Lee County Market Update
Click here to watch Mike's Lee County Market Update for the month of September!
Hi, this is Mike Darda with Darda Group and Compass Realty. Thank you for checking out our market update for the month of September 2022.
In August, there were 429 properties that closed escrow in Cape Coral and in Fort Myers there were 195.
If you go back one year, you'll see that there were 557 properties in Cape Coral that closed escrow for August 2021 and 275 in Fort Myers, so our sales have reduced by up to 25% year over year. Now a big reason why this has taken place is because last year, obviously, we were in a pandemic-related real estate market fueled by really low interest rates. Today we've moved into a more balanced market, with higher and rising interest rates, and it's beginning to have an impact on the sales volume, as you can see in this report.
Next we are going to go over our active listing report. Now this gives you an idea of how many homes are actually for sale at any given time in the market. At the end of August, we finished with 1456 properties for sale in Cape Coral and 367 properties for sale in Fort Myers. That is up approximately 3 times compared to last year when the inventories were averaging 554 in Cape Coral and 218 in Fort Myers. So we're starting to see the inventory creep up quickly, which is good if you want to keep home pricing in check. However, it's been holding at the same level of inventory for the last 6 weeks, which if that holds, is a sign of the market starting to stabilize.
An absorption rate is a great indicator of what type of market the general market is sitting in. So, for example, the absorption rate right now is averaging about a three-month supply of homes, meaning that if the sales volume remained the same and no other homes came up for sale, it would take approximately 3.39 months before all of the existing inventory would sell off. Now that absorption rate has been climbing because in months past that absorption rate was a lot lower, whenever the absorption rate is averaging between zero and three months' supply, it's considered to be a seller's market.
And then, when the absorption rates are between four and five months of supply, it is typically considered to be more of a neutral market. And of course, for inventories or months of supply that exceed six months, it's typically what we call a buyer's market. Right now we're kind of sitting at the tail end of a seller's market, generally speaking for the whole market.
That won't be the case for every price point, so it's important for any real estate professional with a client to zoom into the price range in which you're selling your property and see what the absorption rate is in that price range. That will always give you a really good idea of what your challenges might be, how long the days on market might take to sell a home, and what kind of demand overall you could expect for your sales, so that's something to look at when it comes to absorption rate.
For example, in the mid 300’s there is only a 1.5 month supply, which is considered a sellers' market, versus a 7.6 month supply for properties over 1 million, which is considered a buyers' market.
Right now, interest rates are averaging around six percent. If you go back just a month ago, it was averaging just over five percent. If you go back over six months ago, it was in the high threes, so rates have been moving up, and again, that's beginning to have an impact on buyer demand and overall selling prices.
So I know we covered a lot of points this month, but it's important that I think we all look at it. Take some time to look at the report that's attached on our website so you guys can see everything and all the data. In any case, I hope you guys have a great September. I look forward to talking to you soon. Take care.