A sharp decline in prices boosted affordability and brought both investors and buyers to the market.
Palm Coast, FL – January 7, 2011 – Florida was hard hit by the subprime mess and subsequent economic slide and no city in the state was spared. A sharp price correction and improvements in employment have helped turn the corner for the housing market in Cape Coral-Fort Myers, though. To find out how your market has done, see any of the 152 Local Market Reports for the 3rd quarter of 2010, now available on the NAR Research website.
Florida was ground zero for the subprime mortgage mess and the bout of foreclosures that ensued. A second round of foreclosures overwhelmed many local markets when the economy soured, adding additional layoffs to local unemployment that had already expanded when home construction halted. The result was a sharp decline in home sales in 2006 and 2007.
Low demand and rising inventories pressed the median home price in Cape Coral-Fort Myers downward. The median price fell from a high of $581,200 in the second quarter of 2005 to $271,000 by the second quarter of 2007. This sharp decline in prices boosted affordability and brought both investors and buyers to the market. The price to income ratio, which peaked at 2.9 in 2005, fell to 0.9 by 2009. As a result, sales surged in 2009 and maintained this momentum into 2010. Sales were at roughly the same level in the third quarter of 2010 as a year earlier, but this was a high level of sales volume. Robust sales caused the median home price to expand in early 2010, a pattern that continued in the third quarter of 2010 with a 3.0% increase from the same period a year earlier despite the end of the federal tax credit.
The decline in home prices was not the only factor that spurred home sales. The economy of Florida squeezed out a 0.7% growth rate over the 12 months ended in September, well below the national average of 1.6%. However, the economic growth stopped layoffs in the Cape Coral-Fort Myers area and by September a total of 100 jobs had been added over the prior 12 months. Construction and financial jobs were still weighed down with layoffs, but the trade and transport, education and health services, and leisure and hospitality sectors experienced healthy expansions.
Improvements in the employment picture also helped to mitigate foreclosures in Cape Coral-Fort Myers. Prime, subprime, and Alt-A foreclosure rates all fell between February and August of 2010. In addition, the 60- and 90-day delinquency rates on prime loans both slipped, which suggests that the prime foreclosure rate will ease in the future. However, the prime foreclosure rate of 12.6% was nearly quadruple the national rate of 3.1% in August, so there is much room for improvement.
Cape Coral-Fort Myers’ housing market was hit hard during the subprime crisis and subsequent national recession. Demand for housing has since grown and stimulated home prices and moderated foreclosures. Employment growth has helped as well and the local housing market appears to have hit bottom, but this market is still fragile and has a long ways to go. To find out more about the Cape Coral-Fort Myers housing market or your own see NAR Research’s Local Market Reports for the 3rd quarter of 2010.
©National Association of Realtors – reprinted with permission