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recent article by Lance Lambert in Fast Company discussed how home prices in Punta Gorda have been affected by the pandemic housing boom and its subsequent correction. The article cited data from credit rating agency Moody’s and highlighted a significant price spike from December 2019 to July 2022 when Punta Gorda home prices surged a staggering 73.2%. However, they have since dropped by 9.1%.
The article noted that Punta Gorda was one of the hardest hit housing markets during the 2008 housing bubble burst. It provided an example of a private equity-owned home in Burnt Store Village that was bought for $445,000 in May 2022 during the height of the pandemic housing boom. The home was rented and then put up for sale in February this year with an asking price of $400,000. As of July, it is still for sale with six price cuts and an asking price of $336,000, representing a 25% decline from its original purchase price.
The headline of the article seemed to target the city of Punta Gorda as one of the hardest hit price-wise, which confused some readers. Lambert clarified that the headline was misleading and he didn't write it. He reached out to his editor, pointing out two discrepancies in the headline. The entire story referred to the Punta Gorda Metropolitan Statistical Area (MSA), not just the city of Punta Gorda itself.
Lambert explained that while national aggregate home price indices are hovering around all-time highs, some regional housing markets in states like Florida, Texas, and Louisiana are experiencing home price corrections, including the Punta Gorda MSA. The Punta Gorda MSA includes all of Charlotte County, including Port Charlotte, Englewood, Rotonda, part of Manasota Key, Gulf Cove, South Gulf Cove, Placida, Babcock Ranch, part of Boca Grande on Gasparilla Island, Solona, and Deep Creek. Home prices vary significantly from neighborhood to neighborhood, with multimillion-dollar homes on Boca Grande and modest mobile home communities scattered throughout the county, as well as suburban homes with a wide range of price ranges in between.
Lambert's report addressed the MSA and forecasted a home price correction rather than a crash. He wrote that the pandemic caused a housing boom in Punta Gorda that was "particularly intense" due to accelerated retirement and work-from-home migration. While home prices jumped nationwide by 42.6% from December 2019 to July 2022, prices in the Punta Gorda MSA jumped 73.2%. Lambert went on to write that home prices in Punta Gorda haven't stopped falling and will likely continue to fall in the second half of 2024.
Several local Realtors and a professor disagreed with Lambert's forecast, stating that a crash is not imminent and that recovery might come sooner. Shelton Weeks, Lucas Professor of Real Estate at Florida Gulf Coast University, read Lambert's report and had a different perspective on things. He pointed out that there are price variations from neighborhood to neighborhood, making it difficult to talk about prices within a single zip code.
Weeks explained that while there was a buildup in inventory due to slower sales and new developments being built in the area, builders are currently not pulling as many permits. Hurricane Ian contributed to the present situation along with the increasing cost of home ownership due to insurance costs, which kept new home buyers out of the market even though the price was within their range.
Weeks also mentioned that first-time home buyers, who have set a budget, suddenly find that there are not enough dollars to cover the cost of owning a home, even though the price is within their range. A positive note for the area is that builders are backing off pulling permits, and the pace of sales is ahead of the previous year, Weeks noted.
"The market is working through this, and I don't expect to see a dramatic crash," Weeks said. "Prices are not coming down, and I don't think they're going to fall a lot more."
Weeks explained that what led to the crash over a decade ago was "lending standards had gotten extremely loose," and "students waiting tables were obtaining loans." Realtors of Punta Gorda-Port Charlotte-North Port-DeSoto Inc. provide monthly statistics showing in July the median price of single-family homes was $355,000, reflecting a 9.3% drop. However, as Weeks stated, sales were higher from a year ago. In July, there were 450 closed sales, up 16% from the previous year, according to the Realtors association data.
President of the Realtors association Leanne Walker agreed with Lambert's assessment that the pandemic was a factor leading to people moving to Florida, with many moving to Charlotte County. The demand for homes caused a price surge and multiple offers on homes. Before and during the pandemic, there were bidding wars on some properties.
"In 40 years, I have never seen values doubled in my lifetime," Walker said.
Many new developments located along Burnt Store Road and West Port were just getting started, and inventory was low at the pandemic's peak and migration to Southwest Florida. While Lambert writes that home prices in Punta Gorda haven't stopped falling and will fall further in the second half of 2024, Walker said many people are "on the fence," waiting to buy amid an election, a possible interest rate reduction, and high inflation, which is preventing some from entering the market.
She also mentioned that the Florida Legislature is "working on getting insurers back here," and insurance rates are another barrier to those wanting to become homeowners. Particularly hard-hit are condo owners whose HOA fees in some cases have doubled. Now condo owners face a new Florida law that went into effect in July, requiring engineering inspections of condos three stories and higher and more than 30 years old. The inspections would be at the HOA boards' expense.
If safety issues are discovered, repairs would have to be made at that point and not delayed, hence homeowners would face assessment fees. Weeks agreed that some condo owners are facing the highest increases due to the new Florida law. Some HOA boards are running out of reserves but must make the mandated repairs and not put off having safety-related work done.
Realtor Carla Nix, of The Nix Team in Punta Gorda, said the area "is going to return to a state of normalcy this fall and running through April." She cited the election year as a factor making the market skittish. Walker stated that traditionally, sales are slower July through September. "This time of the year we are slow—it's like everybody's else's winter," she said.
