Analysts forecast the economy to recover by Q4-20 to Q1-21, although we expect unemployment to remain elevated near 10 percent into early 2021 but improving through the year. For those who do not qualify for an extension, the 6-month GSE-backed loan forbearance period expires in the fall (+6 months for foreclosure proceedings). The rise in foreclosures will have negative effects on home values. Mortgage interest rates should stay low through next year and buyers & investors will snap up discounted inventory. Q2-Q4 2021 Forecast: +2 percent to +5 percent Disclaimer: The variability around this forecast is wide and dependent upon data available as of mid-May 2020. The severity and duration of the COVID-19 epidemic, as well as the response of the public and policymakers, continues to change daily. RENTAL RATES As of March 2020, the average three-bedroom, sin- gle-family rental home in the Cape Coral-Ft. Myers MSA is $1,550/mo. Metro area one-year change for a three-bedroom detached SFR is down -2.3 percent, a $40 annual decrease. Zip code level three-bedroom SFR rents range from $1,300 to $2,100. Long-term rents on the local islands and near the coast from Esthero to Bonita Springs are upwards of $2,000. Cape Coral rents range between $1,450 to $1,800. Fort Myers rents south of Highway 82 range from $1,750-$2,000. The least expensive rents in the market are in the Leigh Acres area, ranging from $1,200-$1,500. Cape Coral-Ft. Myers ranks 42nd in the U.S. for five- year SFR rental price increases with a 22 percent gain. Less expensive areas on the northern part of the MSA have seen the largest rental price appreciation up to 30 percent. The more expensive areas to the south end of the market have increased a moderate 15 percent. The overall rent-to-income ratio of the Cape Coral-Ft. Myers MSA comes in at 33.2 percent, slightly above the national average of over 32 percent. However, areas along the Caloosahatchee waterway can have elevated rent-to- income ratios between 35-45 percent. High rent-to-in-

On the supply-side, there is a relatively low inventory of homes on the market, as active listings are down over 20 percent year-over-year in April. The Cape Coral-Ft. My- ers market is 22nd in the country for new construction, adding 3,500 new units and 1,580 SFR properties YTD through March*. This rapid development pace alleviates some of the inventory squeeze and will keep price appre- ciation muted. Buyer demand has not dried up, historically low inter- est rates have made current home prices affordable to a larger group of potential buyers. Additionally, steady population growth in the market has been adding around 15,000 new residents to the area per year since 2012. Sales have been below average yet better than expected through April, while the metro was largely under stay-at- home orders. Real estate industry professionals adapted quickly by using digital platforms to provide virtual tours and even contactless closings to facilitate deal flow. Demand headwinds in the market reduce the potential buyer pool due to rising unemployment, reduced wages, and uncertainty about their employment status as well as increased credit score and down payment requirements to qualify for loans. *Census Building Permit Survey CAPE CORAL-FT. MYERS MSA HOME PRICE FORECASTTHROUGH 2021 Coming into 2020, buyer sentiment has been leveling off in the Cape Coral-Ft. Myers market. Tailwinds of seasonality, low mortgage interest rates, the CARES act forbearance policies freezing foreclosures, and the improving buyer sentiment from reopening the economy are factors that should lift prices higher in the near term. Q3 2020 Forecast: +2 percent to +5 percent Tighter lending restrictions, a slow recovery for the large cohort of T&E jobs, seasonal slowing of market demand, and increasing defaults from non-GSEs are continued chal- lenges to weigh on real estate prices. Medical professionals warn of a resurgence in COVID-19 cases in the fall-winter period, potentially restricting the economy again. Q4 2020 - Q1 2021 Forecast: -5 percent to -2 percent

84 | think realty magazine :: july 2020

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