands boulevards in the Southwest Cape. Built in 2018, this two-story home features 4,522 square feet of living area with six or more bedrooms, including four master suites and six bathrooms. It has an insulated 38-foot RV garage and space for up to six cars and an RV. Out back, there is a gorgeous infinity edge pool with a spa and shallow water sundeck surrounded by palm trees, a high-end outdoor kitchen, and a 13,000-pound boat lift. There is also an office/in-law quarters with a separate entrance and too many other features to include here.

The seller was an LLC that bought this home for $3.5 million post-Hurricane Ian on Oct. 29, 2022. According to the records the prior owner purchased this home for $2.75 million in February 2021. The LLC put this home back on the market for $3.5 million on Oct. 7, 2023, and the home went under contract with the buyer on Dec. 15, before closing on Jan. 24 of this year for $3.42 million with a conventional loan in a turnkey deal. This helps illustrate the shift we have seen in our market in that the LLC listed the home for the same amount as their purchase price in October 2022. Granted, the LLC used this home as a vacation rental, so they did generate cash flow on the property, but how many people would list a home for sale at the same price they bought it for a year earlier?

At the same time, they were carrying homeowners and flood insurance, along with paying the 2023 property taxes of $38,732 and the estimated seller costs related to their sale of this home for real estate commissions, doc stamps and title insurance, etc., was likely another expense of around $200,000 give or take a bit.

This brings us back to our recent conversations about the lawsuit settlement by the National Association of Realtors and real estate commissions. When we pulled up the Realtor Report for this home in the Multiple Listing Service we could see that the seller had agreed to pay cooperative compensation of 2.5% to the buyer’s brokerage. We are unable to see what the seller agreed to pay to the listing brokerage for the sale, but for the sake of argument, let’s say the listing brokerage was also paid 2.5% for a total commission of 5% paid by the seller. This is all negotiable upfront when the listing agreement is signed between the seller and the listing brokerage, so the total commission amount could have been more or less than 5%.

When we “dollarize” this transaction, 5% of the $3.42 million sales price comes to a commission totaling $171,000 paid by the seller, with the listing brokerage agreeing to compensate the buyer’s brokerage with $85,500 of that amount. Worth it? Maybe so. Under the terms of the NAR’s recent lawsuit settlement, in the future the buyer may have to pay all or part of their side of the commission amount directly out of their own pocket and the seller will be given the choice of whether they want to pay anything towards the buyer’s agent’s commission. Had the buyer of this home gone directly through the listing Realtor and not used a separate “buyers agent” to represent their interests, the listing brokerage would have received the full $171,000 commission agreed to by the seller. This is known in Realtor lingo as getting “both sides” of the deal. Still worth it? Getting “both sides” of a deal is legal in Florida (and elsewhere) and most Realtors in our market work that way.

Is it right and ethical? Is any Realtor’s service or “value proposition” really worth paying twice as much for? A lot of Realtors certainly seem to think so. A smaller group of Realtors offer built-in commission discounts to the seller when listing their home to cover situations when a buyer is not represented by another Realtor. This can result in huge savings to both the seller and the buyer.

We tend to think the NAR settlement will ultimately lead to lower commissions for consumers, however, this seems to be a minority view within the industry at this point.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of April 16, 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 with Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.