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 November 2022.
Currently there are 1291 single-family properties in Cape Coral that are currently listed for sale in the multiple listing service. If you go back one year, we had 561 properties for sale, so year over year, our inventory is up by about 2.3 times. However, since Hurricane Ian, we've really started to see our inventory start to drop. We had 1436 homes on the market before the storm. So we’ve seen a drop of 10% in inventory in Cape Coral.
In Fort Myers, we currently have 313 single-family homes for sale. If you go back one year, we had 181 properties for sale, so that is almost double now. If we go back to before the storm, there were 376 properties on the market, so we’ve seen a drop of 16%.
The next thing to look at is our home sold report, and what this does is give you an idea of how many homes actually closed escrow and the seller successfully moved, so if you go back to the month of October, there were 204 properties in Cape Coral and 136 in Fort Myers that closed escrow. If you go back one year, there were 583 properties in Cape Coral and 226 in Fort Myers that closed escrow. Prior to the storm in September, we saw 409 properties in Cape Coral and 153 properties in Fort Myers close. So most of our drop was storm-related. Also prior to the storm, sales were off roughly 25% from a year ago.
Now, what's happening is that interest rates are going up, which we'll talk about in a minute, and as the rates have gone up, it's having an impact on affordability, which is pushing the sales volume down. So if you guys are wondering what's happening in the market, largely it's a result of higher interest rates.
This brings me to the next topic: mortgage interest rates. If you haven't been paying attention, you might be kind of alarmed by the number I'm about to share, but currently the 30-year mortgage interest rate is averaging a little above seven percent nationally. So that is obviously a lot higher; it's more than double what it was a year ago at the same time, and so every one percent that the mortgage interest rate increases has an impact on the purchasing power of a buyer by up to 10 percent. And so now we see rates that are three and a half percent higher than they were a year ago, which really can technically translate into an impact of about 35 percent on the purchasing power for that same borrower, and so we're seeing this show up again and again in today's marketplace.
The variable in our market is the impact of Hurricane Ian. Per Red Cross, Ian has destroyed or caused major damage to more than 12,000 Florida homes, and this number is expected to increase as residential assessments continue.
Per Forbes, home price appreciation typically bounces back better a year after a major hurricane for the affected areas than it did the year before.
It will be interesting to see if the same effect happens in our market, but initially we are starting to see lower inventory and pending sales returning to near-normal levels, which are an indication we may have the same effect here.
FHA & VA Loans
The last thing to talk about is a kind of interesting opportunity in the market. I don't know if, in 20 years, I've ever shared this because it's never been that big of an opportunity! But right now, if you have an FHA loan or a VA loan, one of the attractive elements of those two loan products is that those loans are assumable.
So what that means is that if you're selling your home right now and you find a buyer who wants to purchase it, if they're able to make the down payment to pay the difference between what the home is worth and what your loan amount is, if the buyer can make that down payment plus any of the fees associated with making the sale take place, if they can do that, you could allow a buyer to actually assume your existing FHA or VA loan.
Now, why is that attractive? Well, if you got that FHA or VA loan when the rates were at three and a half percent or four and a half percent or even you know, today at five and a half percent. That would be more attractive than today's interest rate of about seven and a half percent.
So this is an opportunity if you have to sell a home and you have an FHA or VA loan. Make sure you talk to your real estate professional about how to present that information in a way to make your home more attractive in today's market.
So in any case, if you guys have any other questions regarding the market here in Lee County, just know we're always here to help.