Cape Coral Housing Market: Decline, Stabilization, and Future Outlook

Introduction

Cape Coral, Florida, renowned for its extensive canal system and relative affordability within the state, has faced a challenging housing market downturn in recent years. This comprehensive analysis details when the market began to decline, evaluates evidence suggesting it may be reaching its bottom, and provides a detailed forecast for the next 6, 12, 18, and 24 months. Supported by extensive research from reputable sources with active hyperlinks, this report offers valuable insights for homeowners, investors, and prospective buyers navigating Cape Coral’s evolving real estate landscape.

Timeline of the Market Decline

Pre-Decline Context: Overvaluation in 2022

Before the downturn, Cape Coral’s housing market was significantly overvalued due to a pandemic-era migration surge. In August 2022, a study cited by News-Press found that the average home price of $429,775 was 70.43% above long-term pricing trends, marking Cape Coral as one of the most overvalued U.S. markets. This was driven by Florida’s net domestic migration of 314,000 in 2022, as reported by ResiClub Analytics.

Catalyst: Hurricane Ian in September 2022

The pivotal event was Hurricane Ian, a Category 4 storm that struck Southwest Florida in September 2022, causing $112.9 billion in damage, according to the National Oceanic and Atmospheric Administration (NOAA). The storm flooded thousands of homes in Cape Coral, leading to a surge in inventory as damaged properties hit the market. This oversupply, combined with rising insurance costs and economic uncertainty, initiated the market’s decline.

Onset of Decline: Early 2023

The decline became clear in early 2023. By March 2023, DoorLoop reported that the average sale price in Cape Coral dropped to $399,500, a 3.7% decrease from March 2022. Home sales fell from 751 to 601 units, and the median sale price per square foot declined by 5.5%. ResiClub Analytics attributed this to the influx of post-Ian listings and reduced demand amid high mortgage rates.

Continued Decline: 2024 and Early 2025

The downward trend continued into 2024 and early 2025. RocketHomes noted a median home price of $390,158 in December 2024, down 2.3% year-over-year, while Redfin reported a 5.1% price drop in November 2024 and a 2.5% decrease in February 2025 compared to the prior year. The market became a buyer’s market, with homes taking 70 days to sell in February 2025 (Redfin) and 44.9% of listings seeing price reductions in January 2025 (Newsweek).

Historical Price Trends

The Federal Reserve Economic Data (FRED) All-Transactions House Price Index for Cape Coral-Fort Myers confirms the decline, peaking at 452.97 in Q4 2023 and falling to 441.91 by Q4 2024, indicating a consistent downward trend since late 2023.

Quarter	Index Value (1995:Q1=100)
Q4 2023	452.97
Q1 2024	448.93
Q2 2024	445.40
Q3 2024	443.62
Q4 2024	441.91

Is the Market at Its Bottom?

Evidence of Stabilization

As of April 2025, multiple indicators suggest that the Cape Coral housing market is nearing its bottom:

• Increased Home Sales: Fox 4 Now reported a 10.8% increase in home sales in December 2024 compared to December 2023, the strongest annual growth since mid-2021, reflecting renewed buyer interest.
• Forecasted Growth: Realtor.com, cited by Gulfshore Business, ranks Cape Coral-Fort Myers as the 16th hottest housing market for 2025, projecting a combined 22.8% growth in home sales and prices, signaling a shift toward recovery.
• Local Observations: Realtor Caldwell, quoted by Fox 4 Now in July 2024, noted that the market is correcting itself, with median sales prices down over 5% but stabilizing due to improved affordability.

Role of High Inventory

Cape Coral’s high inventory has driven price declines but also supports the idea of a market bottom. Newsweek reported 15,425 active listings in January 2025, up 24.8% year-over-year, representing about 13.7% of estimated housing units (based on 112,533 units, derived from U.S. Census data and growth estimates). This oversupply, equivalent to a 12.3-month supply (Naples Daily News), has made homes more affordable, attracting buyers and contributing to the late 2024 sales surge.

National Context

While Cape Coral does not have the highest inventory nationally—cities like Tampa and Orlando show larger inventory increases, per RE/MAX—its 99.3% year-over-year inventory growth in 2023 was the largest among studied areas, per GOBankingRates. With a high per capita inventory (71 homes per 1,000 residents, based on 15,425 listings and a 216,992 population), the market’s oversupply is fueling affordability and buyer activity, suggesting a bottoming out.

Outlook for the Next 6, 12, 18, and 24 Months

6 Months (April to October 2025)

Over the next six months, the Cape Coral housing market is expected to stabilize, with prices potentially leveling off or slightly increasing. The Realtor.com forecast of 22.8% combined growth in 2025 indicates growing buyer confidence, driven by Cape Coral’s affordability (median price of $387,600 in March 2025, per RocketHomes) and lifestyle appeal. Home sales are likely to rise, following the 10.8% increase in December 2024. Gulfshore Business notes that builders are using cost-effective materials, which could further stabilize prices.

12 Months (April 2025 to April 2026)

Within the next 12 months, significant growth is anticipated. The Realtor.com projection suggests robust increases in home sales and prices throughout 2025, potentially pushing median prices toward $400,000. Norada Real Estate predicts that Florida’s housing market, including Cape Coral, will see gradual price appreciation by 2026, supported by strong demographic trends (2-3% annual population growth) and economic recovery. The market may shift to a balanced or seller-friendly state, with reduced days on the market.

18 Months (April 2025 to October 2026)

By October 2026, recovery is expected to continue, though high mortgage rates may pose challenges. Norada Real Estate cites Fannie Mae’s projection that rates will remain elevated until 2026, potentially above 6.5%. However, Cape Coral’s affordability compared to Miami and Tampa, along with its appeal to retirees and tourists, will likely sustain demand. Real Wealth predicts that Cape Coral’s market will “pick back up gradually” by late 2025 or early 2026, with rental market recovery supporting home price growth.

24 Months (April 2025 to April 2027)

Looking to April 2027, long-term forecasts suggest steady price appreciation. Wallet Investor projects significant home price increases in Cape Coral by 2033, implying a consistent upward trend over the next two years. Potential rate reductions or stabilized insurance costs could accelerate growth. Cape Coral’s population growth and desirability as a retirement and vacation destination will continue to drive demand, per Norada Real Estate.

Factors Influencing the Market

High Inventory Levels

Cape Coral’s inventory surged to 7,234 homes for sale in December 2024 (RocketHomes) and 15,425 in January 2025 (Newsweek), representing a 12.3-month supply (Naples Daily News). This oversupply, driven by post-Ian listings and new construction, has lowered prices but created opportunities for buyers, contributing to the late 2024 sales increase.

Insurance and Economic Challenges

Rising insurance costs, driven by FEMA’s planned flood insurance premium hikes and climate change risks, remain a concern. NPR estimates that by 2050, nearly all Cape Coral homes will face flood risk, increasing premiums. High mortgage rates, expected to persist until 2026 (Norada Real Estate), may limit affordability.

Demographic and Lifestyle Appeal

Cape Coral’s population grew by 2-3% annually from 2019 to 2023, supporting long-term demand (Norada Real Estate). Its affordability compared to Miami and Tampa, extensive canal system, and appeal to retirees and tourists continue to attract buyers. WalletHub, cited by News-Press, ranked Cape Coral second for first-time home buyers due to high per capita listings.

Conclusion

The Cape Coral housing market began declining in early 2023, triggered by Hurricane Ian’s impact and sustained by high inventory and economic pressures. As of April 2025, signs of stabilization—such as a 10.8% sales increase in December 2024 and a projected 22.8% growth in 2025—suggest the market is at or near its bottom. Over the next 6 to 24 months, recovery is expected, with stabilization by late 2025, significant growth in 2026, and steady appreciation by 2027. Challenges like high mortgage rates and insurance costs persist, but Cape Coral’s affordability and demographic appeal position it for a robust recovery. Investors and buyers should seize current opportunities while monitoring economic trends.

Key Citations

1. DoorLoop. Cape Coral Real Estate Market: Everything You Need to Know. https://www.doorloop.com/blog/cape-coral-real-estate-market
2. Federal Reserve Economic Data (FRED). All-Transactions House Price Index for Cape Coral-Fort Myers, FL (MSA). https://fred.stlouisfed.org/series/ATNHPIUS13880Q
3. Fox 4 Now. BUYING A HOUSE? Why a Cape Coral Realtor Says the Market Is Correcting Itself. https://www.fox4now.com/cape-coral/buying-a-house-why-a-cape-coral-realtor-says-the-market-is-correcting-itself
4. Fox 4 Now. Cape Coral Comes in Dead Last in New Hottest Housing Market Report. https://www.fox4now.com/cape-coral/cape-coral-comes-in-dead-last-in-new-hottest-housing-market-report
5. GOBankingRates. Housing Inventory in This Florida City Spiked Most, But Which in the Top 10 Are Cheapest? https://www.gobankingrates.com/investing/real-estate/housing-inventory-in-this-florida-city-spiked-most/
6. Gulfshore Business. Cape Coral-Fort Myers Forecasted to Be a Top 20 Housing Market in 2025. https://www.gulfshorebusiness.com/gb_daily/cape-coral-fort-myers-forecasted-to-be-a-top-20-housing-market-in-2025/
7. Gulfshore Business. Market Trends shift to buyer’s market for Southwest Florida homes. https://www.gulfshorebusiness.com/market-trends-shift-to-buyers-market-for-southwest-florida-homes/
8. Naples Daily News. SW Florida housing hitting marks not seen since brutal recovery from the Great Recession. https://www.naplesnews.com/story/money/real-estate/2025/02/16/sw-florida-housing-hits-marks-not-seen-since-great-recession/72300367007/
9. National Oceanic and Atmospheric Administration (NOAA). Hurricane Ian Report. https://www.nhc.noaa.gov/data/tcr/AL092022_Ian.pdf
10. News-Press. Cape Coral, Fort Myers among most overvalued housing markets in US, study says. https://www.news-press.com/story/money/real-estate/2022/08/22/cape-coral-fort-myers-among-most-overvalued-housing-markets-us/7843734001/
11. News-Press. Study ranks Cape Coral as one of the best cities for first-time home buyers. Here’s why. https://www.news-press.com/story/money/real-estate/2024/07/18/cape-coral-ranks-high-for-first-time-home-buyers/74449326007/
12. Newsweek. Florida Housing Market in Trouble as Prices Slashed in Multiple Cities. https://www.newsweek.com/florida-housing-market-trouble-prices-slashed-multiple-cities-1875858
13. Norada Real Estate. Florida Housing Market Forecast for Next 2 Years: 2025-2026. https://www.noradarealestate.com/blog/florida-housing-market/
14. NPR. Hurricane Ian Walloped Cape Coral, Fla. Two Years Later Housing Costs Have Spiked. https://www.npr.org/2024/10/24/nx-s1-5132690/hurricane-ian-cape-coral-florida-housing-costs
15. Real Wealth. Florida Housing Market Predictions for 2025 & Beyond. https://realwealth.com/learn/florida-housing-market-predictions/
16. RE/MAX. RE/MAX National Housing Report for April 2024. https://www.remax.com/en-us/remax-national-housing-report
17. ResiClub Analytics. From Boom to Correction: 5 Reasons Florida’s Housing Market Has Weakened. https://www.resiclubanalytics.com/p/from-boom-to-correction-5-reasons-florida-s-housing-market-has-weakened
18. RocketHomes. Cape Coral, Florida Housing Market Report December 2024. https://www.rockethomes.com/real-estate-trends/fl/cape-coral
19. RocketHomes. Cape Coral, Florida Housing Market Report March 2025. https://www.rockethomes.com/real-estate-trends/fl/cape-coral
20. Redfin. Cape Coral Housing Market: House Prices & Trends. https://www.redfin.com/city/2654/FL/Cape-Coral/housing-market
21. Wallet Investor. Cape Coral City Real Estate Market Forecast 2023-2033. https://walletinvestor.com/real-estate-forecast/fl/lee/cape-coral-housing-market