In the Know: In historic first, Collier houses now Top 10 most expensive in U.S. Lee keeps rising, too
Phil Fernandez
Some of you may want to replace Southwest Florida's well-worn welcome mat.
We've been reporting data this year and last on the region largely leading Florida and the United States on incoming relocations from all corners of the country.
In 2021, more than 547,000 people switched driver licenses to the Sunshine State. That’s a 40% increase from 2020. While a continuing big boost to the economy, the pandemic's mass migration has its consequences, too.
So what are the ramifications, in addition to a larger chunk of your afternoon spent in a Walmart checkout line, a Starbucks drive-thru or a tiresome Tamiami Trail intersection? For one, not enough quality dwellings to go around with inventory at historic lows, and what is available continuing to dramatically surge in price. And we mean, SURGE.
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“The number of units are declining because of the basic fundamentals of supply and demand,” said CEO Budge Huskey of Premier Sotheby’s International Realty. "Most brokers are confident the values we gained in 2021 will hold and may increase, even if at a slightly slower pace.”
At 32%, Collier County saw the second highest year over year rise in the nation for single-family median in the third quarter and followed it with 21% to finish 2021, according to National Association of Realtors details released Thursday. That thrusted Naples to the most expensive metro to buy a house east of Colorado. For the first time in history to end a year, it's ninth overall in the United States at $685,000.
"A lot of the same that happened over the last 18 months will continue in 2022," said real estate agent Dennis Bowers, who leads at The Bowers Group at Compass in Naples. "With demand at an all-time high and the inventory at an all-time low, there is no way that we see a reprieve at all in this market."
In just a quarter, Cape Coral-Fort Myers rose from the mid-50s nationally to the mid-40s with its $380,000 single-family median price, after a 22% jump. Charlotte County led the U.S. in yearly gain as 2021 ended, with 28.7% to $341,000, followed by the Ocala area's 28.2% to $250,000, a total that's the lowest in the state.
Bowers told me many of the same pieces continue in play, such as "simple economics of supply and demand with added factors of low interest rates (and the) ability to work from anywhere," he said. "It will take a few years to get back to a healthy market that is not a dominant sellers market."
Hottest neighborhoods for 2022: downtown Fort Myers, Sarasota area
Based on the new NAR statistics, a Collier household needs at least $128,000 in salary to affordably pay a 10% down payment mortgage for a single-family home. With a jump from $116,000 in the third quarter, that may doom dreams of many local families. Only eight other places, mostly California, are higher. NAR considers a mortgage affordable if payment amounts to no more than 25% of income.
"The escalating prices took a toll on home shoppers, compelling many to come up with extra cash, and forcing others to delay making a purchase altogether," said Lawrence Yun, NAR's chief economist. "A number of families, especially would-be first-time buyers, are increasingly being forced out of the market."
As compared to obtaining a typical home in Collier, a Lee County household would need $70,972, identical to the Orlando area. For the Sarasota metro, $81,245, and Charlotte, $63,688.
"Not surprisingly, housing affordability took a significant hit in 2021," said the Royal Palm Coast Realtor Association's January analysis shared with me by the agency's Jim Sanville who departed Friday for a Babcock Ranch communications role. "Price growth is expected to slow somewhat (in 2022), but affordability will likely remain a top constraint for some homebuyers."
The stats "clearly indicate that housing affordability is becoming an issue," said Lucas Professor of Real Estate H. Shelton Weeks of Florida Gulf Coast University. "Collier and Lee counties are similar in that the current boom has resulted in similar percentage increases in housing prices. It is also important to note that a large portion of the Collier County workforce lives in Lee County. As a result, the two markets are inherently linked."
Standing out, the median in downtown Fort Myers has been largely rising faster than the county in general, which helped lead to it being slated among America's 10 hottest neighborhoods for 2022, according to Redfin brokerage. Sarasota County communities dominated the top of the rankings.
Redfin's researchers based findings on their "Compete Score" that also analyzed other factors including days on market and domiciles sold above what they were listed. In their study looking at medians for 33916, they found addresses selling there in just over a week at $264,328, or 25% higher than the previous year. The share purchased above list: 35%.
Still, those moving fast could still uncover a deal in that zip code.
"This part of downtown Fort Myers has a lot of 1950s-era homes that need some TLC," said real estate agent Chris Jancich. "I recently worked with a disabled veteran who for years had been living in a nearby neighborhood where he was spending over $2,000 a month on rent. He bought a home for $200,000 in the downtown Fort Myers area, and his monthly housing costs dropped to around $1,400."
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That buyer's happy to be sitting pretty while the obstacles remain everywhere for locals.
"While the price increases are eye catching, they only tell a portion of the story," said Weeks, of FGCU's Lutgert College of Business. "In order to see how these changes are impacting our current residents, we must look at changes in income to see if earnings are keeping pace with home prices."
It doesn't look that way.
"The Bureau of Economic Analysis reported that per-capita personal income rose 1% in Collier, 4% in Lee and 5% in Charlotte during 2020. Unfortunately, these are the most recent income data available," Weeks told me. "Based on the current feedback we are receiving from participants in the job market, we expect to see growth in incomes across the region, (but) the numbers are likely to be well below the rates of increase seen in our housing markets."
And oddly, for those fortunate to own in Southwest Florida, they may face a bit of a conundrum if they want to cash in and still continue living in the region.
"The big struggle for the local population is that they have tons of equity but nowhere to go," Bowers said. "In addition, when the money is in the equity of the home, they would have to sell their home first and then try to find a place after that. With a multiple offer situation, they could end up homeless. Many people are staying put and putting money into their homes."
Could more abodes become available locally, with info showing New Yorkers who began draining our supply early in the coronavirus age now returning in big numbers to the Big Apple and its big city pulse?
In one study I reported last month, New York was third in the country in 2021 in-migration, just ahead of Southwest Florida. The New York Times also found that Manhattan had a record 4,523 apartment transactions in the third quarter of 2021, the most in more than three decades, at prices well above pre-COVID levels.
Bowers expects many will keep their second home investments here and rent them.
"I don't see these coming back on the market," he said.
'Wealthy have enjoyed record highs'
What will help is new construction.
"Hopefully, supply chain issues will be progressively less dramatic during the next year, and this will allow home builders to add more supply to the market," Weeks said. "This potential expansion of the supply of housing is definitely needed across the region."
But if a trend of the past four decades is any indicator, it won't be nearly enough.
Another main driver of the shortage is the decline in entry-level home building, said Sam Khater, chief economist for Freddie Mac. The national number of starter homes under construction has declined significantly, from 40% of homes built in 1980 to 7% in 2019.
Indeed, homes priced between $100,000 to $250,000 saw the volume of sales decrease by 23% in December 2021 compared with December 2020, whereas homes sold in the over $1 million bracket went up by 38% in the same time period, according to NAR figures.
"There's plenty of buyer interest but no supply," NAR's Yun said. "The wealthy have enjoyed record highs in the stock market and accumulated housing wealth and can afford high-priced homes."
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Weeks said there's still a lot of work to do.
"There are no easy answers to resolve the housing situation. Any response that will have a meaningful impact on housing market outcomes will require tradeoffs. These tradeoffs are often not popular with those of us who are fortunate to already live in the region and who want to preserve the quality of life that we enjoy in our slice of paradise," Weeks said. "However, at some point we have to make some difficult choices.
"Do we simply accept rising home prices and a low level of housing affordability, or do we confront the challenges of reducing the cost of adding new housing supply?"
We'll be talking more on that question in future columns.
10 most expensive metros to end 2021
1. San Jose, Calif. ($1,675,000; 19.6%);
2. San Francisco ($1,310,000; 14.9%);
3. Anaheim, Calif. ($1,150,000; 23%);
4. Urban Honolulu, Hawaii ($1,054,500; 16.8%);
5. San Diego ($845,000; 14.2%);
6. Los Angeles ($797,900; 15.9%);
7. Boulder, Colo. ($775,100; 17.2%);
8. Seattle ($700,000; 13.9%);
9. Naples ($685,000; 21.2%)
10. Long Island, NY ($644,600; 9%).
Note: Single-family median by National Association of Realtors, showing yearly increase
Can you afford a house in Florida?
Here's household income to afford median single-family home ranked by Florida metro:
1. Collier: $127,937
2. Miami-Fort Lauderdale-West Palm Beach: $93,385
3. North Port-Sarasota-Bradenton: $81,245
4. Crestview-Fort Walton Beach-Destin: $73,905
5. Lee: $70,972
6. Orlando-Kissimmee-Sanford: $70,972
7. Tampa-St. Petersburg-Clearwater: $66,303
8. Port St. Lucie: $66,303
9. Jacksonville: $64,809
10. Charlotte: $63,688
11. Sebastian-Vero Beach: $62,568
12. Palm Bay-Melbourne-Titusville: $60,700
13. Panama City: $59,766
14. Deltona-Daytona Beach-Ormond Beach: $57,712
15. Gainesville: $57,207
16. Pensacola area: $56,031
17. Lakeland-Winter Haven: $55,564
18. Tallahassee: $52,295
19. Ocala: $46,692
Note: NAR data on 10% down for mortgage and payments 25% or less of income.
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Redfin's 2022 hot 10 neighborhoods
1. South Sarasota
Zip code: 34238
Median sale price: $434,023 (+19% YoY)
Share of homes that sold above list price: 36%
Median days on market: 7
2. East Venice
Zip code: 34292
Median sale price: $420,000 (+38% YoY)
Share of homes that sold above list price: 53%
Median days on market: 4
3. Englewood
Zip code: 34223
Median sale price: $427,500 (+38% YoY)
Share of homes that sold above list price: 28%
Median days on market: 8
4. Venice
Zip code: 34285
Median sale price: $305,000 (+5% YoY)
Share of homes that sold above list price: 39%
Median days on market: 6
5. Nokomis
Zip code: 34275
Median sale price: $475,000 (+32% YoY)
Share of homes that sold above list price: 39%
Median days on market: 10
6. The Meadows (Sarasota)
Zip code: 34235
Median sale price: $275,000 (+20% YoY)
Share of homes that sold above list price: 41%
Median days on market: 5
7. Chatham, Cape Cod, MA
Zip code: 02633
Median sale price: $965,000 (+33% YoY)
Share of homes that sold above list price: 51%
Median days on market: 11
8. Weston
Zip code: 33332
Median sale price: $860,000 (+51% YoY)
Share of homes that sold above list price: 27%
Median days on market: 46
9. Lake Lure, NC
Zip code: 28746
Median sale price: $427,750 (+26% YoY)
Share of homes that sold above list price: 41%
Median days on market: 48
10. Downtown Fort Myers
Zip code: 33916
Median sale price: $264,328 (+25% YoY)
Share of homes that sold above list price: 35%
Median days on market: 9
Source: Redfin, using year over year data notated as YoY through September.
Based at the Naples Daily News, Columnist Phil Fernandez (pfernandez@gannett.com) writes In the Know as part of the USA TODAY NETWORK, which supplemented this report. Support Democracy and subscribe to a newspaper.