Florida Gulf Coast University recently released the January 2022 edition of the Southwest Florida Regional Economic Indicators. The report shares economic data for the region, including an update on the real estate market status across the coastal counties of Lee, Charlotte and Collier. Overall, the report indicates that the real estate market is leveling off after fairly dramatic swings brought about by the COVID-19 pandemic.
Single-family building permits, the metric which indicates the number of new homes under construction, saw an increase of 40% from November 2020 to November 2021. Yet, while this growth indicates increases in new construction from earlier stages of the pandemic, a comparison of more recent numbers actually shows a slow decline over the latter half of 2021.
For example, at the peak of the pandemic housing boom in May 2021, approximately 1,100 new single-family permits were issued by Lee County. However, that number dropped over 18% to roughly 900 permits the County issued by November 2021. These numbers seem to indicate that in the early stage of the pandemic, new construction fell off, likely due to concerns over the economy, material and supply shortages, labor shortages, and a variety of other pandemic-related factors.
In 2021, Florida attracted thousands of new residents seeking to enjoy warmer weather and less stringent COVID restrictions. However, it appears now the population influx into the state may be beginning to slow, which in turn is resulting in a leveling off in new construction. Whether this pattern continues now that more seasonal residents are returning to the area remains to be seen.
Existing Single Family Home Sales & Active Listings
The market for existing homes, similar to new construction, experienced dramatic swings throughout the pandemic. March through June 2021 saw large numbers of single-family homes sold, rebounding after a sluggish spring in 2020. The significant data point for 2021 was not necessarily the spike in the number of homes sold but rather the increase in the median home value sold during that time.
Nowhere was this increase more evident than in Collier County, where the median home price increased from $550,000.00 in November 2020 to $659,000.00 in November 2021. This sharp increase is likely attributable to the lack of available inventory. In November 2020, roughly 6,500 homes were actively listed for sale in Collier County, compared to less than 2,000 homes on the market in March of 2021. The lack of supply mixed with increased demand led to home values jumping up considerably. In the last quarter of 2021, median values began to fall and level off as inventory levels held steady between 1,000 to 2,000 homes on the market. While Collier County is undoubtedly the most drastic example of this trend, they are not alone as the data reflects similar trends in Charlotte and Lee County as well.
In sum, this data indicates that demand has fallen off while supply remains more consistent in recent months, as fewer new buyers are entering the SWFL market. This begs the question will this leveling off continue into the spring or will cold weather and COVID restrictions in northern states lead to another period of increased demand here in Florida?
As new COVID variants emerge, many of the same factors that have shaped the market over the last few years remain crucial in dictating the future of the real estate market:
- Will Americans continue to relocate from metropolitan areas into Florida?
- Will federal policies, such as lower interest rates continue?
- Will labor, supply and material shortages continue?
All of these unknowns will shape the market in 2022. For now, it appears the market is returning to a more sustainable level of growth compared to the drastic highs and lows brought on by the pandemic.
Market Trends 2022
On March 16, Randy Thibault, Denny Grimes and Justin Thibault will provide further insight into the Southwest Florida real estate market. Henderson Franklin is honored to be a platinum sponsor of Market Trends taking place at the Caloosa Convention Center. For more information or tickets, visit https://www.markettrendsswfl.com/.