The last recession was not kind to the Fort Myers housing market, or any other communities within Florida. These areas were among the hardest hit, yet managed to begin making a recovery in the following years. Fort Myers found itself on the forefront, faring just as well if not better than Miami by 2015. That’s significant considering Miami’s popularity and position as an international investor hub.
Buyers and sellers of new homes in Fort Myers will be happy to hear that the area is not currently in a bubble. It’s also not seeing a boom or bust. Instead, it seems to be headed for a healthy position somewhere in between.
Building Permits are Down as Apartments Meet Demand
Lee County along with Charlotte and Collier is projected to see less building permit activity compared to 2015 and 2016. If the predictions come true, then this will be the first time no increase was reported in the past six years.
The main reason for fewer permits is due to fewer approvals for apartments last year. New apartment projects, which were around 300 units each, were started in response to high demand and low supply. This allowed developers to reach high rental rates for their properties.
Rates cannot go up forever. Eventually, they will plateau as potential renters find that buying a home is just as, if not more, economical. Based on current rental fees, a new home in nearby Cape Coral could cost $250,000 to $275,000 and work out to a similar monthly payment with today’s low interest rates.
More homeowners have also managed to repair their credit after the damage done by the recession. This allows them to go from renters to buyers again.
Construction Moves to Other Areas in Florida
Homebuilders are noticing another obstacle when building in Southwest Florida: a lack of vacant lots. There wasn’t much added this summer. Land is in short supply, which has caused some contractors to look to Lehigh Acres and northern Cape Coral. Both communities provide a large quantity of lots, with plenty of potential for new homes.
The last two years saw progress with luxury high-rises appearing in Bonita Springs and North Naples. Construction is going slower than anticipated, but developers are noticing good results so far. The real test will be whether or not condo buyers are prepared to invest in luxury high-rises in Fort Myers and further south.
Potential Setbacks for the Fort Myer’s Housing Market
Stricter building codes could create obstacles for new construction in Fort Myers. With a greater focus on protecting what’s already there, some areas are caring less about tax revenue and more about stopping updates. Property owners have been trying to remove older properties, replacing them with larger homes that are built to today’s construction standards.
Colliers County requires a super majority for zoning approval. Areas like Lee County are considering a similar approach. That means it will be more difficult to get approval for building permits. Approvals lead to more job opportunities, more affordable housing, more tax revenue, and more incentives to keep bright, productive people in the community. Denying permits can have a detrimental impact on these areas which will, in turn, hurt the housing market.
Metro areas in Florida are experiencing a lack of single-family home construction and accelerated price increases. This makes it harder for buyers to find affordable properties. The conditions have especially impacted younger generations who may have fewer financial resources available.
Experts Say Fort Myers Home Prices Will Rise
Home prices are expected to rise throughout Southwest Florida over the next three years. That’s good for sellers, to a point. Eventually, they will become overpriced. Property prices on Naples-Market Island are expected to increase 7% per year in that time period for a total of 21% higher home costs. Single and multi-family homes reached an average of $363,800 in 2015, just 3% below what Local Market Monitor described as the “equilibrium price” of $376,772. This is the price where the property is not over or undervalued.
Fort Myer’s ranked fifth in Florida for price growth, with metro regions seeing an 11% rise into 2017 and another 9% increase expected into 2018. An additional 8% rise is predicted for 2019, bringing the total increase to 28%.
Stronger job growth is one major factor that is driving housing prices up. Fort Myers and Cape Coral saw a 3.4% employment increase with a lower unemployment rate of 4.3% last December. Rental rates average $1,025 with higher rates on nearby Naples-Marco Island. This makes renting an economical alternative to home buying, for now.