I’ve been in real estate for 18 years, I’ve lived through the Cape Coral housing crash of 2008 and remember prices escalating quickly from 2004-2008, then watch them trend down through 2012. I’ve watched people make incredible amounts of money in real estate and I’ve watched some go bankrupt. If buying real estate can be a top contender to the road to riches then how can some people make a fortune while others lose it all while following the same formula???….the answer is timing.
Its impossible to time the market but we can see the trends. Inflation is up, we are all feeling it at the grocery store, gas pump, house prices, car prices, everything costs so much more. The Federal Reserve has been raising the federal fund rate which is pulling up the mortgage rates to over 6%, that’s a HUGE swing in a very short period of time. I start hearing this argument “buy now before you can’t afford the raising rates” and buyers get FOMO (fear of missing out). However, logically, if rates go up, then the cost to own a home goes up if you’re using financing and most are, then as homes become less affordable, inventory will start to increase, as inventory builds and demand comes down…..prices start to drop. We won’t know a top or bottom of a Cape Coral real estate market until were past it and can look back at the trend.
We’re seeing the trends showing serious slow down and inventory increasing now. Regularly in the news I’m seeing negative news about home prices, housing bubble, slow down, 25% listings have dropped price. As consumer sentiment shifts (its shifting now) crazy bidding slows, which is happening and if this trend continues, it will slide into a balanced market, if the trend continues further it will go into a buyers’ market.
Cape Coral real estate trends can go for years, it could start trending down for a few years, or trend down for a period and flatten out then come up, know one knows. So many ask the question…..when is the best time to buy? The answer….when prices are low. According to the case shiller report, which tracks real estate historically over the last 100 years, homes are now more unaffordable when considering buyers income than they ever have been since recording. Right now the prices are high, if you want to buy when they are low relative to income, now is not the time. Bottom line, Buyers income does not support the current values of Cape Coral house prices. Demand is keeping them high. We need more time to see how this trends. I’m guessing by October 2022 we will have a lot better idea of where real estate is trending.
Some buying thoughts to ponder. If you’re buying a home to live in and it’s a major inconvenience to wait, then buy now if you plan to stay in the home for a while. Its not fun to live like a nomad, especially if you have a children and spouse and don’t want to be uprooting from rental to rental. However, if you’re in a rental and it’s not inconvenient to renew 1 year, you could try that and watch the trends. The only place in my real estate portfolio I will buy and not be as concerned about getting the best value is my home, I plan to live in. I place a smaller portion of my decision on the value of the home, I focus primarily how much I would enjoy living in a home, then if the home is unaffordable, I wait. I believe where we live helps us recharge and brings joy in our everyday life, so I believe its best to spend more money on a home that makes you happy. I’m not advocating being house poor, if I want a certain home and they are out of my affordability reach, then I wait and while I’m waiting I save.
If you’re buying an investment property. As an investor, I follow math models for buying. For example, if I buy a Cape Coral home for $200,000 I want a renter for $2000/month for at least 12 month term. Right now the market is now offering these returns, not even close, so I’m waiting until the market offers these returns and I’ll aggressively buy again. As you can see being an investor is lots of waiting…..
Vacation rentals has a lot of hype and the returns can be incredible, I hear people bragging how incredible the returns have been. I always ask when they bought and most of the time it was when prices were WAY lower. Things to consider, vacation rental city rules can change, a city can make a rule change and not allow short term rentals, then if you paid too much for your home you will lose money selling it and won’t be able to rent it anywhere close to the 1% rule, you could get stuck in a upside down investment. The second thing about vacation rentals, if/when we go into a recession one of the first things people cut from their budget is vacations, many people have been buying Cape Coral vacation rental properties. Look on VRBO, there are pages full, I anticipate many of these won’t be profitable in the near future and will likely be sold. If I buy a vacation rental, I need to buy knowing I could rent it as a 12 month rental, the 1% rule and if I can vacation rent it and make 2% or more its even better but I wouldn’t back myself into a corner banking vacation rentals will always work, saturation and recession will be playing a role very soon.
Here’s a few links to watch, it shows things can change, be mindful of that.
TM Listings is here to help, each situation is different, feel free to reach out to us today to discuss your goals. I highly recommend getting on our automated MLS search to watch the market, it’s a free service and the best way to watch the market with accurate data.
Thanks for reading.