Cape Coral’s real estate market has drawn national attention for its recent challenges, with the Wall Street Journal declaring it “America’s worst housing market” in June. Headlines have focused on the fact that 8% of homeowners are now underwater on their mortgages, suggesting a market in crisis. Yet agents working locally describe a more nuanced reality, shaped by market normalization, steady buyer demand, and specific challenges unique to Southwest Florida.
Jenn Spears, a realtor with RE/MAX Realty Team who returned to her Cape Coral hometown after 17 years running a tourism business in Berlin, offers insight from daily experience. Her fluency in German and understanding of international buyers are assets in a market that attracts significant European and Canadian investment.
Rather than a market collapse, recent sales show a return to pre-pandemic norms. In October, Cape Coral recorded 426 home sales—closely matching the 410 sales reported in October 2019, which Spears identifies as the last “normal” market before the pandemic’s surge.
Spears sees national coverage as lacking context. “We had a very crazy few years here. Our COVID market was insane. We had very low inventory, prices went through the roof, and we had so many buyers coming into Cape Coral. That has leveled out, and it was necessary.”
Inventory now stands at about 2,500 homes, up from the 300-500 homes available during the peak frenzy of 2021-2022, but well below the glut seen during the initial market correction. This equates to roughly six months of inventory, a level widely considered balanced between buyers and sellers.
“We’re currently at about six months of inventory, which puts us more in a balanced market again,” Spears says. “We’re not in a buyer’s or seller’s market. It’s really pretty balanced right now.”
This stabilization allows buyers more choices and negotiating power, while sellers must price realistically to attract offers. Unlike the rapid price swings of previous years, the market now rewards accurate pricing and patient negotiation.
While the statistic that 8% of Cape Coral homeowners are underwater has attracted attention, Spears clarifies that this group primarily consists of those who bought during peak prices—often with minimal down payments through FHA or VA loans.
“There are, of course, homeowners that are underwater, for sure, if they bought in the boom when everything was the highest and did FHA or VA financing with barely any money down,” she says. “Some are going into short sale situations, unfortunately. But that really happens in every single market.”
According to Spears, the number of distressed sales remains manageable. Most homeowners with negative equity are either waiting out the market or, in some cases, pursuing short sales. This is not an epidemic, but a normal cycle seen in many real estate markets after periods of rapid appreciation.
In today’s Cape Coral market, success depends on realistic pricing from the outset. Spears and her partner Bob Ashworth focus on setting listing prices that reflect current market value, even if it means losing potential clients unwilling to price competitively.
“We like to price our homes as close to an actual selling price as we can. We don’t want to hold on to a seller for six months,” Spears says. “Statistically, the longer a seller sits on the market, the less money they will get.”
Their process typically involves one to three price reductions, ranging from $5,000 to $25,000, based on buyer feedback and showing activity. If a home attracts showings, the price is likely appropriate; if not, a reduction is needed.
“If sellers are priced correctly, they’re selling and they are selling fairly quickly,” Spears notes. “If they’re sitting on the market for six months, more than likely it’s the price.”
This approach has become more important as buyers scrutinize value and resist overpaying—a sharp contrast to the bidding wars and waived contingencies common during the pandemic boom.
The post-pandemic market has given buyers more leverage. Increased inventory allows buyers to negotiate repairs, request seller concessions for closing costs, and take time to make decisions.
“Buyers are putting out quite a few demands right now. We have a lot of inventory, so it is possible to negotiate that way at the moment,” Spears observes. “Buyers have the option to negotiate. They’re able to look at homes maybe more than once. They’re able to look at a few homes and actually make a more informed decision.”
This is a marked change from the frenzied buying environment of 2020-2022, when buyers often made offers without inspections or seeing the property in person.
Insurance remains a major obstacle in many Cape Coral transactions. Florida’s insurance market has tightened, often forcing buyers to purchase unexpected coverage. Spears recently managed a sale where a property technically outside a flood zone was required to carry flood insurance because a small section of the patio extended into a flood zone by inches.
“The home was outside of a flood zone, but the back right corner, by maybe an inch, was in a flood zone,” she says. “Because that property was built that way, the lender required flood insurance on that property.”
These requirements can add significant costs and uncertainty for buyers, especially on properties that never previously needed flood coverage. The evolving insurance landscape continues to complicate deals and may impact future demand.
Despite insurance and flood zone challenges, Cape Coral’s canal system remains a major draw. Waterfront homes, especially those with Gulf access, continue to command premiums. Values depend on factors such as canal location, proximity to open water, and the number of bridges to the Gulf.
“Waterfront properties are still very, very popular here. Boating is part of the lifestyle here in Cape Coral,” Spears says. “They’re still selling very, very well.”
Properties closer to the river with fewer bridges fetch higher prices, while those farther away or with more restricted access are priced accordingly. The unique geography of Cape Coral ensures continued demand for these homes, even as other segments of the market adjust.
Hurricane Ian’s impact is still felt three years after the storm struck Southwest Florida. Areas like the older Yacht Club neighborhood, which sits at a lower elevation, experienced severe flooding and now face ongoing rebuilding challenges.
Cape Coral’s FEMA 50% rule requires homes damaged beyond half their value to be demolished and rebuilt to current elevation standards. Some owners rebuilt without permits, complicating future sales and raising concerns about compliance.
“Many of these homes that were flooded and rebuilt were rebuilt, some without permits, and that’s turning into a little bit of an issue,” Spears explains. “We’re making sure that our buyers coming into that market are safe and don’t go into a property that maybe didn’t do the right thing.”
Builders in Cape Coral are aggressively courting buyers with incentives such as reduced interest rates and closing cost contributions. This makes it harder for resale properties to compete, though existing homes offer benefits new builds cannot, like mature landscaping and established neighborhoods.
“New construction, the builders, they’re giving such great incentives. Sometimes they’re offering lower interest rates,” Spears says. “Sometimes, if you have a seller, we can’t compete with the incentives that they’re giving.”
Still, buyers seeking immediate occupancy and established communities may prefer resale homes, especially as new construction can involve delays and added costs.
Looking ahead, Spears anticipates a stable market with modest seasonal increases in activity as winter arrives and snowbirds return. While insurance and hurricane recovery remain challenges, balanced inventory and stabilized prices support a healthy market environment.
“I do expect towards the winter, late fall, early winter, the market to pick up. That’s our usual. Our snowbirds are coming back in, and they’re starting to look and starting to buy,” she predicts.
For investors and real estate professionals, Cape Coral presents a market that has emerged from its post-pandemic adjustment with a new equilibrium. Success depends on realistic pricing, clear communication, and a keen understanding of the region’s unique risks and rewards.
While headlines may focus on distress, the reality is a market that has found its footing. Buyers and sellers who understand the current landscape—and who are prepared to navigate insurance and compliance hurdles—will find opportunity in Cape Coral’s evolving real estate scene.
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