Once a pandemic boomtown where people could work remotely from the ocean, Cape Coral, Florida, has turned into a housing market nightmare – especially for sellers.
From 2020 to 2022, thousands of buyers moved to the city that’s full of canal-side homes and docks for boating enthusiasts.
Over those three years, the median home price soared 75 percent to $419,000, and the area began drawing investors looking to rent their properties out.
Now, the former paradise has become a place people are desperately trying to escape, with for sale signs popping up on lawns all over town.
But no one will touch their properties.
Open houses are empty, foreclosure ‘boat tours’ take locals around to see homes that the bank has repossessed, and half-built homes are left to rot.
‘It is one of the worst real estate markets for a seller right now,’ local realtor José Echevarria told the Daily Mail.
Prices in Cape Coral have been slashed for more than 50 percent of homes over the past two years – more than any other major metro area in the US, he added.
Cape Coral, Florida, has turned into a housing market nightmare for sellers
There are around 12,000 homes for sale in Cape Coral currently
While it’s a hellish reality for sellers, Echevarria said is good for buyers.
The problem is that buyers are too scared to purchase anything that comes with high natural disaster insurance rates, which he says have soared to over $5,000 a year for most in the area.
‘It is one of the worst real estate markets for a seller right now,’ local realtor José Echevarria (pictured) told the Daily Mail
‘Inventory is a huge problem, but there’s a reason for that inventory,’ he said.
‘We have of course high insurance costs and the taxes in Cape Coral continue to rise.’
Lee County, where Cape Coral sits, now has 12,000 homes available for sale. That number hovered around 3,500 just two years ago.
Echevarria said so many people moved into the area and bought investment properties hoping they could rent them at a profit.
‘They’re probably hurting the most because they bought with the expectation it would make them money,’ he explained.
‘There was a thriving market for investors here, however, now everything’s opened back up, people have gone back to work. On top of that, now you have higher insurance rates.
‘I’ve got listings that, during the pandemic, they would have bought without having to even carry flood insurance.’
Many people moved into the area and bought investment properties to rent out
Unless inventory decreases very quickly, prices are going to continue to drop
One savvy business is even taking advantage of the crisis, offering a ‘foreclosure boat tour’
Interest rates need to come down to get people interested in Cape Coral again, said local realtor Echevarria
He added that unless inventory decreases very quickly and substantially, prices are going to continue to drop.
And the only way to improve the situation is by lowering inventory, which requires more buyers in the market.
‘In order to get buyers, interest rates need to come down to get people interested in Cape Coral again,’ Echevarria said.
The area has been particularly badly hit by a mix of high home prices, soaring insurance premiums, rising property taxes, natural disasters and a return to the office for remote workers.
One savvy business is even taking advantage of the crisis, offering a boat tour of homes that have been foreclosed on, which takes prospective buyers along the network of salt-water canals that wind through the community.
Condos are also in trouble, with many sellers offering crazy concessions to unload their homes.
Unaffordable HOAs and new state regulations put in place after the Surfside collapse that killed 98 people in Miami are also putting off buyers. Assessment costs are being raised as long neglected repairs are needed on many buildings in the area.
Many home builders in the middle of construction projects have bailed on homes, offering them for sale as is without doors or windows installed.
Condos are also in trouble, with many sellers offering major concessions to unload their home
Sellers are having trouble in Cape Coral, Florida, with so many homes flooding the market
The rest of the Sunshine State isn’t much better.
For condos in particular, it’s become a complicated mess of unexpected costs, disastrous inspection reports, sky-high insurance rates for natural disasters and too many units for sale flooding the market.
David Podein, a real estate attorney at Miami-based Haber Law, has been on the front line of the condo crisis since the collapse.
He is directly involved in helping associations across South Florida navigate the legal, financial and construction challenges that come with special assessments and capital repairs of condos.
To date, he has secured over $100 million in bank loans for condo associations to fund urgent improvements and avoid displacement of residents, especially older people.
He also advises lenders, boards and contractors on structuring these deals.
Podein says Florida is going through a ‘tale of multiple markets,’ that’s seeing buyers looking for newer, up to code builds rather than condos more than 30 years old.
These older condos, many filled with retirees and older people, have lost their appeal.
