FORT MYERS, Fla. — Real estate experts say the Southwest Florida housing market went two different ways after Hurricane Ian. Coastal communities, like Fort Myers Beach, boomed. Inland, interest rates buckled the market, which started happening before Ian.
Industry leaders focused on this reality at the Market Trends of Southwest Florida convention in Fort Myers on Tuesday night.
"It's [Hurricane Ian] brought a frenzy of investors, buyers, and developers to our market that was never here before," said Randy Thibaut, founder of LSI Companies.
Thibaut specializes in land use and new home sales. He says Ian is bringing prices in coastal communities into the millions, sometimes just for the lots.
"If you’re on Fort Myers Beach or Sanibel and you’re looking at 3 million, 4 million, 5 million dollar properties, interest rates aren’t the effect," Thibaut said.
What's happening though in inland communities, which started before Ian hit our area?
"It’s taken a beating right now," Thibaut explained. "Sales are down around 40-50% because of high-interest rates."
Denny Grimes, the realtor for Keller Williams, says this is having different repercussions on our market.
"It's not totally a friendly market for buyers because there's a shortage of inventory and interest rates are high, but it's more friendly than it was," Grimes explained.
Part of the reason for the shortage is two-fold. Ian took houses off the market because of damage. However, Thibaut says it comes back to people not wanting to sell.
"Those who bought a home and locked in at 3% are kind of holding onto that home waiting for the interest rates to go down," he said.
Grimes believes because of that, sellers will eventually have to lower prices if they want to sell, which would raise the inventory.
Thibaut says a stable market would have six to eight months' worth of inventory, meaning houses for sale. Right now, he says Lee County is at a two-month supply, partially because builders are stepping back.
In 2022, there were 26,000 approved permits in Lee County, according to Thibaut. In 2005, it was at 44,000.
"Builders are going to be reluctant to have that much inventory out in the market right now with the volatility of interest rates," he said. "But when the interest rates come back down when the supply chain is balanced and we see decreases in the construction and labor markets...once those align, watch out. This market is going to be on fire."
Grimes believes it's cooling off and says asking prices are down. He says because of this, renters who can afford it should buy.
"They should do everything they can to lock in the cost of shelter, even if it’s painful at first," Grimes said. "If there’s a five in front of that interest rate, buy."
That's depending on who you ask, though.
"I think it’s time to chill out, let the market settle out a little bit, and then there’s going to be great opportunities," Thibaut said. "If you’re a first-time home buyer and you’re entering this environment right now with these 7% interest rates, it’s going to be tough qualifying."
Though sellers putting their houses on the market will help inventory, Thibaut believes density is key, especially in workforce housing.
"You have to either be able to bring new product in at lower interest rates for the development, or there has to be work done by the government with the developers to create workforce housing," he said.
Grimes says one-day interest rates will change and property values will go up. Thibaut says this could happen by next year, but no one can really predict that.
Grimes does believe Ian will not have a long-term effect on the market, despite the destruction the hurricane left behind.