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Understanding what is buried in unsold home numbers

June 2, 2017
By BOB and GERI QUINN - Homing In , Cape Coral Daily Breeze

After the first four months of 2017, in the overall Cape Coral single-family home market, we have been maintaining the same market pattern we have seen since 2014, where the supply of unsold homes is the highest in the first quarter of the year, before moving lower in the second quarter. If this trend stays in place, the overall market should shift from the current neutral market conditions to a seller's market level in the second and third quarters, before moving back to higher levels of supply again in October.

One of the keys to successfully selling a home in Cape Coral, is understanding how the various market segments, with their own unique features, can be moving in different directions and at different velocities at the same time. For example, the market conditions for dry lot homes are often completely different than they are for sailboat access canal homes.

As a statistic, the monthly supply of unsold homes acts as one of the barometers of current market conditions, in that it helps determine if we are in more of a buyer's market or a seller's market. Having an understanding about the current levels of supply in the market can play a role in whether or not a home is priced to sell, which on the surface seems simple enough, except for something buried deep within the supply numbers.

Right now, the year-to-date monthly supply of unsold homes in the overall Cape Coral market is averaging 7.5 months through the first four months of 2017, and as you will see below, it varies higher or lower for the different property segments in our market. But there is a separate, very strong, stealth market within the supply numbers that has a limited supply of unsold homes totaling 30 days or less, instead of 7.5 months. This buried segment of our market is the difference between "reasonably-priced" homes, and overpriced homes, especially in the sweet spot for homes priced from around $300,000 and under, which accounts for over 75 percent of all homes sold in the Cape.

Here is how it works. The longer past 30 days that a home has been listed for sale at about $300,000 or less, the more likely it is overpriced by 10 percent or more. How do we know that? If the home was reasonably priced, statistically, it would have gone under contract with a buyer in the first 30 days on the market, or within about 30 days of a price reduction. If that has not happened, the market is indicating the home is overpriced. For higher priced homes, it will usually take longer than 30 days, but there are other market indicators available to help confirm if a home is priced right to sell, or priced to sit on the market.

In the overall Cape Coral single-family home market, the supply of unsold homes listed for sale remained mostly unchanged at 6 months in April, which matched the 6 months supply in both April of 2016, and March of this year. As we mentioned above, the year-to-date supply averaged 7.5 months through April, which was 3.23 percent lower than the four-month average of 7.75 months at the end of April 2016. Back in 2013, the supply of unsold homes averaged only 4.25 months in the first four months of the year, as home prices were still struggling to regain their footing during the early stages of the housing market recovery. At that time, the median sales price for homes in the overall Cape Coral market was only $163,540 versus $231,450 in April of this year, with the higher prices of today being the most likely culprit behind the higher supply of unsold homes.

Gulf access canal homes

The monthly supply of unsold Cape Coral gulf access canal homes dropped by 22.22 percent to 7 months in April, from a 9 month supply in April 2016, and it was 12.5 percent lower than the 8 months of supply in March. On a year-to-date basis, through April, the average monthly supply of unsold gulf access homes for the first four months of 2017, was 10 months, which was down 14.9 percent from the average supply of 11.75 months through the end of April 2016. This leaves this segment of homes in the upper end of a neutral market, still bordering on a buyer's market. Despite the year-over-year decline in the supply after the first four months of 2017, to the lowest level since 2014, the supply of unsold gulf access homes listed for sale is still running 42.86 percent higher than it was back in 2013, when the supply was only 7 months.

Sailboat access

canal homes

In the Cape Coral sailboat access canal home segment, which is a subgroup of gulf access homes, the supply of unsold homes for sale on the market in April declined 40 percent to only 6 months of supply, compared to 10 months supply in April 2016. The supply this April was also down by 25 percent from 8 months in March. The year-to-date average monthly supply of unsold homes through the end of April was down 26 percent to 9.25 months, from an average of 12.5 months of supply in the first four months of 2016. This is the lowest year-to-date supply of sailboat access canal homes through April, since back in 2013, when the four month average supply was only 7 months, leaving us 32.14 percent above that level.

Freshwater canal homes

The monthly supply of unsold Cape Coral freshwater canal homes increased by 16.67 percent to 7 months in April, from 6 months of supply in April 2016, and it was up the same amount from March, also rising from 6 months. Year to date in 2017, through April, the supply of freshwater canal homes average 8.5 months, which was the same as in 2016.

This segment has settled back down into a neutral market status, which fits with the pause in sales and pricing we mentioned last week, after climbing to the edge of a buyer's market in the first two months of this year.

Dry lot homes

The unsold supply of dry lot (non-canal) Cape Coral single-family homes was up 25 percent to 5 months of supply in April, compared to 4 months supply in April 2016, and it was flat with the 5 months of supply in March of this year. With a year-to-date average monthly supply of 6 months, through the end of April, matching the 6 months supply for the first four months of 2016, this property segment is straddling the line between a seller's market and a neutral market. Since many dry lot homes are priced in the $300,000 and under "hot zone" for Cape Coral single-family homes, there is a lot of competition between buyers in this segment.

(The April 2017, sales and market data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of May 21, 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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