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The markets within the market for Cape condo supply

May 12, 2017
By BOB and GERI QUINN - Homing In , Cape Coral Daily Breeze

This week we will finish our first quarter of 2017 review of the Cape Coral condominium market by looking at the monthly supply of unsold condos, which provides us with a snapshot of the amount of condo inventory available for sale on the market.

When there is a lower amount of supply, it indicates we are in more of a seller's market, meaning buyers are competing with other buyers over a smaller number of condos listed for sale. This tends to shift the advantage to the seller when it comes to negotiating the price and terms of the sale. And when the supply of unsold condos is higher, it becomes more of a buyer's market, meaning sellers are competing against other sellers to try to attract a potential buyer to their home. Having a larger supply tends to shift the negotiating advantage to the buyer, which may force sellers to offer larger price reductions, concessions and incentives to a buyer, to get their home sold.

Although there are several acceptable variations to this, it is generally considered to be a seller's market when the monthly supply of unsold condos available for sale is between zero and five months, and a buyer's market when the unsold supply reaches 11 months or more. A balanced, or neutral market would occur when the unsold supply is between six to 10 months.

In the overall Cape Coral condo market, the monthly supply of unsold condos available for sale has remained in a fairly tight neutral market range since the first quarter of 2011. In this time frame, the quarterly supply has dipped lower into a seller's market in only five out of the last 25 quarters, and the last time we were in a buyer's market was in the fourth quarter of 2010, when the average monthly condo supply was at 12.33 months.

So far in 2017, the monthly supply of unsold condos in the overall Cape Coral market, was at 9 months in January and 8 months in February, before dropping to 5 months in March. The average first quarter of 2017 supply of condos was up about 10 percent, to 7.33 months versus 6.67 months in the first quarter of 2016, but it was down slightly from the 7.67 months supply in the fourth quarter of 2016. This March, with 5 months of supply, was 16.67 percent lower than the 6 months of supply in March 2016.

As we look at the unsold supply of Cape Coral condos by separate property segments, you will see the distinct markets within the the market, as shown below.

Gulf access canal condos

The supply of unsold gulf access condos in Cape Coral moved from a neutral market in 2016, to a buyer's market in early 2017, after posting 14 months of supply in January and 11 months of supply in February. In March, the supply dropped to 6 months, which was 45.45 percent lower than in February, and 14.3 percent below the seven months supply in March 2016.

This brought the first quarter 2017 supply of gulf access condos to 10.33 months, which was almost 41 percent higher than the 7.33 months supply in the first quarter of 2016, and 14.78 percent above the nine months supply in the fourth quarter of 2016.

The January supply of gulf access condos was the highest since 2011, when it was at 16 months, and the first quarter supply was the highest since 2010, when it was 11.67 months.

Sailboat access canal condos

The supply of unsold sailboat access condos in Cape Coral moved from the upper end of the neutral market range in 2016, when it averaged 10.5 months of supply, to a buyer's market in early 2017, when the January supply spiked to 30 months. In February, the supply of unsold sailboat access condos dropped sharply, to 12 months, before settling even lower to 8 months of supply in March. These wild swings brought the average first quarter of 2017 unsold supply in this segment to 16.67 months, or firmly into the buyer's market category.

The eight months of supply in March, was 20 percent lower than the 10 months of supply in March 2016, and 33.33 percent below the 12 months supply in February of this year. In the first quarter of 2017, the average supply of unsold sailboat access condos of 16.67 months, was 92.3 percent higher than the 8.67 months of supply in the first quarter of 2016, and 56.23 percent above the 10.67 months supply in the fourth quarter of 2016.

This was the highest January supply of sailboat access canal condos since 2009, when it was at 28 months, and it was also the highest first quarter supply since 2009, when it was at 23.67 months.

Dry lot condos

The supply of unsold dry lot (non-canal) condos in Cape Coral was at the complete opposite end of the spectrum compared to gulf and sailboat access canal condos, as it remained the most stable, supply-wise, of the condo market segments. For the better part of the last four-plus years, dry lot condos have been pretty much locked into the upper end of the seller's market range (meaning a lower supply), while occasionally drifting and shifting, moving a bit higher in supply and into the lower end of the neutral market range.

Both January and February of this year each had six months of supply, before the supply of unsold dry lot condos dropped by 50 percent in March, to only three months of supply, which was the lowest single monthly supply total since hitting three months back in August 2013. This March was also 40 percent lower than the five months supply a year ago, in March 2016.

The first quarter of 2017, with an average supply of five months, was 28.57 percent below the average of seven months in the first quarter 2016, and 16.67 percent lower than the average of six months of supply in the fourth quarter 2016. The first first quarter of this year also had the lowest quarterly supply since the fourth quarter of 2015, when it also averaged 5 months.

(The March 31, 2017, monthly and quarterly sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, as of April 28, 2017, and it was compiled by Bob and Geri Quinn. It includes information specifically for Cape Coral low-rise, mid-rise, and high-rise condominiums, along with attached and detached villas, and townhouses. It does not include single-family homes, 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 with Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.)

 
 
 

 

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