Realtors say Cape Coral housing market is in transition, not collapse as WSJ reports

The Wall Street Journal on June 30 pegged Cape Coral as having “the worst housing market in America” — stated in a headline — after home prices fell sharply from a COVID-19 pandemic-era boom, leaving a glut of inventory on the market and recent buyers underwater on their mortgages. 

Southwest Florida Realtors responded to The Journal, arguing that the article’s lack of context made it an inaccurate portrayal of what they view as a healthy market correction rather than a sign of collapse. 

“I thought it was clickbait,” said James Sommers, a Cape Coral and Fort Myers Realtor with RE/MAX Trend, of The Journal’s headline. “I thought it was a bit negative.”

Sommers has been an area Realtor for 22 years. He adds, “Don’t get me wrong. We’re definitely in a correction.”

Citing an analysis of Homes.com data, The Journal reported that prices soared 75% to $419,000 in the Cape Coral-Fort Myers metro area in the early years of the pandemic, with buyers snapping up homes “sight unseen,” before tumbling 11% in the last two years ending in May. The drop affected those who bought near the peak the most, leaving 7.8% of Cape homeowners underwater on their mortgages, the highest rate in the country.

The Journal’s report focused on the height of the pandemic buying frenzy rather than putting it in a broader context that shows more balanced pricing trends, Realtors said. 

 “Such a characterization lacks critical context and overlooks the broader dynamics shaping our regional real estate trends,” wrote President Karen Borrelli of the Royal Palm Coast Realtor Association and Florida Gulf Coast Multiple Listing Service Inc. in a letter to The Journal.

MLS data shows that the Cape Coral median sale price grew slightly from $355,000 in October 2021 to $361,975 in June, an indication that pricing remained relatively stable outside the pandemic period when demand spiked and inventory was limited. 

The Cape’s supply more than tripled during that time, from 773 to 3,046 homes for sale, or about 7.3 months of inventory on hand in June. That indicates a tilt in buyers’ favor, but not a distressed market, the RPCRA said. 

A balanced, neutral market typically means four to six months of inventory on hand at current sales rates. 

Across the larger Lee County market, including Fort Myers, Sanibel, Estero, Bonita Springs and Lehigh Acres, sales prices and inventory tell the same story. A median sales price of $365,000 in October 2021 ticked up to $380,000 in June, while the inventory of homes for sale during that time shot up from 1,997 to 8,204. 

The Journal noted a similar sharp rise in inventory across the broader Cape Coral-Fort Myers metro area. 

“The Southwest Florida housing market, particularly Cape Coral, is transitioning from a historically tight seller’s market into one where buyers have more choice and negotiating power,” the RPCRA said. “This is a natural correction, not a collapse.”

Higher insurance rates and recent hurricanes also contributed to waning demand, The Journal article stated. The report cited anecdotal evidence such as increasing numbers of For Sale signs, open houses that no one showed up for and cars racing down otherwise empty streets as evidence that Cape Coral’s market is in trouble. The slower summer season may have contributed to those scenes, Borrelli said. 

The Journal’s article raised the specter of the 2008 housing market crash, when Cape Coral was the epicenter of an economic meltdown. But it noted that this time the market was fundamentally stronger due to factors such as tighter regulations on mortgages and more homes that investors bought outright with cash. 

Recent foreclosure activity in the Cape has also been minimal, the RPCRA said, unlike during the subprime mortgage crisis. As of July 2, 27 homes in the MLS were listed as foreclosures with 76 foreclosure sales recorded in the last 12 months. 

The RPCRA’s letter to The Journal concludes that the Cape’s housing market is “in transition, not in trouble.”

The Journal has not responded to the RPCRA’s letter as of press time, Borrelli said.