Should You Invest in Southwest Florida’s Real Estate Market in 2020?

“As far as real estate goes, there is not a cloud in the sky” according to a recent article by USA Today Network member News-Press when describing the Southwest Florida real estate market.

The economy and housing market in Southwest Florida are witnessing the same robust activity that’s engulfing the entire state. Population and jobs are growing, municipalities are business friendly, and there’s more demand than supply in the real estate market. These are exactly the things that rental property investors love to see.

Southwest Florida is located along the “west coast” of Florida. The region borders the Gulf of Mexico, with Tampa Bay to the north and the Everglades to the east. The region is known for its white sandy beaches, tropical landscape, and winter resort havens.

The Southwest Florida Economic Development Alliance (SWFLEDA) notes that all five counties that make up Southwest Florida – Lee, Collier, Charlotte, Glades, and Hendry – are experiencing strong growth. The largest cities in Southwest Florida include Fort Myers, Cape Coral, Naples, East Naples, and Port Charlotte.

Keep reading to learn why the Southwest Florida real estate market is worth considering in 2020.

>>Explore Roofstock's Southwest Florida investment properties here.

 

Population Growth

The Economic Development Alliance notes that Southwest Florida is among the fastest growing regions in the state and projections show the area’s strong growth trend should continue. Lee County is the fastest-growing county in Southwest Florida, but even smaller counties like Glades and Hendry have seen positive growth over the last 10 years.

Key Population Stats:

  • Population of Southwest Florida is about 1.3 million.
  • By 2025 the region is expected to grow to 1.5 million, with the population reaching at least 1.8 million residents by 2045.
  • Median age is 49.3 years.
  • 71% of people living in Southwest Florida are below the age of 65 and 51% are in the typical working years of 20 to 65.
  • Lee County is the most populated of the five counties in Southwest Florida and home to more than 754,000 residents.
  • Collier County has 372,880 residents, Charlotte County has 182,033, Hendry has a population of 40,347, and Glades County is home to 13,754 people.

 

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Job Market

The Walton Sun recently reported that Cape Coral, Lehigh Acres, and Fort Myers in Southwest Florida made the list of the biggest “boomtowns” in the nation. 

The region is business-friendly and provides a high quality of life that’s easy on the pocketbook. Government, community, and business leaders in Southwest Florida work hand in hand to create a vibrant economy focused on creating high-wage jobs.

Key Employment Stats:

  • GDP of Southwest Florida is nearly $50 billion and has grown by about 35% over the last 10 years.
  • Job growth rate in Southwest Florida is approximately 2.8% while labor force is only growing by 1.6% annually, meaning there are more jobs than workers to fill them.
  • Cape Coral in Southwest Florida was recently ranked by Forbes as the 3rd-best place for jobs in the U.S.
  • Unemployment rate in the region is 3.4%.
  • Labor force in Southwest Florida is nearly 610,000 employees.
  • Median household income is $53,636, higher than the state average of $52,594.
  • Key industry sectors in Southwest Florida include cleantech and emerging technologies, manufacturing, life sciences, defense and homeland security, logistics and distribution, aviation and aerospace, and financial and professional services.
  • At year-end, Naples had job openings for nearly 900 high-skill, high-wage STEM jobs (science, technology, engineering, mathematics) while employers in Fort Myers had nearly 2,000 STEM job openings they were trying to fill.
  • Construction was the highest job growth sector in Southwest Florida last year.
  • Major employers in Southwest Florida include Lee Health, Lee County School District, Publix Super Market, NCH Healthcare System, Walmart, Florida Gulf Coast University, US Sugar, Hertz, and the City of Fort Myers.
  • Companies with corporate headquarters in Southwest Florida include The Hertz Corporation, Hertz Equipment Rental Corporation, Chico’s FAS, and medical device developer Arthrex, Inc.
  • Florida Gulf Coast University, Florida Southwestern State College, Hodges University, Rasmussen College, and Southwest Florida College are some of the largest colleges and universities in the region.
  • 28% of the population in Southwest Florida has a bachelor’s degree or higher and 11% hold graduate or professional degrees.
  • Interstate highway I-75 connects Southwest Florida to Tampa to the north and Greater Miami to the east.
  • Port Manatee is one of Florida’s fastest growing cargo seaports and Seminole Gulf Railway provides freight rail service throughout the region.
  • Southwest Florida region is served by five commercial airports: Tampa International, Southwest Florida International in Fort Myers, Sarasota-Bradenton International, St. Petersburg-Clearwater International, and Punta Gorda Airport.

 

Real Estate Market

Fort Myers, Cape Coral, and Lehigh Acres in Lee County are among the top boomtowns in Southwest Florida, according to News-Press, noting that the region may be in for a record home buying and selling season.

According to Florida Realtors, year-over-year sales of single-family homes in Lee County were up by 35.7%, while inventory and active listings continue to decline. 

Key Market Stats:

For the three largest counties in Southwest Florida – Lee County, Collier County, and Charlotte County – according to Zillow (as of January 2020).

Lee County

  • Biggest cities: Fort Myers, Cape Coral, Lehigh Acres
  • Median home value: $240,330
  • Annual home value increase: 0.6%
  • Projected annual increase: 4.3%
  • Median listing price: $289,900
  • Median selling price: $239,700
  • Median list price per square foot: $164 per square foot
  • Days on market (average): 100
  • Price reduction during listing period: 21.8% of homes listed
  • Negative equity: 6.2% vs. 8.2% U.S. average
  • Delinquent mortgage: 0.9% vs. 1.1% U.S. average
  • Cities with highest home values: Sanibel, Miromar Lakes, Fort Myers Beach
  • Cities with lowest home values: Cape Coral, Fort Myers, North Fort Myers

Collier County

  • Biggest cities: Naples, North Naples, Marco Island
  • Median home value: $342,120
  • Annual home value increase: -1.0%
  • Projected annual increase: 2.7%
  • Median listing price: $435,000
  • Median selling price: $339,800
  • Median list price per square foot: $205 per square foot
  • Days on market (average): 122
  • Price reduction during listing period: 18.4% of homes listed
  • Negative equity: 6.1% vs. 8.2% U.S. average
  • Delinquent mortgage: 0.7% vs. 1.1% U.S. average
  • City with the highest home value: Marco Island
  • City with the lowest home value: Immokalee

Charlotte County

  • Biggest cities: Punta Gorda, Port Charlotte, Boca Grande
  • Median home value: $217,908
  • Annual home value increase: 1.6%
  • Projected annual increase: 2.5%
  • Median listing price: $269,900
  • Median selling price: $218,800
  • Median list price per square foot: $157 per square foot
  • Days on market (average): 79
  • Price reduction during listing period: 20% of homes listed
  • Negative equity: 5.6% vs. 8.2% U.S. average
  • Delinquent mortgage: 0.7% vs. 1.1% U.S. average
  • City with the highest home value: Placida 
  • City with the lowest home value: Port Charlotte

 

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Attractive Renters’ Market

The boomtown experience is also helping to drive the demand for rental property in Southwest Florida. The communications director of CareerSource Southwest Florida, a company that matches local job seekers with employers, gave the Walton Sun a variety of reasons why so many people are coming to the region: 

  • College towns such as Cape Coral and Lehigh Acres are attractive to students looking for affordable housing
  • White-collar workers are coming back to the area to be closer to their aging parents
  • Younger generation is relocating for the career opportunities found in Southwest Florida

Key Market Stats:

For the three largest counties in Southwest Florida according to Zillow - Lee County, Collier County, and Charlotte County – and RENTCafé for Fort Myers, Naples, and Port Charlotte (as of January 2020).

Lee County (Fort Myers)

  • Median rent: $1,647 per month
  • Annual rent increase: 3%
  • Percentage of renter households: 42%
  • Rent range: 68% of units have rents ranging from $1,001 to $1,500 per month

Collier County (Naples)

  • Median rent: $4,000 per month
  • Annual rent increase: -1%
  • Percentage of renter households: 40%
  • Rent range: 50% of units have rents ranging from $1,001 to $1,500 per month, and 45% have rents higher than $1,501 per month

Charlotte County (Port Charlotte)

  • Median rent: $1,900 per month
  • Annual rent increase: 2%
  • Percentage of renter households: 39%
  • Rent range: 71% of units have rents ranging higher than $1,001 per month

 

Historic Price Changes & Housing Affordability

When forecasting the demand for rental property in a given market, real estate investors review price change trends and the affordability of housing in the area. Two information resources that can be found online are the FHA pricing index and NAR’s housing affordability report.

Based on data from the FHA 2019 Q3 House Price Index report, these are the historic changes in home prices (including purchases and refinance mortgages) for Southwest Florida:

Lee County (Cape Coral MSA)

  • 5-year change in home prices: 45.66%
  • 1-year change in home prices: 3.26%
  • Quarter change in home prices: 1.62%

Collier County (Naples – Marco Island MSA)

  • 5-year change in home prices: 40.69%
  • 1-year change in home prices: 2.45%
  • Quarter change in home prices: N/A

Charlotte County (Punta Gorda MSA)

  • 5-year change in home prices: 47.73%
  • 1-year change in home prices: 4.69%
  • Quarter change in home prices: N/A

The Housing Affordability Index (HAI) from the National Association of Realtors measures whether or not a typical family could qualify for a mortgage on a median-priced existing (resale) single-family home in the market. 

An HAI value of 100 means the family has exactly enough median income to qualify (assuming a 20% down payment). 

For example, if an HAI is 130 the typical family has 130% of the median family income needed to qualify for a conventional loan for a single-family home. On the other hand, if the HAI in a market is 90%, it means that the typical family only has 90% of the median family income needed to qualify for a loan.

In all three of the Southwest Florida counties below, the HAI has decreased year-over-year. That means it is becoming more expensive for the typical family to qualify for a mortgage on a median priced resale single-family home in the market.

Lee County (Cape Coral – Fort Myers MSA)

  • 2017 HAI: 143.8
  • 2018 HAI: 134.0
  • Change 2017 vs. 2018: -8.2%

Collier County (Naples – Immokalee - Marco Island MSA)

  • 2017 HAI: 96.4
  • 2018 HAI: 90.5
  • Change 2017 vs. 2018: -2.5%

Charlotte County (Punta Gorda MSA)

  • 2017 HAI: 158.5
  • 2018 HAI: 143.0
  • Change 2017 vs. 2018: -1.1%

 

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Quality of Life

U.S. News & World Report ranks Fort Myers – the largest city in Southwest Florida – as the #1 best place to retire and #35 as the best place to live in the U.S. The city has retained its small-town charm over the last century, while just a few miles away Cape Coral and Sanibel Island are perfect for boaters, sailors, and fishing.

Key Quality of Life Stats:

  • Southwest Florida is known for its tropical climate, water, wildlife, and an ecosystem of preserves, sanctuaries, swamps and estuaries.
  • Major cities include Naples, Fort Myers, Cape Coral, Punta Gorda, and Marco Island.
  • Age of the population is diverse, with 20% of the residents 19 years or younger and 33% aged 60 or older.
  • World-class theme parks of Orlando are about a three-hour drive from Fort Myers.
  • Everglades National Park, Edison Ford Winter Estates, and the Babcock Wilderness Preserve are all in Southwest Florida.
  • Lee Memorial Hospital, NCH Baker Hospital Downtown, and Gulf Coast Medical Center are ranked among the three best hospitals in Florida.
  • Southwest Florida has more than 150 golf courses and is nicknamed the “Golfing Capital of the World”.
  • Boston Red Sox, Minnesota Twins, and the Tampa Bay Rangers all hold spring training in Southwestern Florida.

 

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Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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