Cape Coral / Ft. Myers Market Update Feb 2024

[Adam Bartomeo]

Below is the exact email I sent out to all of owners, buyers, and sellers we work with. Because of BP's format the graphs don't present as well but you can scroll and read to the bottom. 

Market Update February 2024

Last year, as I saw the potential for market conditions to change I sent out a couple of market updates to keep our owners informed. In those I had covered my concerns about the market with the overall theme being that there was a storm coming. Although, I felt that we needed more information, I also felt that there were enough signs that the housing and rental market were declining. Below is information validating those concerns. Since the majority of our portfolio is in Cape Coral and Ft Myers the information provided will revolve around those 2 cities.

Single Family Sales
Overall, we are in a buyers’ market from N. Ft. Myers down to Naples. The only exception that I have seen is in Lehigh which is at equilibrium. Both CC and FM have seen exponential increases in inventory – almost doubling 80% and 90% (this converts to 10+ months and 7+ months of inventory), days on market 70% and 160%, and new listings 62% and 24%. They have also seen a huge decrease in closed sales -10% and -14%. Overall, at the moment Ft. Myers is much better off than Cape Coral. According to the data, Cape Coral is in for a wild ride and I advise bracing for impact. As you drive around the city it is evident that the SFH and multifamily builders are not showing any signs of slowing.

Rental Market
The data for rentals is not as readily available as it is for sales, so, we are using some official data and some of our knowledge in the local market. Over the past 8 months we have seen an increase in inventory and days vacant. We have also seen a decrease in rental pricing of about $100 per unit (in CC, Ft Myers has stayed fairly steady). The rental inventory has more than doubled in CC and almost tripled in FM since Oct of 2022 - see above charts. But, over the past 3 months we might have peaked and we have even saw a slight decline in inventory. As for pricing, we have seen the same units in the same buildings decrease in rental price by $100 (in CC) but we have also seen a stabilization of pricing over the last 3 months. The current rental market is nowhere near as dire as the sales market.

My Opinion
Cape Coral - Over the past 1 – 2 months we have had many SFH and Condo sellers reach out to us in a bit of a panic about their house not being sold. They are asking us to help them sell and/or convert them into a rental. ALL of these homeowners have been in Cape Coral. We are starting to see panic selling and homeowners trying to find alternatives to selling. I believe that this trend is going to continue for 6 – 18 months. This may reduce rental prices further but it is hard to say by how much. As we all know, real estate is slow to react, so, even if interest rates drop and the presidency goes in favor of a real estate centric President it will still take some time for the market to reverse its trend. Personally, I am gearing up to buy as many as many SFH’s as I can over the next few months.
Ft. Myers is much more stable than CC because there isn’t as much overbuilding happening. My hunch is that Ft. Myers will decline at a much slower rate and fully stabilize sooner than CC.

In conclusion, the current market is not a good market to sell but it is becoming great for buyers. The rental market is showing signs of stabilization or slight decline. The near future is often cloudy but the distant future is always clear for those who look that far. The successful investor understands that this is not a game of weeks and months but a game of years and decades. Over the next 5 – 10 years, real estate in SWFL will increase in price for sales and rents.

Please feel free to reach out to me with any questions.

Thank you,

[Joe R.]

Adam Bartomeo -- Great market insights.  I see the long term prospects being very bullish for Ft Myers and Cape Coral.  

[Neal Coppola]

Thank you for your very clear and concise insight.  Would it be safe to assume that vacant land would follow the same trendlines/sediment as single family in Cape Coral?

[Adam Bartomeo]

@Joe R. Cape Coral is already a great place to be a buyer and the deals should keep coming. Ft. Myers is good but it is definitely more stable. We will see if it follows the same trend.

[Adam Bartomeo]

@Neal Coppola Normally, land is the first to get hit but due to all of the builders and buying lots it has not slowed down as much yet. But, it will. I just listed 2 freshwater canal lots that are the lowest price in Cape Coral. We will see it they sell and how long it will take.

[Joe R.]

Quote from @Adam Bartomeo:

@Joe R. Cape Coral is already a great place to be a buyer and the deals should keep coming. Ft. Myers is good but it is definitely more stable. We will see if it follows the same trend.

Adam - Are you noticing any difference in pricing trends between fresh new construction and existing single family homes (say 5+ years built or older), on Cape Coral? 

[Adam Bartomeo]

New construction, it is hard to tell since they get it under contract and don't close until it is completed 6 - 18 months later. But, from what I am seeing the builder prices have dropped. All other properties have been dropping in price. There are currently 9,000 properties listed in Lee and Collier counties and 2,000 or 22% took prices drops in the last 7 day alone.

[Joe R.]

Quote from @Adam Bartomeo:

New construction, it is hard to tell since they get it under contract and don't close until it is completed 6 - 18 months later. But, from what I am seeing the builder prices have dropped. All other properties have been dropping in price. There are currently 9,000 properties listed in Lee and Collier counties and 2,000 or 22% took prices drops in the last 7 day alone.

Adam -- I'm in the process of building on the Cape and for the newly permitted builds, I've noticed pricing is coming down on key building materials - roof trusses, windows/doors, shell pricing, etc.  

[Neal Coppola]

Quote from @Adam Bartomeo:

@Neal Coppola Normally, land is the first to get hit but due to all of the builders and buying lots it has not slowed down as much yet. But, it will. I just listed 2 freshwater canal lots that are the lowest price in Cape Coral. We will see it they sell and how long it will take.

 Curious about the lots that you listed.  Are you able to share the addresses?

[Adam Bartomeo]

@Neal Coppola Yes sir! The link below will take you there.

https://matrix.swflamls.com/matrix/shared/Sy8bNppb7Td/2825NW...

[Neal Coppola]

Quote from @Adam Bartomeo:

@Neal Coppola Yes sir! The link below will take you there.

https://matrix.swflamls.com/matrix/shared/Sy8bNppb7Td/2825NW...

 You're not kidding, that's a great price!  Guess I'll be hanging on to my lot for a while.  Thanks for sharing.

[Joe R.]

Quote from @Adam Bartomeo:

New construction, it is hard to tell since they get it under contract and don't close until it is completed 6 - 18 months later. But, from what I am seeing the builder prices have dropped. All other properties have been dropping in price. There are currently 9,000 properties listed in Lee and Collier counties and 2,000 or 22% took prices drops in the last 7 day alone.

Adam -- The builders that I network with are having no problem selling new builds, even before the CO is obtained, hence why there hasn't been a noticeable slowdown in the Cape Coral market.  In the monthly home sales figures, I suspect its a tale of two markets.  New builds are far more desirable, and have less total cost of ownership than many of the stick framed, pre-existing, non conforming older homes.  Insurance is WAY cheaper for a new build, as are utilities, because the newer homes are more energy efficient, and also have less need for immediate upgrades.  It would be interesting if the data could be filtered by homes under 2-3 years old vs. everything older for single family to see if this dichotomy exists -- I suspect it does.  

[Roman A Elizarov]

What a great and clear analysis! Thank you! Compared to those predictions I read earlier, this is the most real one.

[Adam Bartomeo]

@Roman A Elizarov Thank you sir!

[Joe R.]

@Adam Bartomeo I was reviewing the February 2024 market stats for Cape Coral and am seeing that available inventory is now down to 6.8 months.  Is this a blip on the radar or is the trend shifting again in your opinion? 

I know that on my land listings, which are numerous, activity and pending deals have picked up bigly in the past 2 weeks.  

[Neal Coppola]

Quote from @Joe R.:

@Adam Bartomeo I was reviewing the February 2024 market stats for Cape Coral and am seeing that available inventory is now down to 6.8 months.  Is this a blip on the radar or is the trend shifting again in your opinion? 

I know that on my land listings, which are numerous, activity and pending deals have picked up bigly in the past 2 weeks.  

 A- I love that you used the word "bigly".

B- Thanks for the updated insight.

[Adam Bartomeo]

@Joe R. Cape Coral is showing 7.8 MOI for the month of February. So, there was a shift in inventory due to increased sales and sellers pivoting into annual rentals. We brought on 4 new owners this month that decided to rent instead of sell. The numbers for March are not showing a positive trend BUT the data for the current month is never very accurate.

[Joe R.]

Quote from @Adam Bartomeo:

@Joe R. Cape Coral is showing 7.8 MOI for the month of February. So, there was a shift in inventory due to increased sales and sellers pivoting into annual rentals. We brought on 4 new owners this month that decided to rent instead of sell. The numbers for March are not showing a positive trend BUT the data for the current month is never very accurate.

 Thank you for weighing in.  I can see where a lot of supply would temporarily disappear if they rent instead of sell ... still a motivated seller, so those units are likely to hit the market in the future.  

[Allen Wu]

Quote from @Adam Bartomeo:

Below is the exact email I sent out to all of owners, buyers, and sellers we work with. Because of BP's format the graphs don't present as well but you can scroll and read to the bottom. 

Market Update February 2024

Last year, as I saw the potential for market conditions to change I sent out a couple of market updates to keep our owners informed. In those I had covered my concerns about the market with the overall theme being that there was a storm coming. Although, I felt that we needed more information, I also felt that there were enough signs that the housing and rental market were declining. Below is information validating those concerns. Since the majority of our portfolio is in Cape Coral and Ft Myers the information provided will revolve around those 2 cities.

Single Family Sales
Overall, we are in a buyers’ market from N. Ft. Myers down to Naples. The only exception that I have seen is in Lehigh which is at equilibrium. Both CC and FM have seen exponential increases in inventory – almost doubling 80% and 90% (this converts to 10+ months and 7+ months of inventory), days on market 70% and 160%, and new listings 62% and 24%. They have also seen a huge decrease in closed sales -10% and -14%. Overall, at the moment Ft. Myers is much better off than Cape Coral. According to the data, Cape Coral is in for a wild ride and I advise bracing for impact. As you drive around the city it is evident that the SFH and multifamily builders are not showing any signs of slowing.

Rental Market
The data for rentals is not as readily available as it is for sales, so, we are using some official data and some of our knowledge in the local market. Over the past 8 months we have seen an increase in inventory and days vacant. We have also seen a decrease in rental pricing of about $100 per unit (in CC, Ft Myers has stayed fairly steady). The rental inventory has more than doubled in CC and almost tripled in FM since Oct of 2022 - see above charts. But, over the past 3 months we might have peaked and we have even saw a slight decline in inventory. As for pricing, we have seen the same units in the same buildings decrease in rental price by $100 (in CC) but we have also seen a stabilization of pricing over the last 3 months. The current rental market is nowhere near as dire as the sales market.

My Opinion
Cape Coral - Over the past 1 – 2 months we have had many SFH and Condo sellers reach out to us in a bit of a panic about their house not being sold. They are asking us to help them sell and/or convert them into a rental. ALL of these homeowners have been in Cape Coral. We are starting to see panic selling and homeowners trying to find alternatives to selling. I believe that this trend is going to continue for 6 – 18 months. This may reduce rental prices further but it is hard to say by how much. As we all know, real estate is slow to react, so, even if interest rates drop and the presidency goes in favor of a real estate centric President it will still take some time for the market to reverse its trend. Personally, I am gearing up to buy as many as many SFH’s as I can over the next few months.
Ft. Myers is much more stable than CC because there isn’t as much overbuilding happening. My hunch is that Ft. Myers will decline at a much slower rate and fully stabilize sooner than CC.

In conclusion, the current market is not a good market to sell but it is becoming great for buyers. The rental market is showing signs of stabilization or slight decline. The near future is often cloudy but the distant future is always clear for those who look that far. The successful investor understands that this is not a game of weeks and months but a game of years and decades. Over the next 5 – 10 years, real estate in SWFL will increase in price for sales and rents.

Please feel free to reach out to me with any questions.

Thank you,

Thanks for the great update. This was so detailed. Do you still have the same view for Cape Coral? I have a duplex in SE CC, on a 2.99% 30 year mortgage. Trying to hang on for as long as I can! 

[Adam Bartomeo]

@Allen Wu Thank you! We have seen an improvement in March in sales and slightly in inventory. 

If you are in SE Cape with a duplex you probably have a 3/2 or 2/2 and probably don't have a garage. You should be getting $1,800+ in rent based on the duplexes we manage. 

The Market Update that I wrote does not include small multifamily. Duplexes, triplexes, and quads are still selling well and we have not seen a reduction in price. It sounds like you should be in a very good situation but I would need to know more details about your investment. 

[Tammy Skeath]

This is great insight. Thanks Adam. 

[Allen Wu]

Quote from @Adam Bartomeo:

@Neal Coppola Yes sir! The link below will take you there.

https://matrix.swflamls.com/matrix/shared/Sy8bNppb7Td/2825NW...

 Hi Adam - do you have another update on the Cape Coral market? 

[Adam Bartomeo]

@Allen Wu I just posted my most recent update that I sent to my owners