America’s “Worst Market”? The Hype and the Hard Numbers Behind Cape Coral, FL

So you've probably seen all those headlines about Cape Coral, right? The Wall Street Journal is calling it America's worst housing market, and Newsweek is acting like it's about to fall into the Gulf. Business Insider is piling on. I get it, dramatic headlines sell clicks. But as someone who actually tracks these numbers every single day, I thought we should have a real conversation about what's actually going on there.

Look, I'm not going to sugarcoat this. The market has taken a hit. Home values are down about 17% from that crazy peak we hit in 2022, when the median was around $440K. Now we're sitting at about $365K. That's real money we're talking about.

But here's the thing, and this might sound weird coming from someone whose job it is to track property values, those 2022 prices were absolutely bonkers. I remember looking at sales back then and thinking, "This can't last." Remote workers were flooding in, people buying sight unseen, bidding wars over everything. It was wild.

What the numbers are actually telling us

So here's what the latest sales data shows. The median price has been stepping down pretty consistently. It went from $389,900 over the past two years to $365,000 in the last three months. That's happening in steady chunks, not some dramatic crash.

Price per square foot tells the same story, dropping from $229 to $219 over those same periods.

But here's something interesting. While median prices are sliding, the average sale price is still hanging around $452,000 over the past year, just slightly above the six-month average of $450,000. What's that telling us? Higher-end properties are still closing, which keeps the average elevated.

Homes are sitting longer, too. Days on market hit 53, and that number keeps creeping up about 1.2% every month. The area is at roughly 6.2 months of inventory based on the current sales pace of 408 homes per month. And here's the thing about that six-month mark: that's generally where markets start tipping from balanced to buyer-friendly.

Closed sales dropped 18% from last year, and pending sales are down 22%. People just aren't buying at the same pace. About 20% of what's for sale right now was built in 2023 or later. That's a lot of shiny new competition, especially up in the northern sections.

Here's where it gets interesting with pricing. The median sale-to-list ratio is sitting at 98%, which sounds pretty good until you dig deeper. When you look at the original asking price versus what homes actually sold for, it drops to 94%. The average price cut? About $26,000. Only 6% of homes sold above asking in the past 90 days.

Cash buyers are still active, though. 41% of recent transactions were all cash.

And here's what's not happening. Foreclosures and distressed sales. Bank-owned properties made up just 0.6% of sales, and short sales were only 0.3%. Most people still have equity and aren't being forced to sell.

But there's this massive elephant in the room. Insurance premiums have more than doubled since 2020. Average costs went from around $2,300 to over $5,000 annually. That's real money affecting what buyers can afford.

Oh, and Cape Coral made the national top-five list for year-over-year price declines. So yeah, it's definitely getting noticed for market softening.

Why this isn't 2008 all over again

The last crash was brutal. Foreclosures everywhere, prices dropping like rocks, investors buying everything for pennies. You couldn't give away a house in some neighborhoods.

This feels completely different. For one thing, most people actually have equity in their homes. The lending standards are way stricter now. No more NINJA loans or people buying five houses with zero down. And get this, distressed sales are less than 1% of what's happening right now. Less than 1%! Back in 2008, you couldn't swing a dead cat without hitting a foreclosure.

But wait, there's stuff happening now that we didn't deal with in 2008.

Insurance costs have gone absolutely crazy. I'm talking doubled, tripled in some cases. This isn't some temporary thing that's going away when rates drop. It's the new reality, and buyers are starting to factor these costs into what they're willing to pay. I've heard of people walking away from deals when they got their insurance quotes.

And then there's all this new construction hitting the market. Hundreds of homes in the next year, mostly in the northern sections. Builders are throwing around incentives like closing cost credits and rate buydowns. Great if you're buying, not so great if you're trying to sell your existing home.

Every neighborhood's got its own story

You know what's funny? Cape Coral isn't just one big market. Gulf access homes still have a reasonable demand, and many people want their boats in the backyard. Updated houses and newer built homes that are priced right from day one? They're still moving.

But man, if you've got an older place that needs work and you're trying to price it like it's already renovated, you're going to be sitting there for months.

Some of those Airbnb investors are bailing out too. Makes sense when you think about it as bookings are down, expenses are up, and they're probably looking at their numbers thinking this isn't worth the headache anymore.

So what's really happening here?

Here's how I see it. We had this perfect storm of pandemic craziness, remote work, people fleeing cities, and historically low rates. Then reality came knocking. Rates spiked, insurance went nuts, and all that new construction started getting finished right when demand was cooling off.

It's a real correction, don't get me wrong. But it's not a collapse. Most people can still walk away from their homes with money in their pockets, even if it's less than they would've made in 2022.

I'm watching a few key things to see where this goes. If inventory stays above six months, that's when sellers really lose pricing power. If people start getting less than 95% of the asking price consistently, that tells me buyers are taking control. And if we start seeing more than 5% distressed sales, then I'll start worrying about people getting in real trouble.

Right now, none of that's happening.

The real talk for anyone thinking about buying or selling

If you bought at the peak, yeah, you're down on paper. That stings, and I'm not going to pretend it doesn't. But zoom out a bit, and we're still way up from where we were in 2020. This market ran so hot that it was always going to give some of it back.

Thinking about buying? This correction is creating some opportunities, but factor in those crazy insurance costs. And don't expect this to turn around quickly. The structural stuff, high insurance, oversupply, and higher rates are not going away overnight.

Sellers, listen up. The days of throwing your house on the market and watching people fight over it are over. Price it right from day one, or you'll be doing the price cut dance for months. It happens all the time. Someone lists 20% over market value, then spends six months cutting the price until they end up where they should've started.

Where I think we're headed

Look, nobody has a crystal ball, but I don't think we're done correcting yet. Between the insurance situation, the struggling economy, inflation, and all the other factors, I think we've got more adjusting to do through 2025. But a total collapse? I just don't see it happening with the fundamentals we've got.
Absorption rates are hovering around 400 sales a month, which is still moving inventory, but if that slows down while listings stay high, it’s going to put more pressure on sellers.

These people calling this America's worst market? They're not wrong that it's hurting. But they're also not living there, tracking these numbers frequently, and talking to buyers and sellers. Context matters, and that's what I'm trying to give you.

Cape Coral's market is definitely changing, and it's going to keep changing. But understanding what's really happening - the actual sales data, neighborhood differences, and structural challenges - beats getting caught up in sensational headlines every time.

The media loves a dramatic story, but real estate decisions require local expertise and current market knowledge. Whether you're thinking about buying, selling, or just want to know where your property stands in this shifting market, having someone who tracks these trends daily makes all the difference.

Need an appraiser who actually knows those Cape Coral neighborhoods and understands what these numbers mean for your specific situation? Contact us and let's talk numbers, not headlines.