SWFL Months Of Inventory Drop But Not Because Of Sales - Cape Coral, Ft Myers, Naples

[Adam Bartomeo]

Below are two charts that show the amount of unsold "improved" properties. I broke them down into 2 charts, total unsold and unsold by property class (SFH, Condo, Townhouse).

The month of April had more unsold properties than any other month for the past 7 years. April and May are traditionally when sellers give up selling because season is over and most of the buyer's head back up north. So, it is not uncommon for SWFL to spike during the months of April and May. 

From the second chart we can see that SFH's are the reason that we had such a spike in unsold homes. Condos and Townhouses remained at normal levels in comparison to other years. A third chart that I did not include would show you that the spike was also caused by "dry lots", meaning no waterfront.

So, where did all of the inventory go? It has surfaced in the annual rents and vacation rentals. There are also the homeowners who just left it empty as a second home or are still living in the property. We are experiencing a decline in rental prices both for annual and short-term rentals. Although, it is a great time to buy because houses are still discounted but wont remain that way for long, it is getting more difficult to rent houses. We are seeing more vacancies, for longer periods of time, and for lower rents.

Personally, I am very bullish on the Cape Coral market because the prices are lower than they have been in 3 -4 years. I just purchased a SFH that we are rehabbing and will rent for a buy and hold. I am submitting 5 - 10 offers on SFH's each week in hopes of taking advantage of the current market and to take advantage of the future market.

[Carlos Julio]

Quote from @Adam Bartomeo:

Below are two charts that show the amount of unsold "improved" properties. I broke them down into 2 charts, total unsold and unsold by property class (SFH, Condo, Townhouse).

The month of April had more unsold properties than any other month for the past 7 years. April and May are traditionally when sellers give up selling because season is over and most of the buyer's head back up north. So, it is not uncommon for SWFL to spike during the months of April and May. 

From the second chart we can see that SFH's are the reason that we had such a spike in unsold homes. Condos and Townhouses remained at normal levels in comparison to other years. A third chart that I did not include would show you that the spike was also caused by "dry lots", meaning no waterfront.

So, where did all of the inventory go? It has surfaced in the annual rents and vacation rentals. There are also the homeowners who just left it empty as a second home or are still living in the property. We are experiencing a decline in rental prices both for annual and short-term rentals. Although, it is a great time to buy because houses are still discounted but wont remain that way for long, it is getting more difficult to rent houses. We are seeing more vacancies, for longer periods of time, and for lower rents.

Personally, I am very bullish on the Cape Coral market because the prices are lower than they have been in 3 -4 years. I just purchased a SFH that we are rehabbing and will rent for a buy and hold. I am submitting 5 - 10 offers on SFH's each week in hopes of taking advantage of the current market and to take advantage of the future market.

 Great insight Adam, you are certainly right , sometimes we see this inventory level going down and immediately think that more houses are sold and here clearly shows that listings has been either expired , withdrawal or just canceled 

We are experiencing the same thing with rentals , prices has dropped at least 5 % ... 

What's interesting to see is what would be the effect of all this in the 3rd quarter ? 

Rental and home for sale prices going down. Ut with the 7% interest rate ??  

my hypothesis:

-new construction: developers will take the hit in New construction by adding incentives into the market to keep market presence 

-used homes: will remain unsold as long homeowners can hold it and any need for sale it will be opportunities for new buyers and 

-for investors who buy with traditional financing it will be a breakeven market until interest start to drop and market prices to increase 

what do you think?

[Adam Bartomeo]

@Carlos Julio

Great viewpoints!

- New builders have been given lots of incentives for months now - they pay closing costs, buy down interest rates, higher commissions for agents. 

- Possibly... in most areas of the country the market is a sellers market and the seller can get top dollar for their property. Florida's real estate is purchase by nonresidents more than 50% of the time. It is hard to say if this will dry up forcing FL sellers to hold.

- I always buy so that I have equity in the property the day I close, so, it depends on what you mean by breakeven. Break even on cash flow, purchase equity, appreciation?

One thing that I am 100% certain of is that the market will not remain this way for too long. SFH's are on sale and I am buying as many as I can

[Jacopo Iasiello]

Thanks Adam

[Carleen Murone]

Breakeven or even a small loss in the first year is not so bad if you need to offset income...and the investor upside is always in the "hold".  Buy now and breakeven, and realize more appreciation overall then if you wait until everything goes up again.