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Despite national trends, real estate stays local in nature

March 15, 2019
By BOB & GERI QUINN - Homing In , Cape Coral Daily Breeze

Recent national media reports are indicating that the housing market is expected to be more favorable to homebuyers across the country in 2019, especially in what were some of the hottest markets in the U.S., where home prices have been escalating at a frenzied pace over the past several years. These hot markets have tended to be in major cities and metro areas, such as Seattle, San Francisco and Boston, to name a few, where it had become normal for multiple buyers to quickly swarm newly listed homes and drive the asking prices higher in bidding wars. This market dynamic was as much driven by an oversupply of people moving to many of these areas of the country for high paying technology jobs, as it was by a limited supply of homes listed for sale in these markets.

This hot market dynamic allowed sellers in these areas of the country to cash in on the buying frenzy by doing little more than just putting their home up for sale, and then just sitting back comfortably in control, waiting for the competition for their homes to begin. This was the perfect irrational storm of having too many highly-qualified buyers to choose from and not enough homes available for them to buy, providing these sellers with the perfect opportunity to escape the high taxes and rising costs of living in these cities and states.

But the tide seems to be shifting in these hot markets, from the irrational multiple-buyers in a bidding war for virtually any home that goes up for sale, to a market where sellers are now struggling a bit to attract a single buyer. This shift is likely due to multiple factors, including rising mortgage rates last year, and the resulting affordability issues in a buy at any price market, along with the limited deductibility for state and local taxes in the new federal tax law. The market shifts in these once red hot markets are generally being defined as a situation that is "more favorable to buyers," but not necessarily a shift into a buyers market.

These hot markets are also the ones that have most likely spawned the P.T. Barnum-like national television commercials touting the online real estate service companies that will help someone who is interested in selling their home to, "screen through thousands of real estate agents in your area to help you find the one who is the most qualified to sell your home." This statement is followed by a customer testimonial along the lines of, "This service helped us find real estate agent Alex, and he got our home sold in only two days, and for $50,000 over our asking price!" These people probably lived in Seattle, or in one of the other hot bidding war markets around the country, but in our current local market these ads should be flashing warning signs stating, "If it sounds too good to be true, it probably is," because this type of scenario is not happening in Cape Coral.

This brings us to our takeaway from all of this, which is that for the most part, real estate tends to be very local in nature. Yes, there can be some larger outside influences on our local market, such as the up and down movements with interest rates, or if there is a widespread slowdown in home sales up north, which is delaying people from buying homes here. But for the most part, it comes down to being able to properly analyze the local market, which is the main reason why we stress the importance of breaking down the Cape Coral real estate market into separate property segments in order to more accurately reflect the activity and pricing of the unique markets within our market.

As we have noted numerous times in this column over the past several years, unlike the hot markets mentioned above, our market has been punctuated by a continued oversupply of overpriced homes sitting on the market unsold and a limited supply of reasonably-priced homes. When a home is initially listed for sale in our market, if it is reasonably-priced and move-in ready, it is almost always sold within days or weeks of coming onto the market, especially if the home is priced from about $325,000 or less. We have a lot of interested buyers looking for homes in our market, but they remain patiently rational and willing to wait for the right home, priced correctly to the current market.

In single-family homes in February, we were seeing some of the expected improvements in the numbers, but they were still mostly weaker than a year ago. For example, the monthly supply of unsold single-family sailboat access canal homes declined from 17 months in January, to 10 months of unsold supply in February, for a two-month average of 13.5 months. This is a 22.73 percent increase in the unsold supply of sailboat access homes in 2019, compared to the first two months of 2018, which averaged 11 months of unsold supply.

The supply of unsold single-family Gulf access canal homes was similar to the sailboat access home segment, with February coming in at 11 months, down from 17 months in January, but the two-month average of 14 months of unsold supply was 12 percent above the average of 12.5 months of unsold supply over the first two months of 2018.

The monthly supply of unsold Cape Coral single-family freshwater canal homes also declined, dropping from 12 months in January, to 10 months in February. But, with a two-month average of 11 months of unsold supply so far in 2019, this segment remains elevated compared to last year, increasing 37.5 percent from the average of 8 months of unsold supply over the first two months of 2018.

The 8 months of unsold supply this February in single-family dry lot home segment matched the 8 months of supply from February of 2018, and it also declined from 10 months of unsold supply in January of this year. However, the two-month average of 9 months of unsold supply so far in 2019, is 28.57 percent above the average of 7 months of unsold supply over the first two months of 2018.

Overall, we remain in a buyer's market with the critical peak seasonal months of March through June right on top of us.

(The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of March 11, 2019. It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral single-family homes, and does not include condominiums, short sales or foreclosures. 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 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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