Homing In | February home sales are solid as ‘price fixes everything’
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So, you want to sell your home in Cape Coral? The unpleasant bit of news is that the real estate game has not only changed, but it has changed dramatically over the past two years. And the sooner a seller catches on to this fact, bites the bullet and realizes they will probably need to get a lot more aggressive with their pricing than they had originally planned, the more likely they will be to find a buyer for their home.
Don't misinterpret what we just said, because homes are still being sold. In fact, sales in February were solid, it is just that the game has changed and sellers will probably need to adjust the way they play their hand.
For some perspective, let's look at the numbers and consider the odds of selling a home. Two years ago, there were approximately 433 active listings in the MLS and in February 2022 there were 577 closed home sales, followed by 686 closed home sales in March 2022. At that time we noted that we seemed to be operating with a "just in time" inventory of homes, in that most homes were sold in a matter of days, if not hours, after coming onto the market, and often at a price that was well above the list price. Buyers did not care if a home needed repairs or updating and remodeling, as they were willing to go all in and pay almost any price for a home.
Back then we would almost always set the list price above the highest estimated value we could find on a home and tell our buyer or seller that it would end up selling for more than that. Sellers could sit back and let the game come to them, while buyers had to quickly realize they needed to play their hand much more aggressively than they had initially planned if they wanted to buy a home. The market odds were stacked heavily in the seller’s favor and most buyers came away empty handed and disappointed.
Today, the odds have completely reversed from being in the seller’s favor to the buyer’s favor. Here is what we mean. As of March 5, there were 374 closed home sales in Cape Coral during the month of February. This is a preliminary number and it will end up higher than this when the updated tallies are recorded in the next several weeks. This means that this February will have the third highest number of closed home sales in the history of Cape Coral for the single month of February. The top two all-time record highs for the number of closed home sales in the month of February were set in February 2021 and 2022, with 474 and 577 sales, respectively. One might think that home sellers would be celebrating this fact, until you consider that there were around 2,800 homes listed for sale in Cape Coral during February, so roughly 2,400 sellers, or about 86% of the people hoping to sell their homes, came away empty handed and disappointed.
Here is the reality of the situation based on what we are personally seeing in the current market and based on anecdotal conversations we have with other Realtors. Many homes that have appeared to have been priced properly to the market over the past year have struggled to even attract any showing appointments, let alone any offers. While everyone has been seeing increased buyer activity over the past few months, unlike several years ago, home values have been declining and most sellers are faced with getting less for their homes than they expected. It seems that the successful sellers have been willing to be more aggressive with pricing their homes a bit lower than other sellers. As one Realtor friend of ours so aptly put it last week when we were discussing the current market, "Price fixes everything."
To that point, the number one daily market statistic in the MLS continues to be the number of price reductions being made by sellers. In fact, the highest-priced listing in Cape Coral just reduced its price from $11.9 million to $10.9 million this past Monday. This $1 million price reduction, representing a decrease of 8.4%, was made after this newly built riverfront home had been sitting on the market unsold for 145 days.
We are also seeing situations where home builders are decreasing the prices on their new construction spec homes and offering various buyer incentives. One builder is advertising its "quick move in ready homes" with the tagline of "Temperatures are up, but prices are down," as they reduce their prices and offer $15,000 towards a buyers closing costs, plus an additional $3,000 in "flex cash," to go with a 4% commission to Realtors. This type of promotion does not occur in a strong market and it is providing stiff competition for "regular" home sellers.
As of Tuesday, March 5, there were 2,775 active listings in the MLS for single-family homes in Cape Coral at list prices ranging from $249,900 to $10.9 million, with the median list price coming in at $500,000. This includes 842 active listings for new construction homes. The total number of active listings was down from 2,797 homes on the market two weeks ago on Feb. 20, when the median list price was $499,999. This decline in active listings was due to an increase in pending home sales, which went up by 55 homes over the same time frame. So far this year the current number of active listings in the Cape have increased by 13.6% from the 2,442 homes on the market on Jan. 1. Over the past 12 months, going back to March 7, 2023, the number of active listings increased by 101.1% when there were 1,380 homes listed for sale through a Realtor at a median list price of $534,950.
Currently there are a total of 1,104 Cape Coral homes listed for sale at $450,000 and under, including 43 homes with list prices below $300,000. At the other end of the price spectrum, there were 364 homes listed at $1 million and above. One year ago on March 7, 2023, there were 491 homes listed at $450,000 and under, including 23 homes priced below $300,000 and there were 185 listings in the Cape priced at $1 million and above. The median number of days for a home to go under contract with a buyer from the initial listing, or following the most recent price reduction, was 57 days in February. This means that half of the pending home sales happened in less than 57 days after coming onto the market as a new listing, or following their most recent price reduction, and half took more than 57 days to go under contract with a buyer. This time frame is up by 72.7% from 33 days in February 2023, and it is up by 850% from only 6 days "to find a buyer" in February 2022.
As of March 5, there were 819 pending home sales in the pipeline, with the median pending sales price in the Cape coming in at $415,000. Note the difference from the median list price of $500,000. This indicates continued downward pressure on home prices. On a positive note, the number of pending sales is up 92% from the 427 pending sales on Jan. 1 of this year, but down 5.4% from 866 pending sales back on March 7, 2023. Currently, there are 487 pending sales at $450,000 and under, including 36 priced below $300,000 with 58 homes under contract at $1 million and above. A total of 40% of the current pending sales in Cape Coral, or 327 homes, are for new construction homes.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of March 5, 2024, unless otherwise noted. 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 44 years. Geri has been a full-time Realtor since 2005, and Bob joined Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.