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A year ago in this column our headline began with "Cash is King," as the abnormally low number of homes listed for sale at that time was resulting in highly competitive bidding wars between buyers. Cash buyers often held the upper hand in the eyes of many sellers, giving them a big advantage over anyone trying to finance their home purchase with a mortgage.
The ever-present cash buyers still have a huge advantage in our market, and their influence may increase even more in the near term, especially as the potential for shifting market conditions grows in the face of rising mortgage interest rates. With the Jerome Powell-led Federal Reserve finally about to go on the warpath against the now out-of-control, so-called "transitory inflation," with talk of multiple 75 basis point shock therapy to the Federal Funds Rate, the market's have gone on full red alert. Backed into a corner by the dramatic changes to the economic conditions over the past 15 months, the Fed is seemingly committed to closing the books on its easy money, market manipulation and zero interest rate policies that have largely been in place since the Great Recession days. With deepening concerns about almost everything and chaos seemingly everywhere, the talk of recessions, Stagflation, and asset bubbles has some economic and market pundits wondering if we have shifted from a "Cash is King" to a "Crash is King" scenario?
So what are we anticipating in our real estate market? One would expect to see home prices level off or decline as mortgage rates rise because as interest rates increase, the purchasing power for many buyers is reduced proportionately by the resulting higher monthly mortgage payments. However, despite the fact that the rate on a 30-year fixed rate mortgage has increased from around 3 percent to either side of 5 percent so far this year, our home prices have continued to increase and have remained firm through the month of March. This is likely due to a handful of reasons, including the fact that many of our current buyers who are utilizing mortgage financing have interest rate locks on their loans at lower rates, so the full effect of rising interest rates has yet to be felt. Add in a lot of cash buyers to the mix, along with continued strong demand from out-of-town buyers, and a still abnormally tight, albeit an increasing number of active listings, and so far so good. However, our market conditions could change quickly if the Fed follows through with its more aggressive rate hikes.
As of April 26, when we took a snapshot of the active single-family home listings through a Realtor, there were 559 Cape Coral homes listed for sale at prices ranging from $259,900 to $5.995 million. The median list price came in at $599,000 for Cape Coral homes, down a bit from the peak of $610,000 a week ago. Of the 559 active listings, 85 were priced at $400,000 and under, with only four homes available for less than $300,000. There were 102 homes in the Cape listed at $1 million and above, and a total of 77 of the 1,016 homes currently under contract as a pending sale were at list prices of $1 million and up. There were only two additional listings and five additional pending sales in the MLS that were classified as short sales or foreclosures.
Looking back a year ago on April 28, 2021, there were 345 active single-family homes listed for sale through a Realtor in Cape Coral at list prices ranging from $178,000 to $5.995 million. Of these 345 active listings, 197 were priced below $500,000 with 83 of these homes listed for sale below $300,000. This price group also included four homes with list prices below $200,000. There were 98 Cape Coral single-family homes listed in the MLS at prices ranging from $509,000 to $999,800 and another 50 homes listed at $1 million and above. At that point in time, there were 1,252 homes under contract with buyers as pending sales (1,260 including short sales and foreclosures).
In the overall Cape Coral single-family home market, the monthly level of unsold supply came in at 3 months in March, which was even with the 3 months of unsold supply in both March 2021, and in February of this year. In the first quarter of 2022, the monthly average level of unsold supply was also 3 months, which was 18.3 percent lower than the average of 3.67 months of supply in the first quarter of 2021, but even the average of 3 months of unsold supply in the fourth quarter of 2021.
Indirect gulf access canal homes
In the Cape Coral single-family indirect gulf access canal home segment (meaning homes with bridges in the canal system), the monthly level of unsold supply came in at 3 months in March, which was 50 percent more than the 2 months of unsold supply in March 2021, but even with the 3 months of unsold supply in February of this year. In the first quarter of 2022, the monthly average of unsold supply in this segment was 3.33 months, which was 24.7 percent above the average of 2.67 months of supply in the first quarter of 2021, and even with the 3.33 months of unsold supply in the fourth quarter of last year.
Direct sailboat access canal homes
In the Cape Coral single-family direct sailboat access canal home segment (meaning no bridges in the canal system to get out to open water), the monthly level of unsold supply came in at 2 months in March, or 33.33 percent lower than the 3 months of unsold supply in both March 2021, and in February of this year. In the first quarter of 2022, the monthly average of unsold supply in this segment was 2.67 months, or 11 percent less than the average of 3 months of supply in the first quarter of 2021, and 19.8 percent below the average of 3.33 months of unsold supply in the fourth quarter of last year.
Freshwater canal and lake homes
In the Cape Coral single-family freshwater canal and lake home segment (meaning homes on landlocked canals and lakes with no gulf access), the monthly level of unsold supply came in at 3 months in March, which was even with the 3 months of unsold supply in March 2021, and up 50 percent from the 2 months of supply in February of this year. In the first quarter of 2022, the monthly average of unsold supply in this segment was 2.67 months, which was 11 percent below the average of 3 months of supply in the first quarter of 2021, but even with the 2.67 months of unsold supply in the fourth quarter of last year.
Dry lot homes
In the Cape Coral single-family dry lot (non-canal) home segment, the monthly level of unsold supply came in at 3 months in March, which was even with the 3 months of unsold supply registered in both March 2021, and in February of this year. In the first quarter of 2022, the monthly average of unsold supply in this segment was 3.33 months, which was 9.3 percent below the average of 3.67 months of supply in the first quarter of 2021, but 11 percent higher than the 3 months of unsold supply in the fourth quarter of last year.
The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of April 18, 2022, 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 42 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.