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MARKET & TRENDS

SOUTHWEST FLORIDA

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There’s No “Magic Hour” NOW IS NOT THE TIME TO SIT ON THE SIDELINES IN THE SOUTHWEST FLORIDA MARKET.

by Robert Knight

nyone watching the real estate market during the last year

estate cycle fluctuates every seven years, but the country is currently in the 11th year of an uptick in new single-family homes sold. Southwest Florida seems to be the epicenter of the feeding frenzy for real estate sales. Prices have soared to historic rates in Lee, Charlotte, and Collier counties. As an example, a residential property in Cape Coral (Lee County) that sold for $267,000 in 2020 was valued at $366,000 in the fourth quarter of 2021—a 37% increase. By the end of 2022, that same house could be $500,000. 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.

Those numbers are reminiscent of the “boom” in 2005, when those counties saw 44,000 total permits. 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. Homeowners have seen their home values increase dramatically, so they are opting to sell and rent, leading to an increase in multifamily properties. They’re selling out— choosing not to buy in—but renting an apartment or house instead. In other words, they’re riding it out until the market softens. This activity has created an interesting and emerging trend for investors. The build-to-rent model seems to be a win-win for both investors and residents looking for

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knows bidding wars and above‑listing sale prices have defined this tumul - tuous time. Homes have gone under contract for the asking price or higher on the same day they were listed. This buying frenzy has kept many investors on the sidelines, waiting for the market to cool. Although the irrational exuberance has begun to slow a bit in Southwest Florida, the fundamentals that created it remain strong. Many of the same conditions that created last year’s sellers’ market are still in place; most importantly, supply is still way below demand. Low inven - tory, the arrival of new millennials moving into the buying market, and the historic slow rate of new home construction are keeping prices high. Typically, the national real

58 | think realty magazine :: september - october 2022

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