Surging Prices and Sales Drive the Market in Southwest Florida

Every year at the Market Trends conference, Southwest Florida real estate experts get together to share valuable insights and give their outlook on the current climate and future forecast when it comes to property acquisitions in one of the fastest growing areas in the country. This year the theme was The Thrill of the Chase.

Let’s dive into what their predictions are for 2022.

2022 Predictions

After a record year from sales and prices, topics ranged from single and multifamily home sales to commercial, retail, and industrial space. Land, new home sales, and development expert Randy Thibaut, founder of LSI Companies, stated that while usually the national real estate cycle fluctuates every seven years, the country is in currently on the 11th year of an uptick in new single-family homes sold.

“We thought we were going to see softening, but then something happened … it was COVID-19,” Thibaut said. “It was the spark that lit the fuse in our market. Our permits soared in spite of the pandemic.”

As an example, Thibaut used a residential property in Cape Coral that in 2020 sold for $267,000. In fourth quarter 2021, that house was valued at $366,000, a 37% increase.

“A house in the North Cape could be $500,000 this year,” Thibaut said.

The total number of residential permits for Lee, Collier, and Charlotte counties totaled 25,184, a 37% increase from 2020. New residential single- and multifamily homes in Lee County saw a 28% increase, while Collier and Charlotte saw 48% and 50% increases, respectively.

Thibaut compared those numbers to what he called a true “boom” in 2005 when those counties saw 44,000 total permits. He said if there were to be a massive influx of residents looking for homes in Southwest Florida like we saw in 2005, the builders would simply not be able to meet the demand due to the shortage of supplies and other factors.

Thibaut says many homeowners have seen their home values increase dramatically and are opting to sell and rent, leading to an increase in multifamily properties.

“We saw another surge in multifamily permits. Why? Because people saw their homes go up to astronomical numbers,” he said. “They’re selling out, choosing not to buy in, and renting an apartment. They’re riding it out until the market softens. Young families looking to buy a home got priced out, so they’re renting.”

When it comes to single-family homes, Lee County saw a 59% increase in permits—and not just in premiere locations.

“I believed and what I was taught was, ‘location, location, location.’ These are C and B locations (with the highest increase). It’s not about location—it’s about availability of lots to build on.”

One of the most noteworthy statistics is that 25% of new single-family home permits in Southwest Florida were pulled in Cape Coral—notably in the north Cape.

“I don’t see that stopping,” he said. “People are flocking there because of affordability.”

Another hot commodity on the market is build-to-rent homes. Thibaut said the 6,740 in 2021 is expected to double in 2022.

As for what homebuilders are doing to work through the supply chain issues, Thibaut said these entities are going to manufacturers and suppliers and looking to purchase wholesale amounts of product to be able to keep up with the demand from their customers.

Will the Bubble Burst?

Thibaut says that in order to have the market crash, there needs to be an oversupply, something Southwest Florida is not experiencing at the moment.

While he’s confident a crash is not on the horizon, he did say there could be “softening” coming, due to buyers hitting a wall on pricing, rising interest rates, supply chain issues, and the possibility of a recession.

“It looks like it’s not going to stop anytime soon,” he said. “We’ve just got to keep these things in perspective. I hope they’re not happening.”

Unprecedented Growth

Florida is the second fastest-growing state in the country. Lee County, in particular, saw 23,000 people relocate to the area from July 2020 to July 2021. Residential real estate expert Denny Grimes, president of Denny Grimes & Team at Keller Williams Realty, cited statistics from the U.S. Census Bureau.

In Florida, the median price of sold single-family homes in January 2022 is $375,000, while Lee sits at $413,000.

“There’s no $200,000 market here anymore. That’s gone,” Grimes said. “When you look at the percentage change, Southwest Florida outperformed the state in every county other than Sarasota. There is no question this area is blessed, and we’re doing better than the rest of the state.”

The number of existing homes sold increased by 16% in Lee County from 2020 to 2021.

In 2021, Lee, Charlotte, and Collier counties all set records for single-family home sales, with Lee coming in at 19,226.

The median price of existing homes sold in Lee County from 2020 to 2021 increased by 31%. The median price of a single-family home in Lee County in 2021 stood at $360,000—the first-year median prices were over $300,000. Grimes said in January 2022, the median price for a home in Lee County was $411,000.

“Not only have we broken the $300,000 mark, we’ve broken the $400,000 mark,” Grimes said. “The market is still moving forward (and) the market is still going up. We watch this every month. And when the market starts to turn, that median will start to trail off.”

Inventory Is Moving Fast

Grimes said, “It’s kind of torture being a buyer in this market. Buyers are going through multiple offers, and the national stats show that the average time on the market for a home is 19 days. Normally it’s around 80 to 90 days. Buyers have to have their track shoes on. I know an agent that had 155 offers on one of their properties.”

Grimes said what’s causing this is the lack of inventory. In Lee County, the number of single-family homes available decreased by 13% over the last year.

“When inventory drops, prices go up,” Grimes said.

In February 2009, when the bubble had just burst, there were 4,220 single-family homes in Lee County under $100,000. In June 2021, there were three. Now, there are none.

In Lehigh Acres, the median sales for homes and lots have skyrocketed more than 138%.

In Cape Coral off-water lots, sales have increased by double-digit percentiles, and costs have ballooned 173%, as the median sales price is now $41,000 compared to $15,000 in January 2021. When it comes to waterfront property in Cape Coral, Grimes said the median asking price eclipses $1 million and, on a canal, more than $2.5 million.

“Asking prices are still going up. There is no slowdown in the future,” Grimes said.

When it comes to luxury homes ($1 million to $5 million), Lee County is outpacing Collier County (percentage wise) with an increase of 109% from 2020 to 2021. Lee County saw 1,169 homes sell in that range in 2021, up from 558 in 2020.

Regarding homes over $5 million, Lee saw a 208% increase from 2020 to 2021, with 37 sold in 2021 compared to 12 in 2020.

Grimes agreed that to have a bubble, excess inventory is needed, which is simply not the case in the current climate.

He shared statistics from over the last seven days, where 353 were sold, 560 sales were pending, and 358 new listings went on the market.

“When is the market going to shift? It’s going to shift when the numbers reverse and more listings are coming in than going off,” Grimes said, adding that the 2021 market is very unlikely to be repeated and that Florida’s migration numbers may slow as states relax mandates. “Now when is that going to happen? I don’t know. But we watch the numbers every week.”