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Is supply of unsold homes a wet blanket on Cape’s market?

March 31, 2017
By BOB and GERI QUINN - Homing In , Cape Coral Daily Breeze

Last week we discussed the generally strong February numbers for median sales prices and the number of homes sold in the Cape Coral single-family home market, while also pointing out that the higher, pesky level in the supply of unsold homes could be the wet blanket being thrown over our market. As this supply increases, buyers have a larger number of homes from which to choose, making it more difficult for a seller to attract a buyer to their home.

Fortunately, in our market, we have fairly predictable, temporary seasonal influences. The downside of these seasonal market swings, is that the higher supply of unsold homes at this time of year means that sellers who have their homes overpriced will likely be busy wrestling with that wet blanket, instead of getting their home sold. Receiving an accurate assessment of the potential buyer interest in your home and having a better understanding of the current market conditions can help you establish a strategy based on realistic expectations to get your home sold for the maximum value possible.

In the overall Cape Coral single-family home market, the supply of unsold homes for sale has been following the same general pattern since 2007, where the supply increases every January from the previous December. Then the February supply is the same or lower than in January, with the unsold supply moving even lower in the month of March. This monthly pattern has formed a quarterly trend since 2014, when the "early bird" sellers try to get out in front of the market by listing their homes for sale in October and November, before the larger group of seasonal sellers begin piling into the market in January. This has resulted in us seeing the highest level of unsold homes in the first quarter of the year, with a decline in supply in the second and third quarters, followed by a ramp up in supply in the fourth quarter.

Not surprisingly, this seasonal pattern with the supply of unsold homes has been directly correlated with the number of homes sold in 9 of the previous 10 years. During this time frame, the number of homes sold has been lower in January, before moving higher in February and March, with the peak number of sales each year being reached in the second quarter. The only exception to this pattern was in 2009.

In February, the supply of unsold homes in the overall Cape Coral single-family home market was 9 months, which was the same as in January, but up 34.9 percent from the fourth quarter average supply of 6.67 months. After the first two months in 2017, the average monthly supply is the same as it was in both 2015, and 2016, and we should see the supply of unsold homes decline in March, if the normal seasonal pattern plays out.

Gulf access canal homes

In February, the monthly supply of unsold homes in the Cape Coral single-family gulf access canal home segment was 11 months, as it still remains in a buyer's market this year with a two-month average supply of 12.5 months. The January supply was revised down from 15 months to 14 months, bringing this segment below last year, when the supply of unsold homes through February averaged 13 months. Also, the month of March has had an average supply of 11.67 months, so if the seasonal patterns remain in place, we will likely stay in a buyer's market through the first-quarter, before the supply declines and shifts this segment back into a neutral market in the second and third quarters.

Sailboat access canal homes

The monthly supply of unsold sailboat access homes also moved lower, to 10 months supply in February, while January was revised lower to 14 months of supply, bringing the average after two months in 2017, to 12 months of supply in this market segment. This is 11.11 percent lower than last year, when it averaged 13.5 months. A 50 percent increase in the number of homes sold in February over January of this year has helped bring this inventory to its lowest level in the first two months of the year, since it was 9.5 months in 2013. However, we are likely still on track for the fourth consecutive year with the first quarter in the sailboat access segment firmly positioned in a buyer's market.

Freshwater canal homes

The monthly supply of unsold Cape Coral freshwater canal homes climbed to 12 months in February, up 20 percent from 10 months in January. This February was flat with February 2016, but the first two months of 2017, is running 10 percent above the same time frame last year and at the current average of 11 months, it is 57 percent higher than the fourth quarter of 2016, which had a 7 month average supply of unsold homes. The supply of freshwater canal homes is usually lower in the month of March, but if this trend is broken, it would be the first quarterly shift to a buyer's market in this segment since the first-quarter of 2014, when the supply of unsold homes averaged 12 months.

Dry lot homes

Cape Coral single-family dry lot (non-canal) homes continue to have the lowest monthly supply of unsold homes out of the different property-types we measure, despite increasing to 8 months of supply in February. This is 14.3 percent higher than the 7 months of supply a year ago, in February 2016. The supply in the first two months of 2017 is running about 7 percent higher, averaging 7.5 months versus 7 months last year. At this point, the first-quarter supply is 40.7 percent higher than the fourth-quarter of 2016, but we would expect the supply to decrease in March, as sales typically increase.

The buyers are out there and homes will still be sold throughout the entire year, not just in the peak winter season. Serious sellers need to hang in there, as the second quarter usually combines a lower supply of unsold homes with the yearly peak in the number of homes sold. As a seller, if you are not seeing good showing activity, you will probably need to make some adjustments to get your home sold.

(The February 2017 market data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County as of March 17, 2017, and it was compiled by Bob and Geri Quinn. It includes information specifically for Cape Coral single-family homes, and it does not include condominiums, foreclosures or short sales. 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 Century 21 Birchwood Realty Inc., in Cape Coral. They have lived in Cape Coral for over 37-years. Geri has been a full-time Realtor since 2005, and Bob, who also holds a Certified Financial Planner designation, 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.)



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