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Cape supply of unsold homes makes seasonal shift

April 28, 2017
By BOB and GERI QUINN - Homing In , Cape Coral Daily Breeze

Today we will be providing our update about the monthly supply of unsold single-family homes in Cape Coral. As we have mentioned previously, we had reached a higher, pesky level of supply in our market, but it remained within the typical seasonal levels and all signs seemed to be pointing towards the next seasonal downshift in the supply. And like clockwork, the decline in the supply of unsold homes was right on time in the month of March. The supply almost always moves even lower in the second quarter of the year, when the number of homes sold typically reaches its peak annual levels.

The monthly supply of unsold homes provides a good indication of whether a particular housing market, or a segment of the market, is favoring buyers or sellers. Simply put, it is a measure of how many months it will take for the existing supply of unsold homes available on the market to be sold, given the current pace of home sales.

The monthly supply of unsold homes is calculated by taking the number of active listings and dividing it by the number of homes sold, including pending sales (homes under contract, but not yet a closed sale), during a particular timeframe. As an example, in a given month, if there were 100 homes listed for sale and 20 homes were sold or went pending, there would be 5 months of supply at that moment (100 homes listed / 20 homes sold or pending = 5). This would mean, in theory, at that pace it would take 5 months to sell the 100 homes.

Once the monthly supply is calculated, we can use it to determine whether we are in more of a buyer's market, a seller's market, or a neutral market. This is important information to know, and in Cape Coral it is especially important to break it down by specific property types, because the market for dry lot homes can be completely different than the market for sailboat-access canal homes. We often refer to this as the "markets within our market."

There are several acceptable methods for determining the market conditions based on this statistic and we prefer to use a "range method," whereby a 0 to 5- month supply of unsold homes would be considered a seller's market; a 6 to 10-month supply would tend to be more of a neutral market; and a supply of 11 months or more would be a buyer's market.

We use this statistical information to try to accurately identify the current market conditions against the longer term market trends that are in place, while trying determine if there are any market shifts or new trends developing. By analyzing the market trends in this manner, we can better anticipate what is likely to happen if the trends stay in place. This can help buyers and sellers make more informed decisions based on current, factual market data.

The monthly supply of unsold homes for sale in the overall Cape Coral single-family home market dropped down to 6 months in March, a 33.33 percent decrease from the 9 months supply in both January and February. This was also 14.29 percent lower than in March 2016, when the supply of unsold homes was 7 months. In the first-quarter of 2017, the monthly supply averaged 8 months, which was about 4 percent below the 8.33 months of supply in the first quarter 2016, but 19.94 percent higher than the 6.67 months supply in the fourth quarter of 2016. All of this indicates our supply is staying within the current market trends, and we are seeing this in all of our property segments, which is a good sign.

Gulf access canal homes:

The monthly supply of unsold single-family gulf access canal homes has been declining each month since hitting a nearly two year peak of 14 months in January. The supply dropped to 11 months in February and then dropped 27.27 percent from there, down to 8 months of unsold supply in March. This was 33.33 percent lower than the 12 months of supply in March 2016, and 20 percent lower than in December 2016. In the first quarter, the supply of unsold gulf access homes averaged 11 months, which was 13.18 percent lower than the average of 12.67 months a year ago, in the first-quarter of 2016, and 8.33 percent below the 12 months of supply in the fourth quarter 2016.

Sailboat access canal homes:

The monthly supply of unsold sailboat-access canal homes, has also been declining each month this year, hitting 8 months in March, and down by 38.46 percent versus 13 months of supply in March 2016. The March supply was also down 11.11 percent from February. In the first- quarter of 2017, the supply of unsold sailboat-access canal homes was lower, down 22.5 percent to 10.33 months from 13.33 months in the first quarter of 2016. It was also down 24.43 percent from the fourth quarter 2016, which averaged 13.67 months of unsold supply.

Freshwater canal homes:

The monthly supply of unsold freshwater canal homes, dropped by 45.4 percent from 11 months in February to only 6 months in March, and the March supply was down by 25 percent from the 8 months of supply a year ago, in March of 2016. In the first quarter of 2017, the supply of unsold sailboat-access canal homes ended at 9.33 months, the same as a year ago, but up 33.29 percent from the fourth quarter of 2016.

Dry lot homes:

The monthly supply of unsold dry lot (non-canal) homes dropped by 37.5 percent from 8 months in February to only 5 months in March, and the March supply was down by 16.67 percent from the 6 months of supply a year ago, in March of 2016. In the first-quarter of 2017, the supply of unsold dry lot homes ended at 6.67 months, the same as a year ago, but up 33.4 percent from 5 months supply in the fourth quarter of 2016. With the lowest supply by property type in Cape Coral, dry lot homes are where we see the most competition between multiple buyers trying to buy the same home. This is due to the generally lower price points in this segment, which is attracting the largest pool of potential buyers.

To put this into context, we have said repeatedly that "reasonably priced" homes sell quickly, but there is a limited supply of reasonably-priced homes available for sale. This is especially true with homes priced from the low $300,000s and under, which is why the supply of unsold, reasonably-priced homes, can be measured in days or weeks, and not in months.

(The March 2017, sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of April 15, 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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