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Cape Coral Foreclosures Affect Construction Market

By
Real Estate Broker/Owner with Villa Realty Group, Inc.

The Cape Coral real estate market which is currently plagued by a record number of foreclosures and short sales now has affected the construction industry which employs so many in this area.  Due to the large number of these distressed properties on the market, many of them available bleow the cost of replacement has meant that it is increasingly difficult for builders to build new homes.

The question I hear all the time is why would someone contract with a builder to build a home when they can buy a new never lived in home for less money than the cost of construction.  Even if the buyer really wanted to build a new home so they could have it "their way", it is next to impossible to get an appraisal to substantiate the cost of construction these days.  Banks are cutting prices substantially to get these properties off their books.

In August 2008 the city of Cape Coral issued only 11 building permits for the entire month.  This is half of the 22 issued in June.  A year ago August, when every one thought the numbers were low at 47, now pale in comparison.

The reality is the oversupply of Cape Coral real estate does not need more inventory stocked on the shelves.  Building lots of new homes when the number of, homes ready to move into is to much, makes no sense.  I expect this low permit volume to continue for quite some time.  Especialy in the market segment under $500,000 since this is where the majority of the foreclosures exist. 

Where it does make sense to build a new home is in the higher price points, typically in the $1 million + price range.  There are less distressed sellers than in the lower price points and the "luxury home buyers" are typically willing to pay for the "I want what I want" rather than settling for something else.

With the large volume of BRC (Below Replacement Cost) properties currently available, now is an exceptional time to take advantage of owning a newer home for less than building a new Cape Coral home.  Want to know more about these properties read our FREE REPORT, "How To Successfully Buy Foreclosures and Short Sales" & "The Ten Biggest Mistakes Buyers Make".

This guide will help you understand the current Cape Coral real estate market conditions and how you can make the most educated decision to finding the best possible deal for you!

Comments(2)

Winter Baserva
Seasons Realty Group of Atlanta Communities - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

It's unfortunate that the builders and employees of the construction industry are suffering because of current market conditions in Cape Coral. However, it does present amazing buying opportunities for the savvy investor. With all the benefits currently being offered for first time home buyers too, its the perfect time to get in on below replacement cost property. I have friends looking into the "watefront wonderland" because of all the unbelievable deals going on in SWFL.

Sep 21, 2008 02:37 PM
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

There are many new construction projects here that haven't been finished, and since they are not going to be finished because the builders have gone bankrupt, there are a lot of half-finished eyesores in certain areas right now. They'll remain that way because the individual buyer doesn't have the money or experience to buy them and complete them. It's a mess.

Sep 28, 2008 03:50 AM