THE LIKELY GROWTH OF THE RENTAL MARKET
THE SUPPLY-DEMAND CURVE We’ve already mentioned that the city of Cape Coral was a planned community. The strict zoning limits the de- velopment of new housing stock. That in turn limits sup- ply though demand is high. That creates faster-than-av- erage rent increases that yield significant returns for investors. On the flipside, Cape Coral planners didn’t build a glut of luxury condos that have caused a several year backlog of such inventory in other housing markets. Because the surrounding area is built up, there isn’t room to build a lot of single-family homes that bring down existing home prices, either.
Pay scales in Cape Coral haven’t kept up with the double digit rent increases. That is in part because the large student market isn’t very sensitive to rent increas- es, and it is in part because they provide cheap labor that keeps wages from going up. The movement of Fort Myers residents to the relatively affordable area, too, drives up rents. That means that the number of renters in the Cape Coral real estate market will go up while supply won’t increase the return on investment for those who invest in this housing market today. That is why rents in the Cape Coral zip code are expected to hit $1500 a month though the median income is around $50,000 a year.
THE STRONG RENTAL MARKET Between tourists, students, snowbirds, seasonal workers, and locals who cannot afford to buy a home or condo, the Cape Coral real estate market has a strong market for rentals. However, it isn’t a market that is so hot for rental units that new construction could cause that bubble to burst. Cape Coral has roughly a third of its population renting, a rate higher than suburbs but lower than Fort Myers proper. Rental rates won’t go down in Cape Coral as they might in Fort Myers due to redevelopment there. Nor will they be able to buy a house in the suburbs; nearly half of all rent- ers spend more than a third of their income on housing.
CAPE CORAL IS AFFORDABLE BY LOCAL
STANDARDS Cape Coral is affordable to renters and investors alike by Fort Myers standards. The average rent for a Fort Myers apartment is $1200 a month. A studio apartment comes in at $750 a month while a one bedroom yields around $1000 or more a month. Many choose to rent in north Cape Coral and commute to Fort Myers, trading time for money. For investors look- ing at buying real estate in Florida, the $250,000 median price tag is certainly better than the much higher bill you’d get if you tried to invest in Miami.
Made with FlippingBook Online newsletter