homepage logo

Homing In | Part two: Perfect storm? Or what a return to normal feels like?

By GERI and BOB QUINN - Homing In | May 16, 2024

Geri and Bob Quinn

Last week we discussed the recent local television news report about our real estate market that pointed out there were a large number of homes for sale in Cape Coral, along with noting there were a lot of open house signs everywhere on the weekends. This report accurately said it was taking a lot longer for most people to get their homes sold and that it might require sellers to make price reductions in the hopes of attracting a buyer. They went on to say Cape Coral has become a buyers market at this point and that our market was in a “Perfect Storm.” We questioned whether we were suffering through a “perfect storm,” or if it was more of a return to what a normal market actually feels like? Let’s take a closer look.

Perfect storms tend to be wild, dramatic, one of a kind events that are formed by an unusually powerful combination of multiple things that occur at the same time creating a critical situation that is often viewed as disastrous. Although perfect storms are normally considered to be negative events, technically they can also be wildly positive events and our market has seen both sides of this coin over the past 20 years. As we mentioned last week, we can understand why some sellers who have been unable to attract a buyer to their home while making price reductions to levels that are below what they want, or need, to sell their home for, may feel like this is a perfect storm. However, the current market is far from wild or disastrous, and it is much more like a return to the “normal” pre-COVID market conditions that we saw back in 2018 and 2019.

To this point, on June 28, 2019, our headline read, “Higher supply of homes creates a ‘Bob Barker’ market,” noting sellers faced a “truth or consequences” moment in the then rapidly expanding Internet age of real estate information. We said that no amount of marketing was capable of overcoming an overpriced home as buyers were just a few quick clicks away from being well-informed about home values in our local market. We also noted that there was “an audience full of excited and qualified people wanting to come on down and buy a home in Cape Coral, but they will only make their move when the price is right.”

Simply put, we are back to that kind of a market today, albeit at substantially higher home prices and with substantially higher interest rates. As a seller, right now you could hold an open house every day of the week and hire a Realtor claiming to have the best super duper marketing system in the world to sell your home, but until you get the price right to the current market, your home will sit there unsold. Period. In this type of market, price fixes everything. Just ask the 868 sellers with their homes under contract with buyers right now what they had to do.

Next, let’s look at an infamous perfect storm. Back in January 2006, the median sales price in our overall single-family home market hit its peak at $285,450. At that time, we were in a house flippers dream market with “investors” mortgaging everything to the hilt that had anything to do with Southwest Florida real estate. It was common for a spec home in Cape Coral to be flipped multiple times between multiple investors from the time the first person bought the vacant lot, to when they broke ground and completed building the home. It was total insanity with estimates that upwards of 40% of all homes being built in Cape Coral were spec homes that never had an end user actually moving into the home.

When the music stopped, it turned out that the more fortunate speculators were the ones who funded their purchases with multiple mortgages, because they could just walk away and leave the mess for their lender to clean up through a foreclosure or short sale. The unfortunate people were the ones who invested cash into this speculative game of musical chairs, because their losses were with their own real dollars, which could not be dumped off onto a lender.

In a snapshot, by September 2006, median home prices in our overall Cape Coral single-family home market had fallen by a mere 13% to $248,300. Then everyone, including investors, home builders, Realtors and mortgage brokers, were lulled into a false sense of security when median sales prices climbed back up to $278,700 by April 2007, in what was a prelude to the looming Great Recession and the total collapse of our housing market. By November 2007, median sales prices for single-family homes in the Cape had dropped to $190,000. This cascading bear market pattern of lower highs and lower lows continued until the bottom was reached in October 2010 with median home sales prices in the Cape collapsing to $115,000 for a top to bottom price plunge of 59.7% from the January 2006 high. In 2011, our market slowly changed to a more bullish price pattern of higher highs and higher lows as Cape Coral was “rediscovered” again as a great value by buyers from all over the world. Home prices eventually broke back above the January 2006 peak in August 2020 when median sales prices reached $286,500. That is what a perfect storm feels like.

Next week we will get into the details of our other perfect storm and discuss more about where our current market fits in historically, along with what may lie ahead for our market in the next 6-12 months.

Based on our live market snapshot taken from the MLS Tuesday, May 14, the number of active listings for Cape Coral single-family homes eased back to 2,760 homes on the market versus 2,791 homes a week ago. List prices are ranging from $244,900 to $7.7 million, not counting the one outlier at $110,000 for a prepped lot with materials, including spec home plans and permits. The current median list price is at $499,000 and it has mostly remained in a tight range on either side of $500,000 so far in 2024.

There are currently 1,139 homes in the Cape listed at $450,000 and under, with 44 of these listings priced below $300,000. At the other end of the price spectrum, on May 14, there were 326 luxury homes on the market in the Cape at $1 million and above. One year ago on May 16, 2023, there were a total of 1,570 active home listings in the Cape and the median list price was at $538,000. Back then there were 553 Cape Coral homes listed for sale at $450,000 and under, including only 16 homes priced below $300,000 to go with the 224 homes listed at $1 million and above.

As of May 14, there were 868 single-family homes in the Cape under contract with buyers as pending sales, up from 843 pending sales one week ago, and down slightly from the 881 pending home sales in the pipeline one year ago on May 16, 2023. The current price range for pending sales is from $199,900 to $3.799 million, with the median pending home sales price coming in at $399,900. A total of 562 of the 868 pending sales were priced at $450,000 and under, equaling 64.7% of our market, including 52 homes below $300,000. We currently have 52 Cape Coral home sales pending at $1 million and above. Coincidentally, one year ago there were also 562 homes pending at $450,000 and under, but with only 26 homes priced below $300,000 to go with the 36 home sales pending at $1 million and above. The median pending home sales price was $405,000 a year ago, keeping us stuck in a tight range for the past year that is more indicative of a difficult market rather than a perfect storm.

The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of May 14, 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.