January 2023 Market Update; 2022 In Review
Lee County Market Update
January 2023 - Review of 2022
Click here to watch Mike's Lee County Market Update, a review of what happened in the real estate market in 2022!
Hi, this is Mike Darda with Darda Group and Compass Florida. Thank you for checking out our market update for January 2023 as we review 2022's real estate market.
Homes Sold in 2022
First, let’s review the number of homes sold in 2022 for Fort Myers and Cape Coral. In January 2022, there were 1,200 home sales, which increased by an average of 14% each month from January to April. In April of 2022, there were 1,741 homes sold. In November and December of 2022, the number of homes sold was averaging at 840 homes. Overall, there were 14,770 homes sold in Fort Myers and Cape Coral.
The next set of data we are going to review is the sale prices of the homes sold in 2022. The average sale price of homes in Fort Myers and Cape Coral was $381,000. Now this number stayed consistent throughout the entire year, with the highest month being June at an average sale price of $408,000.
Absorption Rate in 2022
Now, let’s take a look at the absorption rate over 2022. If you recall, absorption rate is the number of months it would take for all the homes currently listed to be sold. At the beginning of 2022, the absorption rate was roughly three to four weeks. What this means is that there were more homes selling than were being listed on the market, and when they would be listed, they sold very quickly. As the year went on, the absorption rate began to increase and we closed out 2022 with a 4 month absorption rate.
Interest Rate in 2022
Let’s move onto interest rates. This has been a major topic of discussion throughout 2022. Before we dive into the interest rates of 2022, we have to understand what made this such a remarkable year for home buyers.
In the middle 2020, the real estate market had begun to face an unprecedented shift in the number of sales. There were more homes sold at such a fast rate and at peak sale prices than ever seen before. That is because interest rates had begun to decrease at such astounding rates, and people were taking advantage of the market. This trend continued well into 2021, where home sale prices were still rising and interest rates were at all time lows. This caused a massive migration across the United States as people were starting to work from home more often, making it easier for them to choose the city they wanted to live in. According to the US Census, the Florida population increased by over 1.5 million people between July 1, 2021 and July 1, 2022. This was clearly shown here in Southwest Florida as new communities and developments were being built all over town.
Now as we have moved into 2022, interest rates had begun to steadily increase, as we started off the year with a 3.22% interest rate on a 30 year loan. This sudden increase in interest rates forced buyers to pull themselves out of the market. This caused sellers to either panic and pull their homes off the market, or attempt to gain more traction with decreasing their listing price, a tactic we hadn't seen in the real estate market for over 18 months. As the year continued, interest rates had jumped to 4.16% by the middle of March. If you recall back to the number of homes sold in 2022, this is when there was a sudden decrease in the number of homes sold in Fort Myers and Cape Coral, a clear correlation between interest rates and homes sold. Throughout the next months of 2022, interest rates continued to rise, finally hitting 6.02% in the middle of September. The highest interest rate we saw in 2022 was 7.08% in the end of October through the beginning of November. We closed out the year with a slight decrease in rates, at 6.42%.
Arguably, interest rate changes were the largest factor in the balancing of the real estate market in 2022. This resulted in a market where buyers were forced to be more selective with the homes they would afford. In an effort to sell their homes for the highest price, sellers then became more open to negotiations and potential contingencies of their sales.
What to Expect in 2023
Let’s now move into what we are expecting for 2023. In spite of interest rates and hurricane damage, initial signs are positive for the Southwest Florida real estate market.
Here at the Darda Group, we have seen an uncharacteristically high volume of buyer inquiries over the last few weeks of December, which is normally a relatively quiet time of the year. Resulting in a record for December of 33 new pending homes here with the Darda Group. The bottom line is that it still gets cold up north and sunshine sells very well this time of year.