Lee County Market Update
Click here to watch Mike's Lee County Market Update for the month of October!
Hi, this is Mike Darda with Darda Group and Compass FL. Thank you for checking out our market update for the month of December 2022.
If you go back just one year, you’ll see that 612 homes in Cape Coral were sold in November and 210 in Fort Myers, so our sales have reduced by 49%.
One reasons we are seeing this is because Southwest Florida, is just now beginning to rebuild after Hurricane Ian. Homeowners are deciding whether to sell their home with hurricane damage, or to rebuild. What this may begin to show us as we move towards the end of this year, is an increase in the number of offers buyers are having to write to purchase a home. Sellers may be more likely to accept the first offer on their home to relieve themselves of the stress of rebuilding a home, or risk getting a lower sale price than what they were expecting.
Another reason why we may be seeing the decrease in the number of home sales in November is because Southwest Florida’s season is beginning. Part-time homeowners are having to decide if they even want to come back to Southwest Florida during the clean up time of this Hurricane Ian. Homeowners in this scenario may be holding off on making any real estate decision until the future becomes more clear in regard to the state of Southwest Florida.
The next thing to look at is our absorption rate. The absorption rate is a great indicator of where the market is currently. Right now, the absorption rate is averaging at 4-month supply of homes, meaning that if the sales volumes remained the same and no other homes came up for sale, it would take approximately 4 months before all of the homes on the market would completely sell out. We have seen the absorption rate climbing in the past few months. When the absorption rate is averaging between zero and three month supply, it’s considered to be a seller’s market. 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 are sitting at the beginning of a neutralizing market. This means that sellers are leveling out expectations of the market of their home, and buyers are beginning to have to negotiate more details of the sale, but overall having to write less offers per home.
Let’s move onto interest rates. Right now, interest rates are averaging around 6.29% for conventional loans, and 5.75% for FHA loans. If you look back just a few months ago, they were averaging at around 7%. So, rates are shifting down and this is a rare moment where rates are down during a past year where we have seen steadily increase overall.