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Market Update February 2024
Last year, as I saw the potential for market conditions to change I sent out a couple of market updates to keep our owners informed. In those I had covered my concerns about the market with the overall theme being that there was a storm coming. Although, I felt that we needed more information, I also felt that there were enough signs that the housing and rental market were declining. Below is information validating those concerns. Since the majority of our portfolio is in Cape Coral and Ft Myers the information provided will revolve around those 2 cities.
Single Family Sales
Overall, we are in a buyers’ market from N. Ft. Myers down to Naples. The only exception that I have seen is in Lehigh which is at equilibrium. Both CC and FM have seen exponential increases in inventory – almost doubling 80% and 90% (this converts to 10+ months and 7+ months of inventory), days on market 70% and 160%, and new listings 62% and 24%. They have also seen a huge decrease in closed sales -10% and -14%. Overall, at the moment Ft. Myers is much better off than Cape Coral. According to the data, Cape Coral is in for a wild ride and I advise bracing for impact. As you drive around the city it is evident that the SFH and multifamily builders are not showing any signs of slowing.
The data for rentals is not as readily available as it is for sales, so, we are using some official data and some of our knowledge in the local market. Over the past 8 months we have seen an increase in inventory and days vacant. We have also seen a decrease in rental pricing of about $100 per unit (in CC, Ft Myers has stayed fairly steady). The rental inventory has more than doubled in CC and almost tripled in FM since Oct of 2022 - see above charts. But, over the past 3 months we might have peaked and we have even saw a slight decline in inventory. As for pricing, we have seen the same units in the same buildings decrease in rental price by $100 (in CC) but we have also seen a stabilization of pricing over the last 3 months. The current rental market is nowhere near as dire as the sales market.
Cape Coral - Over the past 1 – 2 months we have had many SFH and Condo sellers reach out to us in a bit of a panic about their house not being sold. They are asking us to help them sell and/or convert them into a rental. ALL of these homeowners have been in Cape Coral. We are starting to see panic selling and homeowners trying to find alternatives to selling. I believe that this trend is going to continue for 6 – 18 months. This may reduce rental prices further but it is hard to say by how much. As we all know, real estate is slow to react, so, even if interest rates drop and the presidency goes in favor of a real estate centric President it will still take some time for the market to reverse its trend. Personally, I am gearing up to buy as many as many SFH’s as I can over the next few months.
Ft. Myers is much more stable than CC because there isn’t as much overbuilding happening. My hunch is that Ft. Myers will decline at a much slower rate and fully stabilize sooner than CC.
In conclusion, the current market is not a good market to sell but it is becoming great for buyers. The rental market is showing signs of stabilization or slight decline. The near future is often cloudy but the distant future is always clear for those who look that far. The successful investor understands that this is not a game of weeks and months but a game of years and decades. Over the next 5 – 10 years, real estate in SWFL will increase in price for sales and rents.
Please feel free to reach out to me with any questions.