Massive inventory boom in Southwest Florida's housing market raises questions

[Adam Bartomeo]

Check out our interview with Fox 4 by clicking the link or read it some of it below.

SOUTHWEST FLORIDA — How many single-family homes do you think are on the market in Lee and Collier counties as of January? Remember that number, because the answer is probably going to shock you.

In Cape Coral alone, there's a good chance you've seen a home on sale no matter what road you go down. Fox 4 Senior Reporter Kaitlin Knapp went to Adam Bartomeo, owner of Bartomeo Realty, to validate what seems to be a housing boom.

"Now we have the highest inventory we ever had in Southwest Florida," Bartomeo said.

Bartomeo explained to Knapp why we're seeing a huge spike in inventory:

"My opinion is that the sediment of folks was 'hey, Trump's going to come in and houses are going to sell like crazy,' so there was an influx of inventory," Bartomeo explained.

He also says many remote workers are going back to the office, which may not be in Florida.

So because of these reasons, how many homes do you think are on sale in Lee and Collier counties as of January?

"12,000 homes for sale," Bartomeo said.

That's just single-family homes! He says condos are through the roof, too.

Adding to that number is what Bartomeo calls a "shadow home." It's a partially built home that went under contract, but the builders ran out of money.

"So now, these houses are starting to come to market," he said. "I think what has happened is they spent a lot of money on other things to keep the business running."

Bartomeo believes the high inventory might stay that way for a while. Data from the Southwest Florida MLS shows there's enough inventory to last 10 to 11 months, and that's if no other homes are listed.

"Buyers are not in a rush," Bartomeo said.

This has a big domino effect. Homes are staying on the market for about 60 days, which has some people rethinking selling.

"My number one customer is I can't sell my home, can you please make it a rental?" Bartomeo said.

That, coupled with more apartment complexes going up, means the inventory is even higher. Bartomeo says that will impact how much you pay.

"Until we get through some of this inventory, I'm foreseeing that we're going to be decreasing in both rental prices and single family home sales until about the end of the year," he explained.

It's not good news for sellers. Bartomeo says there's a lot more people that are willing to negotiate anything, such as closing costs.

On the flip side, he says it's fantastic to buy homes.

There's a lot to choose from, but there's a catch.

"Interest rates do have to come down, because that prices are still too high," Bartomeo said.

So if you're a seller, Bartomeo suggests to hold on to the property if you can. If not, he says to make the house as nice as possible or stage it.

We've been in an unstable market for a while — really since the pandemic.

Knapp asked Bartomeo how do we level out the market.

"So the first thing that has to happen is they have to stop building," he replied. "Once the building gets done, then those houses will be eaten up by all the people that are actually moving down here and that will correct the market in that way."

Bartomeo says we will get a better idea of where our market is headed after tourism season, because that's when people tend to buy.

[Marcus Auerbach]

I have been watching FL for a while now as a case study for how a market could crash. The inventory especially in Southeast FL is absurdly high, especially when I compare with my market here:

     Milwaukee County, WI: 1,040 listings
     Broward County, FL: 18,448 listings

That's Fort Lauderdale. They have about twice the population of Milwaukee, but still an unbelievable difference. So far prices in Fort Lauderdale have not come down. Same for Miami. 

Residential real estate prices are "downward sticky" - sellers just don't sell if they don't get their price and just hold on to it until the market catches up over time. This was the big catalyst in 2008: they were forced to sell and that means they had to take the price the market was offering.

What could change the dynamic is the 500,000 Canadians who own a 2nd home in FL and are now questioned intensely at immigration. This could motivate many more to list and some of them to sell for any price.

It is important to understand that FL has had high inventory before Covid and a lot of people argue that is normal. I believe what happened is that OOS buyers sucked up all that inventory rapidly in 2021 and 2022, indicating to developers a huge market demand and I don't think they recognized it as a windfall and trying to meet that "demand" which has evaporated.

So now you have a huge amount of new construction in the pipeline. Plus a huge amount of 2nd homes for sale. So we have seen high inventory before, but the pace at which inventory is rising is new.