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Short supply, high demand for real estate

Properties being swept up quickly on Fort Myers Beach

By Nathan Mayberg - Editor | Jul 15, 2021

Short-term vacation rentals on Fort Myers beach are up 40% or more for this summer compared to 2019. / File photo by Nathan Mayberg

Within a day or two of being listed for sale, properties are being swept up on Fort Myers Beach by those eager to join in a real estate frenzy sweeping the nation, local real estate professionals say.

Chris Loffreno of Loffreno Real Estate said the amount of housing stock available is as thin as he has seen it as demand has grown. “I’ve been selling real estate for 30 years and this is the least inventory we’ve ever seen on the island,” he said.

“Right now we are at a 15-year low for inventory,” Loffreno said. “There is an extremely limited supply of inventory.”

Loffreno said those doing the purchasing are second-home buyers from coast to coast. A majority of those doing the buying are also looking to rent out the properties during the rest of the year. Those purchasing homes are often from places where the real estate prices are also rising. “People are in a buying craze,” he said.

The difference between now and the housing bubble of 15 years ago is that many of those buyers back then were trying to quickly flip their properties – which is not the case now, Loffreno said.

Paula Kiker, owner of Lahaina Realty said she doesn’t think this buying frenzy is “anything like the 2005 boom.” People are buying homes without even waiting for appraisals, she said.

“The agents see something come on and they have six to eight offers in one day,” Kiker said. The average property is gone in two days. While the speed of properties selling is not especially different than before the pandemic, the amount of buyers interested has changed since late fall of last year.

Short supply and high demand means rising prices. Loffreno estimates that prices are up overall more than 20% over pre-pandemic figures with prices even higher for single-family homes.

For single-family homes, Kiker estimates the prices are up even more – closer to 40%. Prices for condominiums are up less. A three-bedroom canal home which would have been $650,000 is now $950,000 “for a fixer-upper,” Kiker said.

Pool homes away from the water which are being used for rentals are going for $600,000 to $800,000.

There are some drawbacks to all of the buying, Kiker said. Older cottages are being demolished. “I’m not a fan,” she said of the tearing down of cottages.

Kiker said many of the buyers her office is seeing are fleeing the cities, with more from the northeast. Fort Myers Beach has long been a destination from the midwest and that is continuing though there are more interested buyers now from places like California and Texas, she said.

“It’s predominantly cash. I feel bad for those with loan offers,” Kiker said. “Cash is king.”

“We can not keep a house on the market,” Fort Myers Beach Chamber of Commerce President Jacki Liszak said.

“They sell within a record time,” Loffreno said. “It’s a great time to be a seller. You are going to get top price and probably multiple offers.”

Buyers are being flexible with sellers, allowing homeowners extra time to move out or even rent back their properties while they move, Loffreno said.

Despite the short supply of real estate, Kiker said “I think there is enough to go around.”

Kiker said she is worried about a potential saturation of the rental market. “I’m a little concerned about the rental market,” she said. Many of the buyers are counting on strong rental income for years to come, which is no guarantee.

Liszak said the turning of single-family homes which were once rented by workers on the island have been transformed into short-term vacation rentals that have priced out workers. “Those are gone. They don’t exist anymore,” she said. Some short-term rentals can go for $1,000 a week or more in season.

Property values increased countywide last year by 6.96 percent over the year prior, with the Town of Fort Myers Beach seeing a 4.72% increase. Based on sales, those values will be even higher this year.

Kiker thinks prices should settle down some. “I am telling folks if you don’t need to buy, wait until the fall. I think we are still on the uptick.”