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Price trend in sailboat access homes may be shifting

October 26, 2018
By BOB & GERI QUINN - Homing In , Cape Coral Daily Breeze

As the year-long water quality issues involving toxic algae, red tide and other nasty stuff, along large sections of both east and west coastal Florida, has reportedly come to an end, we may be seeing the first signs of its impact on our real estate market. Now that people have started to return to Southwest Florida's beaches, and based in part on a recent media report about the economic impact on Sanibel due to the water woes, we may be beginning to see what could be the longer-term effect on our prime waterfront real estate markets.

In this column over the summer months, we said we had yet to see anything in the real estate numbers in Cape Coral that indicated any kind of a decline in our market due to the water quality issues, but it was something we were monitoring closely. For the most part, we had growing anecdotal evidence that this was likely a festering problem underneath the surface of our market with the potential to grow into a lingering problem, as we heard reports from various agents that they had at least some buyers decide to hold up on canal home purchases. At the same time, we have also had other serious buyers who have not been fazed by the water issues and continue to move forward with purchasing gulf access homes.

In another case, a long-time friend from Massachusetts told us a relative of his recently sold their gulf access home in Naples because of the "nasty" water, but they bought another home in a Naples area golf course community. He was quick to remind us about the winter of 1978, which was our last winter as residents in the Northeast, and said don't forget that cold, dismal winters, blizzards and high taxes still make Florida a better choice for a lot of people.

Getting back to our real estate market, we may have seen the first shot across the bow that is likely related to the water quality issues in the September numbers for the Cape Coral sailboat access canal home segment of our market. But before we get deeper into those numbers, we want to provide some background about interpreting real estate market statistics and trying to identify possible changes in market trends for home prices.

One of the trickiest aspects about tracking the trends in home prices, and trying to identify a shift in those trends, is the fact that the real estate market is an opaque market where there is no "real time" pricing data available. There is not even a daily or weekly market recap available that compiles current sales prices, in large part because of the lengthy process involved with real estate transactions. When we compare this to the instant pricing data of the U.S. stock markets, it reinforces the fact we are left with a much more inefficient monthly reporting process on the sale of a home, which is also subject to being revised after the initial monthly reports are published. When these inefficiencies are combined with the lengthy transaction process on the sale of a home, there is a lot of lag time built into the numbers. To put this into plain English, we try to be really careful about flagging a potential shift in the market trends on home prices, because what we are seeing in the September numbers may have already changed, for better or for worse, because of the lag time in the reporting process. Here is what we saw in the numbers, which raised a caution flag in our minds.

Sailboat access canal homes

The biggest change occurred with the median sales price for Cape Coral sailboat access canal homes, where a 20-month price trend was violated. This could be an early indication of further price weakness to come in this property segment, and we will likely have a clearer picture of this situation over the next several months. At this point, it could just be a one time blip in the numbers, but based on some of the anecdotal evidence we mentioned above, this break in the price trend could result in anything from stagnant prices to a deterioration in prices over time.

The price trend that was violated involved 20-consecutive months, dating back to January 2017, where the median sales price for Cape Coral sailboat access canal homes came in at $400,000 or more in each month of the year. This was the first time this had happened since back in 2006, so this was a fairly significant price trend. This September, the median sales price came in at $387,450 or 22.28 percent below the $498,500 recorded in September 2017, and 14.85 percent less than the $455,000 in August of this year.

In addition, the median sales price for sailboat access canal homes averaged $429,150 per month in the third quarter of this year, which was 3.45 percent lower than the $444,500 per month average in the third quarter of 2017, and down a fraction from the average of $431,333 per month in the second quarter of this year. Year-to-date, through Sept. 30, the median sales price in sailboat access homes has averaged $441,000 per month in 2018, which is up a fraction compared to the average $440,106 over the first nine months of 2017. These numbers could make the break below $400,000 in September more significant.

As far as the number of closed sales in the sailboat access canal home segment, this September had the fewest number of sales so far this year, at 26. Normally, we would look for some seasonal weakness at this time of year, but the 26 homes sold was the same as last September's decline to 26 due to Hurricane Irma. The number of closed sales was also down 8.82 percent to 93 total sales in the third quarter of this year, versus 102 sales in the third quarter of 2017, and down over 40 percent compared to the 156 closed sales in the second-quarter of this year.

When we combine this weakness in sailboat access home sales with the violation of the 20-month price trend, a line from a Buffalo Springfield song written by Stephen Stills years ago comes to mind. "There's something happening here. What it is ain't exactly clear," but we expect that any shifts in price trends are likely to become clear in the next few months.

(The September and third quarter of 2018 sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, FL, as of Oct. 19, 2018. It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral single-family homes, not including 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 the RE/MAX Realty Team office in Cape Coral. They have lived in Cape Coral for over 39 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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