Quarterly Market Snapshot - July 2024

This Snapshot will attempt to provide a brief summary of our local Real Estate Market conditions.

· The regional economy continued to track upward during the first quarter of 2024, as evidenced by the latest indicators available. Southwest Florida’s three regional airports served 4.5 million passengers in the first quarter of 2024, up 18 percent from 2023 and higher than any other first quarters on record for the region. Year-to-date seasonally adjusted tourist tax revenues also improved in February, increasing 14 percent from 2023 to 2024. The labor market in Southwest Florida has shown minimal changes during this first quarter with seasonally adjusted unemployment rates remaining relatively stable alongside a high labor force participation rate. The number of single-family building permits in the region has increased by 18 percent since last year driven by increased construction and rebuilding efforts post Hurricane Ian.

· According to a recent U.S. News & World Report, Ft. Myers is among the “Fastest Growing Places” in America. Ft. Myers ranked No.1, with three other Florida cities making the top five. A recent article in the Ft. Myers News-Press on May 20th revealed how Lee County is attracting some of the highest dollar investments in Florida. Lee ranks No.8 among Florida counties based on business established growth, Gross Domestic Product Growth, and new building permits. Historically, U.S. News & World Report listed Ft. Myers in 2023 ranked 91 and in 2022 ranked Ft. Myers at 100th in the “Best Places to live in the U.S.”

· Despite the appealing statistics regarding our “Fastest Growing area” ranking and increased tourist activity, housing affordability issues continue to persist in Southwest Florida, according to new research by Florida Gulf Coast University. For many, median family incomes in both Collier and Lee Counties are not enough to afford a median-priced home, based on the latest FGCU readings of the Household Affordability Index, known as HAI, which is commonly used by agencies. The second quarter report shows the affordability index largely worsened for all residential properties in the region, falling between 7% and 12% year over year. A representative from a large national builder was recently quoted saying “About 40% of the buyers we see at our new home developments in Southwest Florida are unable to qualify for homes.” Even with rate buydown programs and cash incentives, we are seeing enormous finance challenges. The median family income (MFI) in Lee County of $85,900 was just enough to cover a median-priced residential property of $385,000. However, for a first-time home buyer, the MFI is 18% lower than desired. For single-family, the MFI was 6% lower than the required income ($91,160) to pay the median of $410,000. For a first-time home buyer, the MFI is 26% lower. A recent report indicates that 43% of the families living in Lee County live paycheck to paycheck. Across the board, people are struggling more than they were two years ago.

· The multi-family condominium market has a new law that will affect condominium dues and assessments due to the collapse of the Ft. Lauderdale Surfside  Chamberlin Tower South, collapse in June 2021. By December 31st of this year, the structural integrity reserve law requires all Florida condominiums three stories and higher and 25 to 30 years old to have a milestone inspection and use the results to guide them to maintain financial reserves that will pay for future maintenance, inspections, and repairs. The burden of raising the funds will require mandatory assessments on current and future owners. Sellers will need to take into account the additional cost to maintain the reserves. Several older types of housing that fall within this requirement used to be an option for those with lower incomes. These new requirements will present yet another challenge for individuals seeking affordable housing.

· The Cape Coral- Fort Myers metropolitan area has the highest rental vacancy rate in the nation at 15.3%, according to a report from research company Construction Coverage, using data from the U.S. Census and Department of Housing and Urban Development. With 21.5% of households renting, the Cape Coral- Ft. Myers area has a $1,967 median monthly rent. The report states that 59.3% of households renting in the area are cost-burdened. While the average rent is still historically high, and the year-over-year decline is not huge, the downward shift is more significant than it might appear to the outside observer, said Shelton Weeks, a real estate professor at Florida Gulf Coast University. Not only did rental rates fall over the year, but over the month, which Weeks attributes to an increase in the housing supply. Not just rentals, but housing of all types, in Cape Coral, and across Lee County. Looking back two years, there were 6,500 to 7,000 apartments in the midst of permitting or construction in Lee County, with many having come online now. The movement in rental pricing primarily reflects the added supply, which has eased demand and converted the area to a tenant’s market. As we reported in our last two quarterly monthly snapshot summaries,  significant rental rate reductions,  move-in incentives, and relaxed credit scores are now required to lease units. With more apartments on the horizon, I expect to see further declines in rental rates, especially the older product. According to Co-Star, there are 6,928 apartments in the works or under construction in the Ft. Myers/Cape Coral market. Gone are the days of 15%-17% annual rental rate increases. We are now faced with attempting a much more moderate 4%-5% annual increase, if any, to minimize the possibility of a vacancy. Owners are currently performing interior renovations and upgrades to compete with the newer products.

·      According to Royal Palm Coast Realtor Association Market Stats, the median sold price for a single-family home as of May 2024 was $389,000, down 2.7% from the previous month. The number of closed sales was 1,276, up 12.3% over April. The number of new listings at the end of May was 1,932, a decrease of 1.0% from the previous month. The median days on the market was 46, up 9.5% compared to April. Finally, the month’s inventory decreased to 4.8, 3.5% lower compared to April. The median sold price for the condo townhouse market was $297,000, down 1.0% from the previous month, and down 1.0% over May 2023. The number of closed sales was 300, a decrease of 15.5% from April, with median days on the market up 33.0% at 67. The number of new listings at the end of April was 491, a decrease of 18.6% from the prior month. Finally, the monthly supply of inventory increased to 7.8, up 14.9% from April and up 105.1% compared to May 2023.