Sizzling Southwest Florida housing market shows no signs of letting up

The hot housing market in Southwest Florida might have Realtors wanting to "party like a rock star," but the party can't go on forever.

Still, there aren't any signs of a slowdown yet, despite a world of chaos, from the Ukraine war to inflation, said Randy Thibaut, founder of LSI Cos. in Fort Myers, at Market Trends 2022.

"Isn't that amazing?" he asked the revved-up crowd.

He followed his question, however, with a dose of caution.

He compared the highs of the market to dopamine, and warned that "the thrill of the chase" by buyers can make Realtors forget about "fear, uncertainty and doubt." 

"We can't crash," Thibaut said. "But we could have a little softening ahead."

By the way:High demand for apartments pushes up rental rates, selling prices in Fort Myers and Naples

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The event drew a packed house at the Caloosa Sound Convention Center in Fort Myers, promising to deliver "just the facts." The presenters shared a dizzying amount of data, with slides galore and sprinkles of entertaining and sarcastic humor throughout.

As for Southwest Florida, COVID-19 sparked a fire that ignited the housing market that still burns hot today, evidenced by the low inventory and high prices. 

In 2021, new home sales and permits soared in Collier, Lee and Charlotte counties, marking the 11th year of an uptick, Thibaut shared. 

"People just lost it," he said of buyers' enthusiasm.

Price increases have been off the charts.

To put an exclamation on that point, Thibaut offered up a few startling examples: From the first quarter of 2020 to the fourth quarter of 2021, the price tag for a home in a North Cape Coral subdivision rose 37% from $267,000 to $366,000, while one in an Estero subdivision increased by 77% from $385,000 to $683,000.

This year, Thibaut said it wouldn't surprise him to see that same house in Estero that sold for $683,000 go to $1.2 million.

"I'm going to tell you right now we're not in a boom," he said, reassuring the crowd.

That's because there isn't enough inventory for a boom, he said, like the one Southwest Florida experienced in 2004 and 2005 — that went bust and led to a housing crisis that earned it the unbecoming title of America's foreclosure capital.

In 2021, builders in the three counties pulled a total of 25,184 residential permits, Thibaut shared, up nearly 37% from 18,418 in 2020. That compared to a high of 44,000 in 2005, and a low of 2,066 in 2009. 

As for multi-family permits, Thibaut reported that they increased by 65% to 3,431 in Collier and by 148% to 1,227 in Charlotte from 2020 to 2021, but fell by 20% in Lee to 3,391 from 4,215.

Apartments remain a hot commodity in Southwest Florida for many reasons. They're desired by millennials and retirees, who don't want the hassles that come with homeownership.

They're also serving as a catch-all for new arrivals — as well as residents who have been priced out of the market or who have sold their homes to take advantage of the high prices.

"They're riding it out until the market softens," Thibaut said of many renters.

From 2020 to 2021, single-family home permits rose by 59% in Lee to 10,285, by 36% in Collier to 3,771 and by 30% in Charlotte to 3,079. 

Low inventory: location is no longer the driving factor for homebuyers

With inventory so low, location is no longer the driving factor for homebuyers. They're flocking to "B and C" locations where homes and home sites are available — and a little less expensive, Thibaut said.

Case in point? Ave Maria in eastern Collier County ranked as the top community in 2021, based on the number of residential permits pulled, with 780.

Babcock Ranch in the eastern stretches of Lee and Charlotte counties came in as a close second, with 729, followed by River Hall with 410, also in east Lee.

Miami-based homebuilder Lennar led the pack, with 3,171 units permitted in 2021 at its various communities.

When it comes to single-family permits on scattered lots, Cape Coral has been particularly hot, seen as one of the last places for affordability. 

"It lit up," Thibaut said. "It's where the heat is at."

In his fast-paced presentation, Thibaut also touched on the growing build-for-rent trend, increasing demand for manufactured and modular homes, and the "mind-blowing" land prices, as well as the rising cost of luxury high-rise homes.

He's concluded that 2022 will still be all about the chase for inventory across Southwest Florida, with strong demand and fierce competition continuing to drive the market — and put upward pressure on prices.

Residential real estate expert Denny Grimes, president of Denny Grimes & Team at Keller Williams Realty in Fort Myers, focused his talk on the existing home, or resale, market in Southwest Florida.

He discussed how prices have skyrocketed, leaving limited choices when it comes to affordable housing. 

"There's no $200,000 market here anymore," he said. "That's gone." 

He described 2021 as "the greatest market that ever was" and expects 2022 to be even better.

Price increases haven't stopped. In January, the median price for a single-family home rose to $722,500 in Collier and $413,500 in Lee — a 26% increase in both counties over the year.

The median is the price at which half the homes sell for more and half for less.

The number of resales grew by 16% from 2020 to 2021 in each of the three counties, showing strength across the board.

Lee County had a record year of resales — at 19,226. The median price of those sales reached $360,000, up 31% over the year and breaking $300,000 for the first time.

He showed a cartoonish slide to illustrate the craziness of the market today. In it, the buyers ask their real estate agent if they can look at something a little higher priced than the home they're standing in and she replies: "Okay, I can show you this house again tomorrow."

"Southwest Florida is actually kind of in unison," Grimes said

He shared a story about a local agent who got 155 offers on one house. 

In Lehigh Acres, a community once considered affordable, there's nothing much selling for less than $250,000, with more than a dozen listed at more than $501,000.

Meanwhile, builders have been gobbling up available lots in Lehigh. A total of 6,090 sold last year, compared to 3,206 in 2020, an increase of 90%.

In Cape Coral, he said, off-water lots have skyrocketed in price, increasing by 173% last year.

Luxury sales in the $1 million to $5 million price range have also performed well. In 2021, they rose by 109% in Lee and 59% in Collier over the year, he said, and Charlotte topped those numbers with a 256% increase.

Sales over $5 million have also been startling. In 2021, they increased by 75% in Collier and 208% in Lee over the year.

As for when the market might shift, Grimes said he hasn't seen any signs of it yet, based on a recent seven-day snapshot of Southwest Florida's residential Multiple Listing Sevice, or MLS.

"We watch it every week and we'll know it before you read about it," he assured the crowd.

His snapshot showed 358 new listings coming to market, with 560 sales pending. 

That means Southwest Florida is still deep into a sellers' market. That it could go on forever, however, is "inconceivable," Grimes said.