come in the MSA is just over 50 percent, with the lowest at 22.5 percent. WHERE DO RENTS GO FROMHERE? During the previous recession in Cape Coral-Ft. Myers, RentRange measured a 25 percent decrease in SFR rents from the peak of $1,250 in 2007 to $890 in 2012. Since the lows, rental rates have rebounded nearly 75 percent to current market prices. Rental rates in the Cape Coral-Ft. Myers MSA have re- cently been flattening over the last 2-3 years as buy vs. rent affordability leans to the buy-side. The market average rent price of $1,550 equates to nearly $350-400,000 of purchase power (assuming 20 percent down, 30-year fixed). On May 14th the Federal Reserve reported that near- ly 40 percent of workers in households earning under $40,000 had lost their jobs by early April. These numbers will bounce back as economies restart; however, this is a very large cohort of the renter pool across the U.S. Addi- tionally, many job sectors in the lower income range have a slower recovery trajectory ahead. In the meantime, the Cape Coral-Ft. Myers MSA de- mand for short-term rentals has been severely impacted from travel restrictions. This popular tourist destination has around 4,400 short-term rental properties. Owners are faced with a tough decision to hold through low occu- pancy, convert to a long-term rental, or sell the property. RentRange analysts forecast that the majority will choose to hold the property as a long-term rental for one or two years. This trend will add new inventory to the mid-high end of the rental market, and the extra supply could put downward pressure on prices in the near term.

Winter-spring months are higher activity times for vaca- tioners. If travelers feel safe, this will spur economic activ- ity in the area to help support prices heading into spring. If home prices dip during this time, more demand could be lost due to low rates turning renters to homeowners. Q4 2020 - Q1 2021 Rent Price Forecast: -10 percent to -5 percent The last five years have provided nearly seven percent year-over-year gains, and Cape Coral-Ft. Myers is due for a cooling period to allow job growth and wages to reconnect price support. Rent vs. Income metrics show the market is above the national average, and wages are not projected to rise until the economy recovers. Rental rates will see limit- ed appreciation until the job market begins to recover. Q2-Q4 2021 Rent Price Forecast: 0 percent to +5 percent CONCLUSIONS Our forecast for the near and long-term is that Cape Coral-Ft. Myers is still a good market for investment, even with the challenges of COVID-19. Low rates provide many opportunities for investors to find affordable rental properties. Relatively low home prices in the market, and post-2012 appreciation has been modest, but has not overshot fundamentals this time around. In fact, the market has only just recently surpassed the April 2005 median home price. Inward population migration will support demand for real estate for people looking to rent and buy. Rent prices have recently surged ahead of median house- hold incomes; however, home prices are still relatively affordable compared to other large metro areas, and low interest rates help overall affordability. Be aware that the rental price outlook is expected to fall due to current economic factors. So, investors looking for buy-and-hold rentals would be wise to focus on lower cost properties and set lease rates at a competitive price in the near term. Lastly, virus fears will need to abate before tourism industries can rebound, so for now it is not a good market for short-term rentals. •


Some areas are cheaper to own than rent, which will reduce demand heading into peak season. Economic effects will increase demand for affordable housing, and there will be significant increase in demand for Section 8 subsidized rentals. High-end rentals will see a drop in demand along with increased inventory from short-term rental conversions. Q3 2020 Rent Price Forecast: -5 percent to 0 percent

Fred Heigold III is the senior data analyst at Altisource / RentRange®, an industry leader in market data and analytics for the single-family rental housing industry.

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