CAPE CORAL, Fla. — The Federal Reserve's decision to cut interest rates Wednesday sparked renewed optimism among Southwest Florida real estate brokers, who said they hope it will help kickstart a sluggish real estate market.
WATCH: FOX 4's Hunter Walterman sits down with Cape Coral brokers after Federal Reserve cuts interest rate:
Federal Reserve Chair Jerome Powell announced a quarter point cut Wednesday - the first cut since December.
It's a much-anticipated move that has mortgage brokers and real estate agents fielding calls from clients eager to understand what it could mean for their home buying or selling plans.
"They [the Fed] are moving in the right direction, downward now" said Tony Lee, owner of Edison Mortgage, Inc. in Cape Coral.
The cut comes as parts of Southwest Florida's housing market slowed from red-hot pandemic highs. In Lee County, homes currently spend an average of 107 days on the market, according to Realtor.com — nearly a month longer than last year.
"Sales have definitely slowed down," said Nathaniel Hajjami, a Cape Coral realtor who said some potential buyers retreated to the sidelines.
"There's a lot of people that I've been working with that decided, let's wait and see what happens," Hajjami said.
Cape Coral's housing inventory has returned to pre-pandemic levels, Hajjami said, with more than 3,000 single-family homes currently for sale, according to MLS.com.
Many clients remain unable to afford homes, Hajjami said. That's partially because some sellers and real estate agents have remained stubborn on price, Lee said.
"They still think the house might be the 2022 price, when it's not," Lee said.
Home prices have started to tick down - somewhat dramatically in some parts of Southwest Florida. A Consumer Affairs report finds North Port home prices dropped more than anywhere else in the country over the past year.
In August, the median Lee County home sale price was $355,000, according to Realtor.com - that's down from $375,000 in August of last year.
"We've had insurance go up, we had interest rates go up, and we had house prices go up quite a bit from the whole COVID everybody moving down to Florida bit," Lee said.
"So now we're starting to see interest rates go down, insurance has kind of stabilized a little bit, we're getting some new carriers coming into the state of Florida," Lee said. "So we are starting to see a little bit more competitive pricing there, which is good."
However, the Fed's rate cut doesn't guarantee home prices will drop. Over the past two decades, home prices increased faster than income across much of the country, according to a U.S. Treasury report
"We don't set mortgage rates, but our policy rate changes do tend to affect mortgage rates," Federal Reserve Chair Jerome Powell said Thursday.
In August, the U.S. Bureau of Labor Statistics reported that unemployment rose to 4.3%, the highest level since 2021. That same report finds U.S. job growth slowed, signaling a stagnant economy.
"There's a deeper problem here, there's not a cyclical problem that the Fed can address," Powell said. "And that just is a pretty much nationwide housing shortage."
Despite this caveat, brokers said they remain optimistic about Wednesday's announcement. Both Lee and Hajjami said a lower rate could increase affordability for home buyers.
However, it would likely take more than a year - and more rate cuts - for that to happen, Lee said. On Wednesday, the Federal Reserve signaled an appetite for future cuts.
"There's more good news to come," Lee said.
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