Sign In | Create an Account | Welcome, . My Account | Logout | Subscribe | Submit News | Staff Contacts | Home RSS
 
 
 

Will lower home supply levels lead to higher prices?

September 27, 2019
By BOB & GERI QUINN - Homing In , Cape Coral Daily Breeze

The monthly supply of unsold homes available for sale on the market in Cape Coral during August continued to tighten. This inventory shrinkage is leading to a theory that seems to be floating around out there in our market, that this reduction in supply is likely to lead to higher home prices in the coming months. This thought process is a seemingly obvious, one plus one equals two formula, where a lower supply, plus a continued high demand for homes in the Cape, should automatically equal higher prices. Although we do not wish to be branded as "math deniers," we tend to think our market is a bit more complex than this simple formula because of what we are actually seeing on the ground with both buyers and sellers.

Simply put, buyers are remaining very rational in what they are willing to pay for a home, and for the most part, they get the fact that they have to react quickly with a competitive offer when a reasonably-priced home comes on the market. We are seeing out-of-town buyers make several trips to the Cape to look at homes and to get educated about our market, to the point that they are comfortable enough to ultimately buy a home sight unseen after we run the numbers on it and go out to preview it for them. Price it right, and it sells quickly.

On the seller's side, we have been dealing with a very tight supply of reasonably-priced homes, combined with an oversupply of overpriced homes for several years, so despite the recent shift to lower inventory levels, nothing has really changed. This year, we have also noticed a surprising number of homes selling for amounts below what the pricing data suggests. Add in the fact that we are approaching the time of year when we have a seasonal influx of homes coming onto the market, and we tend to think that we may see higher list prices, but we are not so sure this will translate into a large enough increase in actual closed sales prices to matter that much in the coming months. Over-price it, and it will not sell.

In the overall Cape Coral single-family home market, the monthly supply of unsold homes came in at 5 months in August, which was even with the 5 months of unsold supply registered in both August 2018, and in July of this year. Through the first eight months of 2019, the level of unsold supply in the overall Cape single-family home market has averaged 6.63 months, or 10.5 percent above the average of 6 months during the first eight months of last year. After beginning this year in a buyer's market with an unsold supply level of 11 months in January, and 9 months in February, our overall single-family home market has averaged only 5.5 months of unsold supply in the past six months. Based on this lower supply of unsold homes since March of this year, the current market really feels like it is in more of a lower supply seller's market right now with less than 6 months of inventory.

Gulf access canal homes

In the Cape Coral single-family gulf access canal home segment, the monthly supply of unsold homes came in at 6 months in August, which was 14.29 percent below the 7 months of unsold supply registered in August 2018, and it was 25 percent lower than the 8 months of supply in July of this year. Through the first eight months of 2019, the level of unsold supply in this segment has averaged 9 months, or 4.29 percent higher than the average of 8.63 months of supply during the first eight months of last year. This level of unsold supply in the Cape Coral gulf access canal home segment places it in the higher end of being in a neutral market so far this year.

Sailboat access canal homes

In the Cape Coral single-family sailboat access canal home segment, which is a subgroup of the gulf access home segment, the monthly supply of unsold homes came in at 7 months in August, which was 22.22 percent below the 9 months of unsold supply registered in August 2018, and it was 12.5 percent lower than the 8 months of supply in July of this year. Through the first eight months of 2019, the level of unsold supply in this segment has averaged 9.13 months, or 1.44 percent higher than the average of 9 months of supply during the first eight months of last year. This level of unsold supply in the Cape Coral sailboat access canal home segment also places it in the higher end of being in a neutral market so far this year, while any overpriced sailboat access canal homes will continue to act more like they are still in a higher inventory buyer's market, as they sit on the market unsold.

Freshwater canal homes

In the Cape Coral single-family freshwater canal home segment, the monthly supply of unsold homes came in at 4 months in August, which was 33.33 percent below the 6 months of unsold supply registered in August 2018, and it was even with the 4 months of supply in July of this year. Through the first eight months of 2019, the level of unsold supply in this segment has averaged 6.75 months, or 5.8 percent higher than the average of 6.38 months of supply during the first eight months of last year. Similar to the overall market, this segment started out the year in a buyer's market with an unsold supply level of 12 months in January, and 11 months in February, but it has averaged only 5.17 months of unsold supply over the past six months. Based on recent trends, this segment is really in more of a lower supply seller's market right now, despite the higher year-to-date neutral market numbers.

Dry lot homes

In the Cape Coral single-family dry lot (non-canal) home segment, the monthly supply of unsold homes came in at 5 months in August, which was even with the 5 months of unsold supply registered in both August 2018, and in July of this year. Through the first eight months of 2019, the level of unsold supply in this segment has averaged 6.25 months, or 13.64 percent higher than the average of 5.5 months of supply during the first eight months of last year. This has been the one single-family home segment in the Cape Coral real estate market that has consistently posted lower seller's market inventory levels for a number of years, but the supply numbers have ticked a bit higher than usual after dry lot homes posted unusually higher levels of unsold supply in the first quarter of this year. The current trend over the past six months points to this segment being in a lower inventory seller's market.

(The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Sept. 16, 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.)

 
 
 

 

I am looking for:
in:
News, Blogs & Events Web