Home sales cool but records keep coming; higher insurance may bring house price decreases

BER: Bonita-Estero Realtor Board

NABOR: Naples Area Board of Realtors

Royal Palm Coast Association: Lee County Board of Realtors

Beyond destroying more than 5,000 Southwest Florida homes, Hurricane Ian and the insurance aftermath may have a lasting effect on how the housing market operates in the new year.

There may be a bifurcation coming as newer homes are more insurable than older ones. This may begin to affect home prices. Newer homes and their ability to obtain insurance will become more desirable and increase in price whereas older homes that need attention will struggle to find a willing insurer and may become less desirable and decrease in price.

A property insurance overhaul certain to raise premium costs for many Floridians was approved in December by the Republican-controlled Legislature and signed by Gov. Ron DeSantis. The legislation includes no requirements that rates or premiums go down, and many in the cheaper, state-backed Citizens Property Insurance Corp. may be forced out. With the new law, those in the program in flood-prone areas must begin carrying flood insurance later in 2023, and the rest must have it within five years.

With the continuing insurance pricing concerns on the horizon and the increasingly bigger city challenges of less elbow room on Collier County roads, I-75 and most everywhere, Jim Ratliff, a Naples resident and In the Know reader, is not waiting around. He is among those who just sold their homes and are moving out of state.

"When insurers are only willing to provide coverage for our home in an amount that represents 25% to 30% of its actual value, before consideration of deductibles, and the home represents a sizable portion of your assets, something has to be done to mitigate the risk of not only losing the home but the loss of financial net worth to the family unit," Ratliff told me. "We made it through Ian with no damage other than a blown over hibiscus tree. (We) feel especially fortunate to escape unscathed, almost to the point of feeling guilty about it."

As real estate agents brace for a potentially slowing 2023, the second full month of data since Ian's powerful strike shows a significant drop in sales of homes, which for example, took nearly twice as long to sell for the Naples Area Board of Realtors at 46 days, as compared to 24 a year ago.

And at the same time in a market that has double the available homes than a year ago, there was more negotiation room for those Naples buyers as they also considered remnants of Ian-battered domiciles: The overall percent of list price received by the seller decreased 3.3 percent compared to last November.

“The season for aspirational pricing is over,” said Jillian Young, president of Premiere Plus Realty. “The economy is very different from where we were during the frenzied buying activity experienced in the year following the pandemic. Sellers can no longer expect multiple offers that are significantly over the listed price. We had less inventory then, which drove prices higher, and mortgage rates were at 2 and 3%, which gave buyers more room to make concessions.”

Days on the market increase, but median prices keep rising anyway

Open houses that had become obsolete during that frenzy when folks were buying up property, sight unseen, are back in a big way.

For the Bonita Springs-Estero Realtors organization, the average days on market is now at 31 days, "which is a large difference from averaging 17 days in November of 2021," the BER group said in its monthly report this week. For buyers, real estate has returned to being a long-term investment, and they're being more selective about the properties being considered. BER has 90% more listings than a year ago, putting it at 528, many of which have reduced the asking price one or more times recently.

In the week ending Tuesday, "our market had 600 price reductions," said Suzanne McGuire, the NextHome Coast2Coast owner who also noted more potential buyers asking about living further from the Gulf of Mexico after Ian's wrath. “Inland is where it is at."

While its days may be numbered, one trend hasn't yet subsided: The sizeable jumps in the median closed price for single-family and condos continued in November as compared to a year ago.

► NABOR: 20.4% to $600,000;

► BER: 15.3% to $515,000;

► Lee County's Royal Palm Coast Association: 7.9% to $355,000

Even in Fiddler's Creek, the median single-family home price surged 18% in November. But the evidence is growing that the rises won't be as dramatic in Southwest Florida for 2023 with buyers taking their time and not being in a hurry. “This lack of urgency will most likely help keep prices in check," Kolenda said.

Record home prices on Sanibel, Fort Myers Beach despite Ian's bashing

However, that's not across the board, especially with cash buyers who don't care what the interest rates are, and in some cases what condition the structures are in after Ian's bashing.

Cash buyers are still dominating the market, 71% of BER sales were cash in November, up 11% from a year ago. Many investors and second home buyers continue to purchase in our market. Some have even bought storm-damaged properties for the land to tear down the current property and build their dream home on it.

While owners of some older homes may face challenges, those at higher income levels may not encounter the same kind of adversity due to those cash buyers, which for NABOR, accounted for 62% of November sales. And as we've reported in the past, many rich folks wanting a mansion retreat near the beach, like west of U.S. 41 in Collier County, don't worry about the cost of flood insurance as much either.

A percentage of homeowners (do) not want to go through the renovation process, especially west of 41, and are instead selling their damaged homes to builders who are eager to buy and tear down a $2 million home to build a $6 million home, despite whether a homeowner spends the money to renovate or sells to a builder, the average list price of a home for sale in a desirable neighborhood west of 41 is likely to increase.

In fact, records are being set or poised to be shattered throughout Southwest Florida for highly coveted spots on the sand, Ian be damned.

Storm Smart founder Brian Rist, with his wife, Kim, recently purchased a dinged up $11.7 million Sanibel house, the most expensive there ever. Just before Christmas, Indianapolis businessman and auto racer Kurt Fazekas sold his green flag-colored Fort Myers Beach manor at 4148 Estero Blvd. between Hercules and Coconut drives for $6.18 million, just above the $6.1 million island record set in February. That mark may be surpassed by a damaged 7834 Estero Blvd. edifice north of Sun Caper condominium that became available Wednesday afternoon for $6.5 million. And on Bonita Beach, evangelist David Turner has listed his 27586 Hickory Blvd oasis for $15.9 million that would top Chicagoland serial entrepreneur Ken “Bucky” Buckman's record summer purchase of $10.5 million. a mile up the road. Another in the running there: A $13.5 million priced abode at 26564 Hickory Blvd.

As a comparison, an estate on Captiva went for $17.15 million in 2021, tops in Lee County, based on data from the Southwest Florida Multiple Listing Service, or MLS. Over the summer, the most expensive home in Naples history sold for $62 million, shattering the record by $10 million. The closest to that since the storm was a $30 million acquisition of 1700 Galleon Drive on Dec. 5.

Even with the surge of available homes, it's still a sellers market

While Southwest Florida has thousands more available homes, the market still isn't close to being a buyers market, and lower-priced housing is still tough to uncover. In NABOR's pool, for example, the inventory has risen in all price categories as compared to a year ago except for those tagged at $300,000 or less, which decreased by 14.2%.

There’s a considerable number of homeowners tied up in insurance disputes right now. Once they are resolved, we may see a slight increase in new listings.

While the increased number of BER homes "seems drastic, it's still only around a third of what it was pre-pandemic and remains at historically low levels," the BER report concluded. "The current market will hold steady for the upcoming year with a gradual increase in inventory, and a relatively strong sellers market."

A balanced market has a six-month supply of inventory. For NABOR, it's currently at 2.8 months despite the 97% surge in availability. The current lineup of 2,478 homes is still a far cry from the 5,563 places buyers had to choose from just three years ago in November 2019.

“Things are moving in the right direction, but it will take time to return to what most would consider normal market conditions," Huskey said.

Lee is the closest to balanced with 4.4 months, according to the Royal Palm group, which has 4,656 active single-family and condo listings, 23% more than a year ago.

Based at the Naples Daily News, Columnist Phil Fernandez writes In the Know as part of the USA TODAY NETWORK.