Cape Coral Florida Real Estate

A Guide for the Conservative Real Estate Investor

Cape Coral real estate has been going up steadily. It is a great city to live in and its proximity to the Gulf make it ideal for boaters and fisherman.

Cape Coral continues to fuel the engine that powers Southwest Florida’s unprecedented growth. Keep in mind that the following statistics are from 2002 - 2003, but they still illustrate Lee County's growth potential:

I don't get a chance to update this site as often as I like, but recently, the federal government gave Lee County money to extend their runways at Fort Myer's International Airport to accommodate the new jumbo jets. This will be one of only two airports in the state that can handle these planes. That is what I mean by positive economic growth. It is the type of thing that you as an astute real estate investor should be looking for.

If you roam around the city you’ll see evidence of that growth. Nearly 5,000 new homes will be built this year. The city is in the middle of a $200 million utility expansion project and new parks are planned throughout the city.

It’s the waterfront that’s attracting so many newcomers. But it’s also the affordable real estate, a balmy climate and one of the lowest crime rates in the state.

Homeowners on the 400 miles of canals enjoy the use of boats moored in the waterways bordering their properties. The canals also help residents avoid flood damage during the rainy season.

Cape Coral lies on the northwest side of the Caloosahatchee River and includes 115 square miles of land area, only about 35 percent of it developed. The city extends from the mile-wide Caloosahatchee to the wetlands on Pine Island Sound. Homes here run from the mid $100,000s to more than $4 million.

Cape Coral residents boast one of the highest median incomes in the area at $46,800. Yet, it’s becoming more than just a retirement haven. The student population is growing at 5 percent annually. There are 17 new public schools planned over the next nine years — three this year — along with four charter schools.

Cape Coral Real Estate Investment Opportunities

Cape Coral real estate gives you a number of investment opportunities.

1. Raw Land - I hesitate to say what lots are going for these days in Cape Coral. They have been going up so quickly that anything I write would have to be updated every few weeks. Nevertheless, a building lot can be a great investment. You just have to understand that the down payment on land is generally a lot higher than it is to build a home. Cape Coral land would make a great investment for a self-directed IRA. If you want to learn how you can use your IRA, 401K, etc., to buy real estate, give me a call.

2. Spec Homes - This is a 100% construction loan. This means that for a very low down payment (about 1.5% - 3% for the land, home and appraisal) you can build a home. Afterwards (or even before completion) you can sell it at a profit, move into it or rent it out.

We have an office in Cape Coral as well as other strategic locations in Florida. Give me a call and we can discuss opportunities in this and other areas in the state.

Taking Off the Rose Colored Glasses I see many sites that hint at 30-40% appreciation in Cape Coral. True, historical appreciation has been that high. But, it would be misleading and almost criminal for me to promise that type of return on a continual basis. That would mean that a $350,000 home would cost nearly $770,000 in three years. Perhaps I lack vision, but I do not see that happening. However, at 10% average appreciation over the next three years that same home would sell for $465,000. The actual appreciation of course varies. The only point I want to make is, you can make a handsome profit without a very great rise in value. This is all due to the fact that you are employing leverage and controlling a valuable property with a relatively small amount of money. Generally, I have a tendency to understate the market.

Research Material from The National Association of Realtors

This has been extracted from a 2005 research report conducted by the National Association of Realtors.

With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the Cape Coral - Ft. Myers metro market, as detailed below, reveals that there is very little danger of this. In fact, the local housing market is in excellent shape with a potential for significant housing equity gains, particularly for home buyers who plan to remain in their house for the long run. Because prices have risen faster than income, the ratio of price-to-income is currently above the historical norm. This measure is frequently cited to imply that there is a housing market bubble. But this ratio is a misleading measure in assessing bubble prospects. A more relevant measure is the mortgage servicing cost relative to income. This ratio is at a very manageable level. It implies no widespread financial overstretching to purchase a home in the region. Furthermore, the nationwide supply of homes on the market relative to home sales is very lean, suggesting similarly tight market conditions in the local area.

You will also need to consider the local fundamentals

Also taken from the NAR report:

The job market has been exceptionally strong.

- There have been 43,000 payroll job additions in the past five years. Many new job holders seek their own housing units.

- The region added in the past five years an estimated 78,000 new housing units of which about 52,000 were single-family units.

- The ratio of five-year job gains to five-year new home construction shows the “hangover” impact of the housing shortage, or housing surplus.

In our case, the local market is at a neutral level as the ratio is just slightly under one. With recent job gains and the expected continued economic expansion, the jobs-to-new home ratio could further increase. In addition, as mentioned earlier, the newly arriving retirees will not show up in the jobs data, though they will need housing.

Southwest Florida has been on investor's radar for quite some time. We have put a lot of investors into the area. From time to time we pull back and slow down our sales. Usually, this is because of greater opportunities elsewhere. Nevertheless, of the 400,000 people who move to Florida each year, a significant number of them will continue to seek out homes in Southwest Florida. We will be investing there for some time to come.

Call and we can discuss the area in more detail.

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The information on this web site is provided as a guide for general informational purposes only and is not intended to be tax or legal advice. It is deemed reliable but not guaranteed. Please consult with your own attorney, tax advisor and/or accountant for specific advice. Martin Unger is a licensed sales associate in the state of Florida and works with London Realty Corp.