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Cape home numbers pointing to an abnormal market

October 13, 2017
By BOB and GERI QUINN - Homing In , Cape Coral Daily Breeze

As of Oct. 9, the preliminary real estate data for the month of September is showing the number of closed sales for Cape Coral single-family homes has now improved to 298 homes sold. This is 115.5 homes, or 27.93 percent below the 2017 monthly average of 413.5 homes sold over the first 8 months of this year, and 25.5 percent below the 400 homes sold in September 2016. We expect this number to top 300 homes sold as the data is revised for late reporting and corrections over the next week, while keeping in mind that most of these closed sales went under contract 30 to 60-days ago, before Hurricane Irma arrived.

As we mentioned last week, we went through a very quiet period in our real estate market for the week prior to, and the week after Irma came through Southwest Florida, with a gradual pick-up in activity beginning between Sept. 14 and 20. Because of this, we would expect to see a lull in closed sales from about mid-October through late-November. To help illustrate this point, between Sept. 10, when the storm hit, and Oct. 9, a total of 253 single-family homes in Cape Coral have gone under contract with a sale pending. Most of this activity should translate into closed sales by late November, but it indicates a continued stretch of a below average number of upcoming closed sales.

In addition, the number of Cape Coral homes coming onto the market as a new listing in the month of September was down 40.17 percent to 359 new listings, compared to an average of 600 new listings per month over the first 8 months of this year. This was also 29 percent below the 506 new listings that came onto the market in September 2016. Under normal circumstances, these declines would tend to put downward pressure on the monthly supply of unsold homes, causing the supply to be lower, and potentially shifting us more towards being a "seller's market." This scenario could create additional upward pressure on prices.

However, Irma has caused abnormal market conditions resulting in fewer homes being sold, which seems to have offset the tighter supply being caused by the 40 percent drop in new listings coming onto the market. This offset has pushed the monthly supply of unsold homes in our overall single-family home market up to 7 months of supply in September, from the 5 months of supply we have posted every month since May of this year. If this number holds, it will be the highest monthly supply of unsold homes in Cape Coral during the month of September since 2010, when the supply was at 9 months. So instead of becoming more of a seller's market, we have moved deeper into neutral market conditions, at least for now.

Next, here is an updated overview of the current price structure in our single-family home market by price points. As we mentioned above, there were 298 closed sales in September, and 223 of these sales were closed between when Irma hit and Sept. 30. Out of these 223 post-Irma closed sales, 55 of them, or 24.66 percent, were for homes priced under $200,000. Another 72 homes, or 32.29 percent, sold for between $200,000 and $249,999. While 29 homes, or 13 percent, sold for between $250,000 and $299,999. So, about 70 percent of the Cape Coral single-family home market is selling for under $300,000.

As we move up in price, a total of 19 of these 223 closed sales, or 8.52 percent, were in a price range of between $300,000 to $349,999. This means that about 78.5 percent of the homes sold in our market sample were priced below $350,000. The remaining 21.5 percent of Cape Coral homes in this snapshot have sold for between $350,000 and $1.2 million, with 1.79 percent of the sales in this broad price segment coming in at above $1 million.

From an anecdotal standpoint, these numbers are pretty consistent with what we typically see with the potential buyer pool looking for information about our market, in that the largest group of buyers are looking for something under $300,000 with a heavier concentration looking for a home priced below $250,000. This has been, and continues to be, an extremely competitive price segment between the largest group of potential buyers in our market, which is a big reason why we repeatedly comment about how reasonably priced homes will go under contract within 30 days, and often within several days or weeks, of being listed.

The pool of potential buyers begins to shrink as the price point for a Cape Coral home climbs above $300,000 and the shrinkage of potential buyers accelerates the higher the price moves above $350,000. Statistically, when we are contacted by out-of-town buyers interested in buying a home in Cape Coral, 7 or 8 out of every 10, are looking for something under $300,000 and 5 or 6 of those 7 or 8, are wanting to buy a home for under $250,000. The remaining 2 or 3 potential buyers out of every 10 are in the 21.5 percent pool of buyers looking for a home priced from $350,000 and up.

This is the reality of the potential buyer pool in the Cape Coral single-family home market based on price point analysis, and the pool of buyers at the various price levels can then be further reduced by "marketability issues." This is a game of subtraction, in that the pool of buyers for your home will not become larger, but rather each perceived negative with your home will only further reduce the number of potential buyers in the pool. Marketability issues can include things such as location, dry lots versus gulf or sailboat access canal lots, flood elevations, the age and maintenance of the home, outdated features versus a remodeled home, square footage of the home and lot, floor plan, utility assessments, and much more. In many cases, it can be difficult to determine the exact impact of marketability issues on the ultimate sales price and on how long it may take to find a buyer, until you put your home on the market and see how buyers react to it.

For someone trying to sell their home, it is critically important to prepare properly in advance of putting it on the market by making sure the home is clean, uncluttered, fresh looking, fresh smelling and reasonably well-maintained. If the look of a home is old and outdated, it will hurt your chances of getting the best possible sales price for it, and if your home is cluttered or poorly maintained on top of being outdated, you may have trouble getting it sold.

Sellers need to realize the vast majority of buyers are looking for something that is in move-in ready condition, or pretty darn close to it. If the home does not meet this standard, buyers will be looking for a discounted price. Remember, it is a game of subtraction.

(The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County, Fla., as of Oct. 9, 2017, and it was compiled by Bob and Geri Quinn. It includes information specifically for Cape Coral single-family homes, not including 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 the RE/MAX Realty Team office in Cape Coral. They have lived in Cape Coral for over 38 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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