Frustrated buyers, bidding wars, quick sales, record prices, low inventory, frenzied open houses, virtual showings, happy sellers.
These are just some of the reverberations from the white-hot housing market in Southwest Florida.
The market has sizzled for a year — after taking an early hit from the coronavirus pandemic scare, resulting in a brief pause that lasted for a matter of weeks.
The busy season only fanned the flames of demand. Even as the busy season subsides, demand persists.
Like no other, the current housing market is fueled in part by the pandemic — a pandemic that has driven more Americans to less crowded areas, such as Naples and Fort Myers.
The clamoring for homes extends from Marco Island to Cape Coral — and beyond, touching just about every part of Lee and Collier counties.
“This has never happened before,” said real estate market expert Denny Grimes, president of his team at Keller Williams Realty in Fort Myers.
Make no mistake it’s not a repeat of Southwest Florida’s last real estate boom that went bust in 2006, he said, because the buyers aren’t investors looking for a fast buck, they’re real buyers who want to live in the homes and truly qualify for mortgages — and can afford to pay in cash in many cases.
Ultra low interest rates continue to contribute to the exuberant demand, although at this point Grimes sees that as “old news,” as they’ve been around for years.
The longtime realtor offers up some startling statistics, pointing to the feverish demand for housing, especially during peak season this year.
His quick calculations show that from January to April, single-family home sales in Lee and Collier counties, based on closings tracked through the Southwest Florida Multiple Listing Service, rose more than 43% over the year, from 6,402 to 9,157.
“What’s interesting is I don’t think that can continue,” Grimes said. “I don’t think we’re going to have enough homes to sell.”
Last month, his team sold nearly 60 homes, reflective of a market that is “superheated,” due in large part to the pandemic, which has opened up more doors for remote work, making it possible for more Americans to move and live wherever they want.
“We are dealing with real demand, and limited supply and it’s not sustainable,” Grimes said. “It won’t go on forever, however, there isn’t a bubble. There is no bubble being formed.”
People who are relocating aren’t just remote workers. They’re families, young and old, retirees and semi-retirees and business owners, some of whom are bringing their companies with them.
Real estate experts say Florida has been a top draw from the “urban exodus” driven by the pandemic, due to a multitude of attributes, from its warm weather and low taxes to its abundance of outdoor activities and business-friendly climate, with all of its statewide COVID-19-related restrictions on businesses lifted long ago.
With all of the state’s public schools open since October, Florida has also attracted more families with school-age children, fed up with longer-running closures in their states.
Southwest Florida, with its small-town feel, is a beneficiary of the larger movement out of more heavily populated or higher-tax states, such as New York and California. The movement actually started before COVID, but has picked up some serious steam since the pandemic erupted more than a year ago.
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Competition can lead to buyer fatigue
While the crazy demand for homes here has driven up prices, they’re still much more affordable than in some of the larger cities buyers are relocating from, such as New York, Boston and Philadelphia, where everything is “uber-expensive,” Grimes said.
“People are leaving a 950 square foot apartment in Manhattan that probably cost $1.5 million and they are getting a 3,500 square foot, three-garage home on the golf course in Naples for less than that,” he said.
The price comparisons have resulted in what Grimes likes to call “reverse sticker shock.”
Clearly, it’s a sellers’ market and Realtors and their buyers have to move with “supersonic speed,” he said, and with the understanding that the asking price is “just the starting line.”
The jubilation for sellers has led to frustration for buyers. From his own experience, Grimes offers up this recent example: A veteran buyer, who couldn’t afford to pay in cash for a home, faced eight rejections from sellers before he finally got one to accept his offer.
In some cases, the fierce competition has led to buyer fatigue.
“I’ve never heard of that before in my 40 years of doing this,’ Grimes said. “They almost want to give up.”
He likens it to running a 5K, then having to do it all over again — not just once or twice, but seven or eight times.
Jay Westerlund, a broker associate for Premier Sotheby’s International Realty in Naples, describes the demand for housing as “across the board,” in all areas and price ranges.
“If it’s a nice property and well taken care of, it’s not lasting very long,” he said. “We have a lot of buyers that are waiting in the wings, who know what they are looking for and are waiting for it to hit the market.”
In some cases, buyers are snatching up homes sight unseen to get what they want, or at least close to it, making offers within hours of the properties appearing on the MLS.
Realtors are giving out-of-town buyers virtual home tours via Facetime, knowing there’s no time to waste when opportunities arise, Westerlund said.
“I think we’ve been discovered,” he said. “Without a doubt.”
When they’re held, open houses are well-attended, sometimes attracting dozens of eager buyers in a day, but more often than not properties sell so quickly that there isn’t even time to plan — let alone schedule and hold one, Westerlund said.
Corey McCloskey, a vice president of operations for John R. Wood Properties and president of the Naples Area Board of Realtors, said it’s not unusual to have up to 50 people attend an open house, which is “pretty amazing,” especially this time of year.
“The demand for pools and open space has been unlike anything we’ve ever seen,” she said. “I’ve been in the market 18 years and it’s just unreal.”
Asked how long the hot housing market might last, she said it doesn’t look like it will slow in the near horizon.
“Like anything, nobody really has a crystal ball, but I would think this is going to continue, just because of the amazing amount of people coming into the market and buying,” she said. “At the end of the day who wouldn’t want to live here?
Mike Hughes, the managing broker of Downing-Frye Realty in Naples, shares the same strong optimism.
It’s incredible to think how strong the market has become, he said, when international buyers are nearly non-existent because they haven’t been coming here, due to COVID-related restrictions and disruptions.
When more foreigners start traveling again, it could bring yet another wave of demand to Southwest Florida, Hughes said.
On top of that, he said, as vaccines continue to roll out across the country, more Americans will start flying again, which could also feed the market.
“I think our governor keeping the economy open down here really was beneficial to the real estate market,” he said.
While Easter typically marks the end of the busy season in Southwest Florida, May is shaping up to be a very good month for Downing-Frye, whose primary markets include Marco Island, Naples and Bonita Springs, Hughes said.
So far, he said, transactions are up 21% and pending sales — or new contracts — are up 118% for the month, when compared to two years ago, pre-COVID.
The high-end market, in particular, continues to perform well regionwide, Hughes said.
Both Lee and Collier counties have seen all-time home prices shattered this year. A sprawling compound in Port Royal fetched $52 million, while an island estate on Captiva recently brought $17.15 million, beating its own record.
“This is an incredible market,” Hughes said. “When you consider that we’re in the middle of a pandemic, to get this kind of activity, we are very fortunate to be in this industry —and a lot of businesses feed off the real estate industry. So we count our blessings to be honest.”
The strong market isn’t all good for sellers.
Tour of outdoor spaces of HGTV’s Smart Home for 2021 in Naples
A tour of the outdoor spaces of HGTV’s Smart Home for 2021. The home is in a private-cul-de-sac next to the Eagle Lakes Golf Club in Naples.
Courtesy of HGTV
Bidding wars and backing out
Some sellers are finding themselves in a Catch-22 if they’re just wanting to relocate elsewhere in Southwest Florida. That’s what happened to Beth and James Raies when they wanted to sell their seasonal home at the Brooks in Estero and buy one closer to the beach in Naples.
The part-time residents, who are in their 60s, had no problem selling their home in a bundled golf community, but they struggled to find a replacement for several months.
“Literally, things would come on the market and I would say ‘I’m interested in that’ and the house would be off the market within 24 hours,” she said. “We wouldn’t even be able to get in and see them.”
It didn’t help that they were trying to buy a home here while living in Ohio, where they have a primary home closer to their grandchildren.
When they traveled here to see properties, nothing panned out.
Then came a breakthrough: A day after returning to Ohio from an unsuccessful house hunting trip, Beth saw a new listing pop up on a Friday night that seemed to have everything the couple wanted.
“I was watching the market constantly,” she said. “Because I knew if something became available you had to pounce on it right away.”
Pounce she did.
The couple made a near-immediate offer on the home, but the seller rejected it, with multiples showings already scheduled for the weekend.
“Honestly, I don’t blame her for that,” Raies said.
By Sunday, however, the couple had returned to the negotiating table, winning the seller over with a bid of $10,000 over the asking price.
They signed the contract in late November, closing on the home in mid-January.
She’s grateful for the help from her Realtor Rick Parlante, with Downing-Frye Realty, who urged her to act fast on the listing, explaining that she could always back out of the contract later if she had a change of heart.
With the market so hot, Parlante said he’s using Facetime more than ever to show listings to his out-of-town clients, understanding the need to act fast.
In the offseason, he expects the market to slow a bit, but not by much.
The summer could bring in more families looking to relocate from up north before the start of the next school year.
Not only does Florida’s public school system have a good reputation, but it continues to grow, through the addition of more traditional and charter schools.
“We are building new schools all of the time,” Parlante said.
In this market, he said one of his biggest challenges comes from other Realtors who don’t keep their listings up to date. He’s booked appointments for showings, only to find out later the properties are already under contract — or worse, have already sold.
In some cases, he said, multiple offers have hurt sellers, with some buyers — who might have been willing to pay more — backing out after finding out about the competition so they could avoid the stress of a bidding war.
“Many people don’t like to be in that environment,” Parlante said. “If they hear there are multiple buyers, they’ll say, ‘I don’t want that. I’m out.'”
Since COVID hit, he said he’s had clients relocating from a host of states, including New York, New Jersey, Ohio and Massachusetts. Some moved their families down here because schools have remained open in Florida, allowing their kids to continue playing sports so they wouldn’t lose out on lucrative college scholarships for athletics, Parlante said.
“The spotlight is now on Florida,” he said. “That’s for sure.”
‘Like adding gasoline to a fire’
Brett Ellis, a partner on the Ellis Team at Keller Williams Fort Myers & The Islands, said his team has created its own MLS of sorts based on data it’s collected from potential sellers, who would be willing to put their homes on the market, if they could only find something else to buy that better suits their needs in Southwest Florida.
“What we are doing is just trying to match people up,” he said. “So, sometimes we’re able to find property that never really hit the market.”
In some parts of Lee County, there’s only a two-week supply of inventory, Ellis said.
“There is a little more supply of homes in the higher price ranges, which there always is,” he said. “But we have been selling a lot of higher-priced homes to people coming to Florida and it seems like a bargain from where they are coming from.”
His team has sold more homes for $700,000 to $1 million in the last six months than it has in the last year or two, he said, describing the demand as “just amazing.”
That shouldn’t be taken to mean there’s not heavy demand in working-class neighborhoods, such as those found in Lehigh Acres or Cape Coral.
In Cape Coral, Ellis said his team’s listings have been selling for $25,000 to $30,000 over the asking price.
The other day, a home in Lehigh Acres got four offers within hours of hitting the MLS.
“Our inventory has been going down for two or three years, but it really hit about a year ago,” Ellis said. “Then our sales really picked up. It’s like adding gasoline to the fire.”
There isn’t just a shortage of existing homes — or resales — in Southwest Florida.
After the housing crisis and Great Recession, builders got “skittish about building,” Ellis said, so they’re still playing catch up, resulting in a tight supply.
As a result, lots and new homes are also selling fast and fetching more money.
On Marco Island, a 100-foot wide lot — a little larger than the usual size — recently went under contract for $16,000 over the asking price after attracting two solid offers, said Wendy Morell, an agent for Downing-Frye, who had the listing.
They were both all-cash offers, which came within days of the property hitting the MLS, she said.
“It happily surprised me,” Morell said. “I feel like I really priced the property very competitively, so I was very pleased and my sellers were very pleased.”
The sellers had purchased the property 35 years ago, she said, with dreams of relocating from New York and building their dream home on the island one day, but their life’s dream changed when their children and grandchildren ended up in Jupiter on Florida’s east coast and they decided to settle there instead.
New home prices have been on the rise, not only due to the high demand from buyers, but because of a shortage of construction materials, including lumber, which have made them more expensive to build.
Michael Diamond, an owner of Diamond Custom Homes in Naples, said his company started seeing a spike in demand for its luxury homes in the third quarter of last year, and it only grew stronger through the busy season to a point he’s never seen.
Business, he said, is up by 50% over the year.
This year multiple speculative homes — or spec homes planned or started without a contract by the builder — have sold before completion, which is highly unusual, Diamond said.
Even more unusual? Buyers have snatched up some of those spec homes before they’ve even come out of the ground, a situation Diamond has never experienced in his 30 years as a local home builder.
“It was pretty amazing,” he said. “The demand was just incredible.”
One of his spec homes that quickly found a buyer is his first-ever estate in the posh neighborhood of Port Royal — at 4005 Rum Row. It’s under contract, but not near completion.
Construction began in late September on the expansive 12,412-square-foot compound, with completion not anticipated until early 2022.
The estate will feature 8,426 square feet of living space in three separate structures: a single-story main residence, a guest house and a gatehouse with a second-floor cabana.
Building a new home has become much more difficult, Diamond readily admits, with constraints on permitting and supplies and strains on construction professionals, such as architects and engineers, which are causing delays.
“We have a great bit of backlog, but getting homes under construction is the challenge,” Diamond said.
One of the biggest challenges involves roof truss engineering, which is in high demand amid a housing boom in other desirable states, such as Texas and Arizona, and it must be done before a construction permit can even be issued for a new home, Diamond said.
“The long lead times became more of an issue this year,” he said. “I don’t think it was quite that bad in 2020.”
Luckily for Dave and Jan Brandon, they had good timing.
After struggling to find an existing home to purchase in Naples due to the tight supply, with the help of a Realtor they discovered and jumped on the opportunity to build one at the high-end golf community of Grey Oaks, through Diamond Homes, which had already purchased the lot.
The couple signed the agreement to move forward about a month ago and now own the lot.
Construction is expected to start in the next few weeks.
Although they already have homes in Michigan and Tennessee, Dave said they wanted to have one in Naples because so many of their friends from the Midwest have purchased here and encouraged them to do the same.
Eventually, the couple sees the possibility of making Southwest Florida their primary residence.
“We’ve got four kids and eight grandchildren,” he said, “and they’re all anxious to come and spend time and take advantage of this home in Florida.”