MARKET REPORT CAPE CORAL, FLORIDA
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MARKET REPORT
CAPE CORAL, FLORIDA
EXECUTIVE SUMMARY BACKGROUND
■■ The housing market is becoming increasingly buoyant Following the housing market crash in 2008, the value of
as it responds to population growth, dynamic job US real estate plummeted. While these declines affected
creation and increased demand for new housing. real estate across the board, land and residential housing
were hit the worst. An oversupply of housing and a lack
■■ As more properties are built to meet the increase of financing options meant that prices dropped up to
in demand, the finite supply of lots available on the 80% in value from their peaks and prevented the building
market is causing significant price gains. of new homes as it was no longer financially viable.
■■ Large corporates such as Hertz are moving to the In 2011 the housing market in the Fort Myers
area. This is expected to bring over 700 new jobs Metropolitan Statistical Area began to recover slightly as
over the next two years which is increasing demand investors began buying up residential housing, having
for housing and land nearby. been attracted by the low prices and high rental yields.
■■ Cape Coral has been one of the fastest growing cities Since 2011 land and house prices have seen year-on-
in the US every year since 2000, during which period year increases and the evidence outlined below suggests
the population has almost doubled. Developers have that this trend will continue in the long term allowing for
struggled and continue to struggle to keep up with significant returns to be realized by those early mover
the ever increasing demand. investors.
Affordable real estate, sustainable employment
growth and good access to health care and
education are the principle drivers of Cape Coral’s
strengthening housing market
LOT SALES
Like many places, the property market in Cape Coral (in
terms of sales values and number of sales) peaked in 2006.
The subsequent recession resulted in a significant reduction
in sales values and an immediate drop in the number of
transactions.
Lot Sales
However, the number of lots being sold / purchased in Cape Source: Lee Clerk / Spyglass Ltd
Coral has remained remarkably consistent. The numbers
back this up: 6,000
In 2006 there were 2,612 plots purchased. This dropped 5,000
slightly to 2,554 in 2007 but this has been the lowest
number seen since. In 2008 2,942 lots were purchased; 4,000
3,438 in 2009; 3,196 in 2010 and 3,139 in 2011. Despite the
ongoing recession and, what was at the time very negative 3,000
press regarding the housing market and economy, these
numbers are very encouraging. Enticed by the low prices, 2,000
many overseas investors re-entered the market in 2012
and this saw an increase in the number of transactions (to 1,000
4,992). This continued into 2013 with 4,354 lots purchased.
0
2,323 lots have been purchased so far in 2014 (to the end
2006 2014
of August).
The sustained rise in sales from the trough of 2010-2011
points to a robust and healthy market. As sales continue at
this level prices will rise further.
The sustained rise in sales from the
trough of 2010-2011 points to a robust
and healthy market
LOT PRICES
The projected values shown below are based on real data
up to 2013 and then projected values after that. Essentially
this is based on previous buying cycles and is a result of
in-house research on price pairing lots which have changed
hands several times over the last 10 years.
Land value 2003 thru 2020 projected
While any prediction is necessarily couched in cautious Source: Gizzi Appraisals
terms this is based on likely scenarios from what we
are seeing on the ground and in areas such as Naples, 30,000
Homestead and Miami which tend to be react earlier in
each cycle. This means that over the next 2-3 years, prices 25,000
on a average dry lot in Cape Coral could be in the region of
$28,000-30,000 which, although between 25-30% of peak 20,000
values, is still 80-100% higher than your purchase price.
15,000
Lots in units in the South West of Cape Coral, such as unit
70 and 71 are seeing very few dry lots on the market for 10,000
less than $25,000 and not many more for less than $30,000.
This is because these units are having by far the most 5,000
houses built here and builders are buying up the available
0
lots at a fast rate. A knock on effect of this, a ripple effect,
2003 2020
can be seen in Units 58 and 59 which are regarded as the
next best place to build. Lots here are on the market for an
average of $24,000. As a guide, lots in unit 58 were selling
at $14,000 as recently as April 2014.
What lends more weight to these findings is the best street
in Cape Coral has recently seen 2 dry lots sell in excess of
$100,000 a price point which has not been seen for 8 years.
Lots in units which will see the most building will therefore
increase in value first, with lots in adjoining units moving up
next.
This means that over the next 2-3
years, prices on a average dry lot in
Cape Coral could be in the region of
$28,000-30,000
HOUSE PRICES
The bottom of the housing market in Cape Coral was 2011
when the average single family home transaction reached
a low point of $137,000. Since then we have seen steady House Prices in Cape Coral / Fort Myers MSA
year on year increases, with the rate of the increase getting
steeper each year. This is reflecting on demand for new
homes to be built, as can be seen from the building permit 300
graph on the following page.
250
A large hedge fund called Blackstone is one of two that
have started operating in Cape Coral over the last 6 200
months. They are buying almost all of the foreclosures on
the market which is having a positive effect on inventory 150
levels. As this supply reduces it will push prices up further.
100
It is not considered likely that the previous peak of $300,000
will be eclipsed in the near future. However, it is considered 50
likely that as the supply of existing foreclosures dry up and
new foreclosures slow down, more and more people will 0
start building new homes. 2002 2014
BUILDING PERMITS
Looking at the statistics for ‘New Private Housing Units
Authorized By Building Permit for the Cape Coral / Fort
Myers Metropolitan Statistical Area (MSA)’ produces some
interesting trends which broadly follow general market
conditions year on year.
In 1995 there were 4,742 building permits authorized for
the Cape Coral / Fort Myers MSA and this number grew
gradually for the next two years (5,482 in 1996 and 5,636 in Single Family Home Building Permits
1997). The number jumped to 8,032 in 1998 and to 8,955 Source: City of Cape Coral
in 1999. There was a slight reduction in 2000 to 7,390 but
the number then grew rapidly over the next 5 years (10,938 30,000
in 2001 – 11,146 in 2002 – 15,083 in 2003 – 20,585 in
2004 and 28,810 in 2005). The figure in 2005 was by far 25,000
the highest seen since records began and reflected the
20,000
worldwide boom in property and land.
This level was unsustainable and it unsurprisingly dropped 15,000
to 18,123 in 2006, although this was still exceptionally high
compared to previous years. 10,000
As the property market crashed and the recession started 5,000
to bite, the number fell rapidly in 2007 to 5,906. The fall
continued in 2008 to just 1,567 and then to an historical low 0
level of just 946 permits in 2009. Land prices by this point 2000 2014
were extremely cheap and, as foreign investors started to
re-enter the market, numbers began to recover, albeit very
cautiously.
1,248 permits were authorized in 2010, 1,637 in 2011 and
1,973 in 2012. With economic conditions improving and
signs of a recovery in the housing marker, 3,130 permits
were authorised in 2013 and 2014 has continued this trend
with 2,274 permits being authorized in the first 6 months.
With many new construction projects underway, it’s evident
that more and more developers are building again in Cape
Coral. This upturn means that land parcels are already
rising in value. As the trend for new construction inevitably
continues, fuelled by pent up demand for new homes
from large population growth and with mortgage finance
becoming available again, more homes will be built. Fewer
developed parcels in key core areas will be available and
prices here will rise further.
Lee County has seen a steady
increase in population since the 1970s
POPULATION GROWTH
A major factor for the increase in land prices and their
continued growth is the sustained population growth in
both Cape Coral and Lehigh Acres. To give an indication
of just how fast people are flocking to the area; the Fort
Myers Metropolitan Statistical Area has featured in the top
Lee County Population Growth 1970 - 2020
Source: US Census
10 fastest growing MSA’s in the USA every year since 1980.
Cape Coral itself has been one of the fastest growing cities 900,000
in the US every year since 2000, while Lehigh acres has
almost tripled in size since 2000. 750,000
Lee County (the county in which both Lehigh Acres and 600,000
Cape Coral are situated) has seen a steady increase in
450,000
population since the 1970s. Overall the net population of
the County grew by 177,888 between 2000 and 2010 and 300,000
by 42,361 between 2010 and 2013. Experts predict that
the population will have grown by a further 14,000 people 150,000
by 2015 and then a further 102,083 by 2020. Calculations
to estimate the number of new housing units this will 0
require indicate that an extra 51,042 new homes will need 1970 2020
to be built between 2015 and 2020. These figures show
on average there will need to be more than 10,000 new
units built per year. This may be a house, or a condo or an
apartment but will be some kind of housing unit. Many of
these will be in gated communities like Sandoval in Cape
Coral, but most will be on scattered lots in Cape Coral and
Lehigh Acres.
Estimated population growth between 2015 and 2020 102,083
Estimated number of housing units required per person 0.5
Estimated number of new housing units required between 2015 and 2020 51,042
JOBS MARKET HERTZ RELOCATION
Both Cape Coral and Lehigh Acres have very strong
jobs markets. Part of this is to do with local and state
A case study
government taking an active interest in helping businesses Hertz has officially announced the relocation of its
relocate to the area. This is highlighted by a number of worldwide headquarters to Lee County, Southwest Florida.
large corporates such as Hertz, who will be moving their Frank Mann, the Lee County commissioner, described it as
operations into the area in the coming months and years. “Truly the largest economic event in Lee County’s history”.
Hertz alone are expected to bring over 700 jobs to the area, The big question is, what is it that makes Southwest Florida
many of which will be very highly paid roles, high up within so attractive to businesses?
the company hierarchy.
With Orlando being the world’s largest car rental market,
In addition to new businesses moving to the area, others and Miami now being a hub for accelerating travel growth,
within South West Florida are looking to capitalise on the the move to Southwest Florida for Hertz makes sense.
financial recovery by expanding their current operations. However, there are a number of other factors that attracted
The nearby Immolkalee Casino is rumoured to be planning Hertz to the area and that will continue to attract other
to expand and build a large hotel which will further increase businesses in future. Employability is a huge factor in
the number of local jobs and demand for local housing. a relocation programme for any corporation. Hertz has
With unemployment across the US at 6.3%, Lehigh Acres quoted over 700 jobs shall become available in Lee County
and Cape Coral’s unemployment figures of 5.4% and 6.0% over a period of approximately two years. Increasing
respectively offer yet another indication of why land prices population, tourism growth, availability and the accessibility
in the area are increasing. People from across the US are of employment needed in the region means that Hertz will
moving to Cape Coral and Lehigh Acres to find jobs and not only be able to fill the roles the move will create, but
make the most of the opportunities available in the area. they will have tremendous long-term growth potential aided
by the high levels of local talent.
Lee County already has a number of major employers
whose growth is reliant on an ever increasing number of Southwest Florida has already established itself as a
people being able to live in the local area. holidaymakers destination of choice, with Lee County
being central for most of Florida’s main attractions such
Jobs are important for the housing market as, the more
as Tampa, Miami, Orlando (Disneyland) and of course the
new jobs which are created, the more housing units the
attractive beaches and Mexican Gulf coast line. Hertz’
area needs. This then feeds a virtuous circle whereby the
finances shall no doubt see an uplift with the change. At
demand for housing units creates more jobs and then
a conference, CEO Mark Frissora stated ‘The relocation
more housing units. This, along with population growth and
results in a positive financial return to the company and we
tourism, are the three bedrocks for the Florida economy.
will provide more details during our next quarterly earnings
call’. From this we take a high potential for a payoff result,
not only for Hertz but for other market areas in Southwest
Florida. In addition to all this, the low price ranges of land
and property in the area is great for Hertz perspective, as
land and property is readily available.
Hertz’ relocation could potentially bring phenomenal results
both for the company and for locals and the local economy.
Demand for land will rise within the next five years as
people look for potential houses or land to build upon to
make the most of the increase in demand that the booming
jobs market will bring with it.LEE COUNTY MAJOR EMPLOYERS 1 Lee Memorial Health System 10,425 51 Syngenta Flowers 235 2 Lee County School District LCPEC 10,333 52 Cypress Cove at HealthPark FL 235 3 Publix Super Markets 4,404 53 Winn Dixie, Inc. 231 4 Lee County Administration 2,358 54 Heinz North America 222 5 Wal-Mart 1,967 55 Stilwell Enterprises & Restaurant Group 217 6 Chico’s FAS, Inc. 1,703 56 Miromar Development Corporation 216 7 Lee County Sheriff’s Office 1,535 57 Waterman Broadcasting 214 8 U.S. Postal Service 1,477 58 Coca-Cola Refreshments 210 9 Florida Gulf Coast University 1,323 59 SymMetric Revenue Solutions, Inc. 209 10 City of Cape Coral 1,197 60 Lee County Tax Collector 208 11 Target 1,100 61 Hodges University 208 12 Hope HealthCare Services 1,000 62 Sam’s Club 205 13 Shell Point Retirement Community 952 63 Arthrex 200 14 City of Fort Myers 868 64 SunTrust/Southwest Florida, N.A. 194 15 Lowe’s Home Improvement 757 65 SunStream Hotels & Resorts 194 16 Comcast 705 66 Beall’s Department Store 192 17 Edison State College 635 67 Southwest Florida College 186 18 21st Century Oncology, LLC 627 68 J. J. Taylor Distributing Florida, Inc. 185 19 Alorica, Inc. 592 69 North Trail RV Center 182 20 South Seas Island Resort 500 70 Pink Shell Beach Resort and Marina 181 21 CenturyLink 500 71 Fort Myers Broadcasting Company 181 22 Bank of America 500 72 Sam Galloway Ford, Inc. 180 23 Hyatt Regency Coconut Point 494 73 Fifth Third Bank 167 24 Goodwill Industries-Southwest 494 74 Salvation Army of Lee County 163 25 Gartner, Inc. 469 75 Bass Pro Shops 163 26 LYNX Services LLC 400 76 Suncoast Beverage Sales 157 27 Kelly Services, Inc. 400 77 United Mechanical, Inc. 150 28 Lee County Electric Cooperative 389 78 Smart Companies 150 29 COSTCO 375 79 United States Service Inds 147 30 Lehigh Regional Medical Center 357 80 Park Royal Hospital 146 31 Lee County Port Authority 354 81 Eye Centers of Florida 146 32 Wells Fargo Company 350 82 AIM Engineering/AIM Construction 145 33 Radiology Regional Center 350 83 Shaw Development LLC 141 34 Crowther Roofing 350 84 FL Dept. of Environmental Protectio 141 35 The News-Press Media Group 342 85 RE/MAX Realty Group 139 36 Lee County Clerk of Courts 342 86 Home-Tech 138 37 LeeSar, Inc. 335 87 Rehabilitation & Health Care 135 38 Florida Cancer Specialists 334 88 Regions Bank 130 39 G4S Secure Solutions (USA) Inc. 320 89 Paramount Transportation Logistics Ser. 130 40 WCI Communities, Inc. 312 90 Orthopedic Specialists of SW Florida 130 41 B & I Contractors, Inc. 300 91 JRL Ventures, Inc./Marine Concepts 130 42 UPS 290 92 GE Global Business Services 130 43 Internal Medicine Associates of SWFL 290 93 Henderson Franklin Starnes & Holt PA 128 44 Physicians’ Primary Care 284 94 NeoGenomics Laboratories 127 45 Florida Power & Light 272 95 TZ Insurance Solutions, LLC 125 46 Securitas Security Services, Inc. 267 96 Scanlon Auto Group 125 47 Keepsake Plants 255 97 Broadway Palm Dinner Theatre 125 48 Raymond Building Supply Corp. 250 98 Gulf Coast Readers 121 49 Fort Myers Toyota Family Store 241 99 Pepsi Beverages Company 120 50 Source Interlink Companies 238 100 Coral Trace Health Care 120
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