Inventory Storm In SWFL

[Adam Bartomeo]

As we move into the summer of 2025, we want to bring you up to speed with key market changes affecting your rental investments in Cape Coral, Fort Myers, Lehigh Acres, and the greater SWFL region.

Over the past two years, I have sent several market updates expressing my concerns with the rising inventory of properties for sale and the rise of rental inventory levels. Unfortunately, I do not have positive news on either front. There has been a dramatic spike in rental inventory throughout Lee County but specifically Cape Coral, Ft Myers, and Lehigh. The data provided includes STRs (short-term rentals) which means that the total number is not correct and if you were to do the math, the percentage of increased rentals would not be correct.

If you look at the 3 graphs - Cape Coral, Ft Myers, and Lehigh - you will see that inventory has increased dramatically since December, with consistent growth month over month. The charts show that from December until now there has been inventory growth from 20% - 25%. I can tell you that these are low compared to the actual numbers which are closer to 30% - 40% for annual rentals. As most of you are aware this creates a lot of concerns for your rentals/portfolios and also for us as property managers. A simple "supply and demand" theory states, that when inventory rises, prices decrease (unless demand also increases at the same rate). Demand is only increasing by 2% - 5%, not 30% - 40%.

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Reasons for increased inventory
There are many contributing factors to the increased inventory - overbuilding, immigration laws, houses not selling, STRs not renting, and high interest rates to name a few. There are still HUNDREDS if not THOUSANDS of unfinished homes/units still in the building phase. All of this inventory has yet to come to market. The lack of sales is creating desperate sellers who are pivoting into annual rentals. Our number one customers right now are owners who cannot sell their properties for the price that they want, and they are transitioning them into annual rentals. As employees have returned to the office, inflation has gone up, and saving accounts have depleted so has the market for STRs. We have converted about 30 in the past 2 years and in the past week, I have personally spoken with 5 STR owners that want to transition into annual rentals.

Weathering the Storm
We are a property management team that is dedicated to giving you a better product, better service, and a better experience than any other company, in good times and bad times. We are not sitting idly by waiting for the storm to pass.

We are:

• Increasing marketing - better photos, descriptions, and we have even bought a drone and have been taking drone photography and video
• We have partnered with local assistance programs to help find tenants who are on assistance - getting them flyers, talking with their local specialists, and marketing on their website
• We are lowering tenant rents when their rent is above market rent
• We are fixing more maintenance concerns in a timelier manner
• We are trying to increase our tenants' experiences
• We ensure that every vacant property has a sign

The vacancy rate throughout Lee County is currently 15.4%. We are proud to say that our portfolio of properties has a vacancy rate of 8.3% (our goal is to be below 5% at all times). Despite us lowering rents during tenant renewals, drastically lowering rents after turnover, and our unit count staying the same, for the month of May we had our third highest revenue collection period. We are weathering the storm while continuing to row in the right direction.

Sales
You will see from the sales chart below that we are on a steep decline in median sales price. On May 31, 2025, the median sales price of $435,000 matches the median sales price from 11/30/2021. Our slowest time of the year, and the time when prices are the lowest are from Sept - Dec. Meaning that we are going to continue to see a decline in sales prices for the next several months. During this time, I am projecting that we will have a median sales price of $370,000 - $410,000. This will put us back to pricing that we haven't seen since late 2020. It is a great time to buy and will continue to be a great time to buy for at least another 6 - 12 months. There are too many high-level policies and politics in play to say if the decline will continue, stabilize, or get worse. Footnote, this data is for SFHs not multifamily but from what I can see, multifamily is following this trend.

The storm is not over, and it is going to get worse. Rents are going to continue to drop, vacancies are going to increase, the timelines to fill units are going to increase, and expenses are going to rise. But, it will get better, and we will continue our dedication to giving you a better product, better service, and a better experience than any other company, in good times and bad times.

[Jay Hinrichs]

Quote from @Adam Bartomeo:

@Carlos Julio Thanks for the well thought out post! 

When you are marketing for a new tenant it is very difficult to stand out. Price and location are the top 2 search factors, so, no matter how good you market, if you don't meet the tenants' criteria here you will never be seen. Unless, you have a website. If you are able to drive tenants to your website, then they will probably scroll through your inventory. Our website is our #3 lead generator. There are other factors that may or may not be heavily searched, like bedrooms, baths, etc.

If you do meet their criteria then it is about standing out from the competition. Drone photography, quality photos, and video will help with this. Tenants and buys want to see #1 Quality photos, #2 Video, and #3 Accurate description. Depending on the site that you market on, they normally go in that order - they look at the photos, then watch the video, then read the description. Everything else falls behind that.

Bottom line investors with max debt are in trouble investor who paid cash or have small debt will be fine they just lower rents and take what ever tenants are out there.. The refi till you die or putting to much equity into an investment lowers returns methodology is going to really hurt a lot of folks or they can just write checks now monthly for the negative cash flow or pay off the props etc..  Those idiots who paid cash who cant do math and dont realize that your return is smaller on cash purchases .. Well they will be fine albeit smaller returns but lots of good rest at night not worrying.  I know its contrarian to the SOP on BP  for investors who rely on their calculator to decide return and then use that to decide to max leverage.

As for the spec building this is just a replay of 08 time frame.. you simply cannot have thousands if not hundred thousands vacant lots  that are shovel ready and sustain values like other cities were buildable lots are scarce or new builds have to go on newly created developments that take years to put together and have to be built to todays standards as opposed to Lehigh that was built to 40s and 50s standards which were NO standards just carve stright roads out of the swamp allow well and septic on each lot and off you go.  then you have Alec Baldwin and his company at Glen Garry Glen Ross sell the lots sight unseen to the thousands of folks from  WI IL MI and other nothern cities with the dream of retiring on them.. The same thing has played out all over America and for sure in Western US with massive retirement communities built same time frame same standards and thousands of vacant lots.. One needs look no further than CAL PINES in Alturas CA.