Last week we discussed the first two parts of the three-part story about the current overall theme to the Cape Coral single-family home market. We will wrap up the story this week with part-three, which involves the months of inventory, or what we refer to as the monthly supply of unsold homes available for sale on the market. As we examine the different segments within our single-family home market, "A Tale of Two Cities" emerges from the numbers.
"It was the best of times, it was the worst of times." Median sales prices have continued to grind higher in Cape Coral, but the number of homes sold has been in a steady decline since the 2nd quarter of 2016. The price action seems to be that of a more rational market, building what is likely to be a more stable foundation for steadily higher prices, but most buyers watch for price reductions and wait for a more reasonably priced home to come onto the market.
"It was the spring of hope, it was the winter of despair." Even more sellers are listing their homes for sale, trying to take advantage of the rising prices, hoping to have their home sold by springtime. But in our winter months, for many, despair will set in, as the inventory rises.
"It was the age of wisdom, it was the age of foolishness." Some sellers will realize they are now in stiff competition with other sellers to attract a buyer, and they will successfully adjust to the reality of the market. Many others will most likely remain on the list of unsold homes.
In the overall Cape Coral single-family home market, the supply of unsold homes available for sale climbed to 9 months in January, which was a 50 percent increase from December 2016, when the supply was only 6 months. However, not to be alarmed, this January simply matched the 9-month supply of unsold homes posted both in January of 2016, and 2015.
Looking back at 2016, for the year, the monthly supply of unsold homes averaged 6.33 months, which was similar to 2015, when the supply averaged 6 months, so we are most likely experiencing a "seasonal trend" with a rising monthly supply of unsold homes in the 1st quarter of the year. Also, as our market has stabilized over the last three years, with far fewer distressed sales and steadily rising median sales prices, more homeowners are now able to sell their homes without taking a loss, which contributes to the rising inventory.
With a tip of the cap to Charles Dickens, here is the breakdown by specific property types in Cape Coral, where our "Tale of Two Cities" theme comes into play.
Gulf access canal homes:
We have seen a move more deeply into a buyer's market in the gulf access single-family canal home segment, as the monthly supply of unsold homes ramped up to 15 months in January. This was an increase of 50 percent from the 10 months supply in December, and an increase of 39.5 percent above the average supply of 10.75 months for the entire year in 2016. It was only 15.38 percent higher than January 2016, when the supply was 13 months. The highest supply of gulf access canal homes has occurred during 1st quarter since January 2014.
Sailboat access canal homes:
In January, the monthly supply of unsold sailboat access canal homes in Cape Coral, also increased to 15 months, which was 36.36 percent higher than in December, when the supply was 11 months. It was also 20.77 percent higher than the average supply of 12.42 months throughout the year in 2016, but it was down 6.25 percent from January 2016, when the supply of unsold homes was 16 months. For sailboat access homes, the 4th quarter 2016, had the highest monthly average supply for the year at 14 months, with the peak of 19 months in November.
This segment of our market is firmly in a buyer's market, meaning sellers are having to compete against each other to attract a buyer, and may find they have to start making more concessions to buyers to get their home sold.
Freshwater canal homes:
The monthly supply of unsold Cape Coral freshwater canal homes, was 10 months in January, which was 25 percent higher than a year ago, in January 2016, when the supply was 8 months. This January was 42.86 percent higher than the unsold supply of 7 months in December 2016. The average monthly supply for the entire year of 2016, was also 7 months. Over the last three years, the peak inventory for freshwater homes has been in the 1st quarter of the year. This segment is in a neutral market, but it is beginning to border on becoming a buyer's market, likely due to a combination of seasonal influences and a rising median sales price.
Cape Coral single-family dry-lot (non-canal) homes have the lowest monthly supply of unsold homes out of the different property-types we measure, reaching 7 months in January. This was equal to the 7 months supply in January 2016, but 40 percent higher than in December, when the supply was at 5 months. For all of last year, the supply of unsold dry-lot homes in Cape Coral averaged only 5 months, which meant this segment was in a seller's market. If the current move above 5 months of inventory holds, dry-lot homes will be in a neutral market, with no advantage to a buyer or a seller when negotiating price, terms, or concessions.
So the different market segments in Cape Coral have become "A Tale of Two Cities," in that there is a direct correlation between median sales prices and the level of the monthly supply of unsold homes on the market. Homes in the typically higher priced gulf and sailboat access canal homes, with median sales prices well above the average for a home in Cape Coral, are in a buyer's market with much higher inventories of unsold homes.
While dry-lot and freshwater canal homes, which are much more likely to be priced well within the most popular price range with buyers, have much lower, albeit rising inventories of unsold homes available for sale, in the Cape, roughly 79 percent of all homes sold are currently priced under $300,000 and the level of supply for homes above and below this dollar amount are clearly reflected in our current market, especially as prices continue to grind higher.
(The January 2017, sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, FL, as of February 18, 2017, and it was compiled by Bob and Geri Quinn. It includes information specifically for Cape Coral Single Family Homes, and does not include Condominiums, Foreclosures, or Short Sales. 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 Century 21 Birchwood Realty Inc., in Cape Coral. They have lived in Cape Coral for over 37 years. Geri has been a full-time Realtor since 2005, and Bob, who also holds a Certified Financial Planner designation, joined Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.)