The rental market in Cape Coral, Fort Myers, Naples, Lee County and Collier counties are in a challenging time without and end in sight. Due to immigration laws, over building of single-family homes and large apartment complexes, rising interest rates, and slower home sales the market has been flooded with inventory for annual rentals. The rise in inventory has created more competition and a reduction in rental prices which is great for the renters but creates a challenging environment for real estate investors. Couple decreasing rental prices with dramatically rising insurance prices and property taxes and you may have a receipt for disaster.
3 years ago, there were only 9 single family houses for rent in Cape Coral and today there are over 400. Of those 400 houses 100 of them, 25% were built between 2022 – 2024. A good portion of these newer homes were built by speculative builders that were “building to rent” or were building to sell and cash in on the quickly appreciating real estate market of 2021 and 2022. Unfortunately, the timeline to build carried on past the hot market and these spec builders were forced to make decision between selling for a loss or renting in hopes that a better sales market would arrive in the near future. The far majority decided to rent and wait it out.
With a slowdown in the sales market the inventory of homes for sales has bottle necked. This has dramatically decreased pricing and increased the time it takes to sell for the average homeowner. Similarly, the spec builders that were unable to sell at an acceptable price, some of these homeowners have decided to also wait the market out by turning to annual rentals. Thus, increasing rental inventory and causing rental prices to decrease.
There are hopes that with the election of the presidency that the markets fear of uncertainty will die down and home sales will begin to rise.
The cure is for increase in sales of the units of single-family homes. When that happens, it should reduce inventory and reduce the days on the market. Thus enticing rental owners to switch their annual rentals to vacant properties for sale. This is a long process as most leases a signed for a 12-month period.
Although we do not have a crystal ball most real estate professionals feel that with a change in presidential leadership there will be a reduction in interest rates which should spur an increase in home sales. But, even if this is the case, the earliest that we would feel the impact would be 12 – 18 months after the decrease in interest rates. So, prepare for a long ride.