It is difficult for a family to buy a house in SWFL

It is difficult for a family to buy a house in SWFL

It is difficult for a family to buy a house in SWFL


Housing affordability issues continue to persist in Southwest Florida, according to new research from Florida Gulf Coast University.

For many, median household incomes in Collier and Lee counties are not enough to afford median-priced housing, according to the latest readings from FGCU’s Household Affordability Index, known as the HAI, which is commonly used by agencies.

Here’s what you need to know.

What percentage of potential SWFL buyers are unable to reach an agreement on a new home?

FGCU’s just-released Second Quarter Real Estate Report shows the affordability index worsened significantly for all residential properties in the region, falling between 7 and 12 percent year over year.

“About 40% of the buyers we see at our new developments in Southwest Florida don’t qualify for loans,” said Mike Bone, area sales manager for DR Horton. “Even with rate reduction programs and cash incentives, we are seeing tremendous financial challenges.”

How far apart are median incomes and median home prices in Collier?

Collier County’s median household income of $100,700, also known as MFI, was 17% lower than the income required ($117,841) to purchase a median-priced residential property of $530,000 in the first quarter of 2024.

The first-time homebuyer has a 38% shortfall. But the gap is even larger for a single-family home, as Collier’s income is 48% below what is needed to make up the gap. In addition, the first-time homebuyer has an income that is 75% below what is needed.

What salary do you need in Lee County, Florida to buy a house?

Lee County’s MFI of $85,900 was enough to cover a median-priced residential property of $385,000. However, for a first-time homebuyer, the MFI is 18% lower than desired. For a single-family home, the MFI was 6% lower than the income required ($91,160) to afford the median of $410,000. For a first-time buyer, the MFI is 26% lower.

“Home prices hitting new highs are creating a wider gap between homeowners and first-time buyers,” said chief economist Lawrence Yun of the National Association of Realtors, also known as NAR.

How much has the average risen in some areas of southwest Florida?

The overall median home price continued to rise year-over-year in the latest housing data from the Naples Area Board of Realtors, reaching $650,000 in May compared to $600,000 last year. The price of a NABOR single-family home hit $850,000. A year ago: $745,000. Since the beginning of the year, the Lee-based Royal Palm Coast Association of Realtors median price is $375,000 in May, just $5,000 lower than the same period in 2023. The price of a single-family home of $395,000 is 2.5% below last year’s pace.

NABOR record prices are up 83% from 2019, said Wes Kunkle, president and managing broker of Kunkle International Realty: “Buyers are having a hard time qualifying for loans. The demand is there, it’s just that many people can’t make the down payment or find that the burden of additional expenses from big-ticket items like homeowners insurance and association fees is preventing them from purchasing a home.”

What challenges do potential condo buyers face?

The condominium enigma is not comforting either.

“Beginning Dec. 31, the Structural Integrity Reserve Law requires all Florida condominiums three stories or older and 25 to 30 years old to undergo a baseline inspection and use the results as a guide to maintain financial reserves that will pay for future maintenance, inspections and repairs,” said Jillian Young, president of Premiere Plus Realty. “The burden of raising these funds will require mandatory assessments for current and future owners. Sellers will need to factor in the additional cost of maintaining reserves.”

Previously, this type of housing was more accessible to those with lower incomes, which makes the situation even more complicated.

How much do most Collier County employees make?

According to a June analysis by GOBankingRates of data from the Florida Department of Economic Opportunity, Occupational Employment and Wage Statistics, nearly 60 percent of Collier employees make less than $45,000 a year and 35 percent of workers make less than $35,000 a year. That kind of pay in an expensive market is not an incentive for Collier.

“People don’t move here to find work,” Kunkle said. “People live here because they want to.”

That makes Collier different from other parts of the U.S., where sales are driven by workers who relocate for work.

“We have a different mix of sellers and buyers here,” said Mike Hughes, vice president and general manager of Downing-Frye Realty. “The majority of our sales are second homes.”

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What are the indicators that workers might have an easier time buying a home?

But one or two indicators have the potential to open the door a little wider for workers.

Royal Palm’s inventory has surpassed 6,300, which is up more than 50% year-on-year, with 1,930 new listings added in May. A similar trend is driving NABOR, which has 67.1% more properties available than 12 months ago, with 1,201 new listings in May. This is also happening at the same time as another ongoing shift.

“There were more price reductions than new listings in May,” said Jeff Jones, a broker with Keller Williams Naples. “Price reductions are good for our market. They tell us that sellers are finally realizing that the current market will not support ambitious pricing.”

NABOR’s 1,710 price decreases in May add to the 2,365 price decreases in April.

“Decreases in list prices are a sign that we are moving toward pricing that reflects current home values,” said Molly Lane, senior vice president of William Raveis Real Estate.

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How many homes have become more affordable in the Naples area?

Rising inventory and declining list prices have impacted homes at the lower end of the area. In May, NABOR properties in the $300,000 and under price category were up 104% compared to a year ago, while similarly, the $300,000 to $500,000 price category has 90.1% more availability.

“Over time, higher inventory will help boost home sales and moderate home price growth in the coming months,” NAR’s Yun said. “The increased housing supply is good news for consumers.”

While year-over-year prices are higher in Collier, the median for April and May was the same, suggesting the possibility of stabilization. While still higher than at the end of 2023, the monthly median for Royal Palm is down 2.9%.

“The share of smaller, more affordable homes in inventory has increased, helping to keep the median price down even as prices per square foot continue to rise,” said chief economist Danielle Hale. “This is very welcome news for prospective buyers.”

Columnist Phil Fernandez ([email protected]), who works for the Naples Daily News, grew up in Southwest Florida and has led Pulitzer Prize-winning initiatives. He writes In the Know for USA TODAY, which complemented this report. Support democracy. Subscribe to a newspaper.