Cape Coral Real Estate Market Correction

Cape Coral Real Estate Market Correction

February 2026 Market Analysis & Buyer Opportunity Guide

Cape Coral Real Estate Market Correction: What Buyers and Sellers Need to Know in February 2026

The Cape Coral real estate market correction has become one of the most discussed topics in Southwest Florida real estate heading into 2026. After years of explosive pandemic-era price growth that saw home values surge by more than 86% between 2019 and 2022, the Cape Coral housing market has been experiencing a sustained price adjustment that is reshaping opportunities for buyers, sellers, and investors throughout Lee County.

As of February 2026, the median sale price for a single-family home in Cape Coral sits at approximately $354,900, with Zillow reporting an average home value of $398,122, representing a 4.7% decline year-over-year. Redfin data from December 2025 shows the median sale price at $365,000, down 3.9% compared to the previous year. Meanwhile, Movoto reports the median listing price in February 2026 at $425,000, reflecting a 3% decrease from the prior year.

This comprehensive guide examines every facet of the Cape Coral FL real estate market correction, including current pricing data, inventory levels, mortgage rate impacts, insurance cost challenges, neighborhood-by-neighborhood analysis, and expert forecasts for the remainder of 2026. Whether you are a first-time homebuyer looking to capitalize on softening prices, a current homeowner evaluating your equity position, or a real estate investor seeking value opportunities in Southwest Florida, this report provides the data-driven insights you need to make informed decisions.

Understanding the Cape Coral Market Correction: How Did We Get Here?

To fully grasp the current Cape Coral real estate market correction, it is essential to understand the extraordinary market dynamics that preceded it. The story of Cape Coral’s housing correction begins with one of the most dramatic real estate booms in American history, followed by a series of compounding factors that have reshaped the market landscape.

The Pandemic-Era Price Surge (2020–2022)

Between 2020 and 2022, Cape Coral home prices experienced an unprecedented surge driven by a perfect storm of market forces. Remote work adoption allowed millions of Americans to relocate to warm-weather destinations, and Cape Coral’s combination of waterfront living, no state income tax, and relative affordability made it one of the top migration destinations in the country.

Key factors that drove the Cape Coral price surge include:

- Massive Population Growth: Cape Coral’s population grew by 2–3% annually from 2019 through 2023, with the city’s estimated 2025 population reaching approximately 243,810 residents, representing nearly 25% growth since the 2020 Census.
- Historically Low Mortgage Rates: Sub-3% mortgage rates during 2020–2021 supercharged buying power, enabling buyers to stretch into higher price points and fueling bidding wars across Cape Coral neighborhoods.
- Remote Work Migration: Florida’s tax-friendly environment and Cape Coral’s waterfront lifestyle attracted a massive influx of remote workers from high-cost states like New York, New Jersey, California, and Illinois.
- Limited Inventory: Extremely tight housing supply during the pandemic created intense competition, with homes routinely selling above asking price within days of listing.
- Investor Activity: Both institutional and individual investors flooded the Cape Coral market, purchasing properties for short-term rentals, long-term rentals, and speculative flips.

By August 2022, a study found that the average Cape Coral home price of $429,775 was 70.43% above long-term pricing trends, making Cape Coral one of the most overvalued housing markets in the United States. Home values had increased a staggering 86% from 2019 to 2022, creating an unsustainable price level that was virtually guaranteed to correct.

Hurricane Ian and Its Lasting Impact (September 2022)

Hurricane Ian made landfall in September 2022 as a devastating Category 4 storm, causing catastrophic damage throughout Southwest Florida. While Cape Coral was not the hardest-hit area (nearby Fort Myers Beach and Sanibel Island suffered far worse), the storm created lasting ripple effects throughout the Cape Coral housing market:

- Insurance Premium Spikes: Homeowners insurance rates skyrocketed across Southwest Florida in the aftermath of Ian, with many carriers exiting the Florida market entirely and remaining carriers dramatically increasing premiums.
- Flood Insurance Reassessments: FEMA’s Risk Rating 2.0 methodology, combined with updated flood maps effective November 2022, resulted in significant premium increases for many Cape Coral properties, particularly waterfront homes.
- Increased Inventory from Distressed Sellers: Some homeowners, unable to afford rising insurance costs or facing storm-related repairs, listed their properties, adding to the growing inventory.
- Buyer Hesitation: National media coverage of Ian’s devastation created lingering concerns among prospective buyers about hurricane vulnerability in Southwest Florida.

The Correction Takes Hold (2023–2025)

The Cape Coral housing market correction officially began in early 2023 and has persisted through early 2026. Multiple converging factors have driven this sustained price adjustment:

- Rising Mortgage Rates: The Federal Reserve’s aggressive rate hikes in 2022–2023 pushed the 30-year fixed mortgage rate above 7% by late 2023, dramatically reducing buyer purchasing power and slowing transaction volume.
- Soaring Insurance Costs: Florida’s homeowners insurance crisis has been particularly acute in Lee County, with the average homeowners premium reaching approximately $3,631 per year as of March 2025, a figure that increases substantially for waterfront and flood-zone properties.
- Inventory Surge: Cape Coral’s housing inventory surged dramatically, reaching as high as 15,425 listings in January 2025 according to some reports, representing a 12.3-month supply that firmly established buyer’s market conditions.
- Overvaluation Correction: The 86% price appreciation from 2019–2022 was fundamentally unsustainable, and the market has been working through a natural correction to align prices with historical trends and local income levels.

Home values in Cape Coral have declined approximately 18% from the 2022 peak, representing a significant correction that has eliminated much of the speculative premium built during the pandemic era. However, this correction has also created meaningful opportunities for well-positioned buyers entering the market at more sustainable price levels.

Cape Coral Real Estate Market Data: February 2026 Snapshot

Understanding the current state of the Cape Coral real estate market requires examining multiple data points from trusted sources. Here is a comprehensive look at the key metrics defining the market as of February 2026.

Current Home Prices in Cape Coral

Multiple data sources paint a consistent picture of continued price softening in the Cape Coral FL housing market:

- Zillow Home Value Index: $398,122 average home value, down 4.7% year-over-year. Homes are going to pending status in approximately 38 days.
- Redfin Median Sale Price: $365,000 (December 2025), down 3.9% year-over-year. Median price per square foot is $214, down 3.2% from the prior year.
- Property Focus Median Price: $354,900 median price for single-family homes as of February 2026, with a median AVM value of $378,000 for properties sold in the last 12 months.
- Movoto Listing Data: $425,000 median listing price in February 2026, down 3% year-over-year. Median price per square foot is $239, representing a 3% annual decrease.
- Houzeo Median Price: $374,000 median home price, down 3.8% compared to the prior year.

Key Takeaway: Cape Coral home prices have declined between 3.8% and 10% depending on the data source and timeframe examined. The median sale price for completed transactions generally falls in the $354,000–$374,000 range, while active listing prices tend to be higher, reflecting seller expectations that have not yet fully adjusted to market conditions.

Inventory and Supply Levels

Inventory remains one of the most important indicators in the Cape Coral housing market correction. Current supply levels strongly favor buyers:

- Active Listings: Approximately 4,379 properties are currently listed on the MLS in Cape Coral as of early February 2026, with Houzeo reporting 3,492 homes available in December 2025.
- Months of Supply: Houzeo reports 8.1 months of supply as of December 2025, up from 7.3 months the prior year. Worthington Realty reported 6.1 months in October 2025. Generally, anything above 6 months indicates a buyer’s market.
- New Listings: 660 new homes hit the Cape Coral market in December 2025 alone, representing a 20.4% year-over-year increase in new listing activity.
- Inventory Growth: Overall supply has grown 19.7% year-over-year, giving buyers substantially more options and negotiating leverage than in recent years.

Buyer Demand and Market Activity

While prices have declined, there are meaningful signs that buyer activity in Cape Coral is beginning to stabilize and even improve:

- Pending Sales Growth: Pending sales surged 68.3% year-over-year in October 2025 (278 to 468 pending sales), representing one of the strongest gains in all of Southwest Florida.
- Closed Sales Increase: Redfin reports 483 homes sold in Cape Coral in December 2025, up from 410 sales in December 2024, reflecting an 18% increase in transaction volume.
- Days on Market: The median days on market stands at approximately 67 days according to Redfin (down from 79 days the prior year), while Movoto reports approximately 105 days for listed properties.
- Sale-to-List Ratio: Homes are selling at approximately 96.1% of their list price, with only 9.5% of homes selling above asking (down from 12.2% the prior year). Price reductions have increased from 62.7% to 74% of listings.
- Competitiveness Score: Redfin rates Cape Coral at just 26 out of 100 on its competitiveness scale. Multiple offers are rare, and average homes sell approximately 4% below list price.

Pre-Foreclosure and Equity Data

The financial health of Cape Coral homeowners presents a mixed but generally stable picture:

- Pre-Foreclosure Activity: There are currently 588 properties in pre-foreclosure status in Cape Coral, a figure worth monitoring but not indicative of a foreclosure crisis.
- Involuntary Liens: 5,282 involuntary liens exist across 3,830 properties, suggesting some financial stress among a segment of homeowners.
- Strong Equity Positions: 66,345 properties in Cape Coral have more than 50% equity, and 34,432 homes are fully paid off. This strong equity foundation reduces the risk of a foreclosure-driven market crash.

What Is Driving the Cape Coral Real Estate Market Correction in 2026?

Several interconnected factors continue to influence the Cape Coral real estate market correction as we move through February 2026. Understanding these drivers is essential for anyone looking to buy, sell, or invest in Cape Coral real estate.

Mortgage Rates: Better Than 2024, But Still a Factor

As of February 2026, mortgage rates have improved significantly from their 2023–2024 peaks but remain elevated by historical standards:

- Current 30-Year Fixed Rate: The 30-year fixed-rate mortgage averaged 6.11% as of February 5, 2026, according to Freddie Mac. This represents the lowest level in over three years, down significantly from the 6.89% average one year ago.
- 15-Year Fixed Rate: The 15-year fixed mortgage averaged 5.50%, offering a meaningful savings for buyers who can handle the higher monthly payments.
- Federal Reserve Policy: The Fed held rates steady at its most recent January 2026 meeting after making three rate cuts in late 2025 (September, October/November, and December). Fannie Mae projects rates will hover around 6% for most of 2026 and 2027.
- Best Available Rates: Several top lenders, including Navy Federal Credit Union, Citi Mortgage, PenFed Credit Union, and Chase Home Loans, have been offering 30-year fixed rates below 6% since mid-November 2025.

What This Means for Cape Coral Buyers: While rates remain well above the pandemic-era lows of 2.5–3.5%, the current rate environment around 6% is significantly more favorable than the 7%+ rates that froze many buyers out of the market in 2023–2024. Combined with Cape Coral’s declining home prices, overall affordability has improved meaningfully for well-qualified buyers.

Insurance Costs: The Hidden Challenge

Perhaps no single factor has impacted the Cape Coral FL housing market more than the dramatic rise in insurance costs. Florida’s property insurance crisis has been particularly acute in Lee County, where hurricane exposure and flood risk drive premiums substantially higher than state and national averages.

Current Insurance Cost Landscape:

- Average Homeowners Premium (Lee County): Approximately $3,631 per year as of March 2025, up 3.3% year-over-year. This blended average includes everything from inland properties to waterfront homes.
- Cape Coral Non-Beachfront Homes: Typical premiums hover around or somewhat above the $3,600 county average, with projections for 2026 ranging from $3,700 on the low end to $4,300+ if a major storm season occurs.
- Flood Insurance (NFIP): The average Florida flood insurance policy costs approximately $878 per year through the National Flood Insurance Program, though costs vary dramatically based on flood zone, elevation, and property characteristics.
- Cape Coral NFIP Discount: The City of Cape Coral successfully retained its Class 5 NFIP rating in November 2024, preserving a 25% discount on flood insurance premiums for residents and businesses with National Flood Insurance policies.
- New Construction Savings: New construction homes built to current 2025 building codes are seeing meaningfully lower flood insurance rates, with potential savings of $300–$500 per year compared to older construction.
- New Requirements for 2026: As of January 1, 2026, Citizens Insurance now requires flood insurance for wind coverage on homes insured for $400,000 or more. By January 2027, flood insurance will be required for all Citizens wind policies regardless of value.

Combined Insurance Burden: When combining homeowners insurance and flood insurance, Cape Coral property owners may face total annual insurance costs ranging from $4,500 to $8,000+ depending on property location, construction age, flood zone designation, and coverage levels. This combined insurance burden has become a critical affordability factor that buyers must carefully evaluate when calculating total homeownership costs.

Oversupply and New Construction

The dramatic increase in Cape Coral housing inventory is a central driver of the current market correction. The inventory surge has multiple causes:

- Post-Hurricane Ian Listings: Many homeowners who delayed selling during storm recovery have now entered the market, adding to available inventory.
- New Construction Pipeline: Cape Coral has experienced a significant new construction boom, with builders absorbing demand from out-of-state migrants who prefer modern homes built to current hurricane and flood codes.
- Investor Exits: Some investors who purchased during the pandemic-era frenzy are exiting positions as short-term rental returns have normalized and holding costs (insurance, taxes, maintenance) have increased.
- Relocating Sellers: Some Cape Coral homeowners are choosing to relocate to markets with lower insurance costs or different lifestyle amenities, adding to the supply of available homes.

Population Growth: The Long-Term Demand Driver

Despite the current correction, Cape Coral’s population growth remains one of the strongest in the nation and provides a critical foundation for long-term market support:

- Current Population: Approximately 243,810 residents as of 2025, with a 4.13% annual growth rate.
- Growth Since 2020: Nearly 25% population increase since the 2020 Census, making Cape Coral one of the fastest-growing cities in Florida.
- 2030 Projections: Population is expected to reach approximately 250,000 residents by 2030.
- Long-Term Build-Out: City planners anticipate Cape Coral could reach a build-out population of nearly 377,000, with projections of adding 100,000 new residents by 2050.

This sustained population growth creates consistent long-term demand for housing and supports the case that the current Cape Coral market correction is a temporary pricing adjustment rather than a fundamental structural decline.

Cape Coral Neighborhood Analysis: Where Are the Best Opportunities?

The Cape Coral real estate market correction has not impacted all neighborhoods equally. Understanding the dynamics of different areas within Cape Coral is essential for identifying the best value opportunities.

Southwest Cape Coral

Southwest Cape Coral remains the most desirable and expensive area of the city, known for its Gulf-access canals, established neighborhoods, and proximity to Cape Harbour. Homes in this area typically range from $400,000 to well over $2 million for premium waterfront properties.

The correction has been particularly noticeable in Southwest Cape, where some waterfront listings have seen price reductions of 5% to 10% from original listing prices. Properties in Cape Harbour and surrounding Gulf-access neighborhoods that once sold quickly in multiple-offer situations now sit on the market for 70 to 100+ days, creating negotiating opportunities that simply did not exist in 2021–2022.

Northeast Cape Coral

Northeast Cape Coral has emerged as one of the most compelling value opportunities in the current market. This area offers waterfront lots with wide canals and newer construction at a fraction of Southwest Cape’s prices. Search trends for “northeast Cape Coral real estate” have been climbing, particularly among out-of-state buyers seeking lower price points, fewer HOA restrictions, and access to the city’s canal system.

For buyers and investors looking for entry-level waterfront properties or new construction opportunities, Northeast Cape Coral represents some of the best value in all of Southwest Florida during this correction period.

Southeast Cape Coral

Southeast Cape Coral offers a mix of established residential neighborhoods with clean canal systems and many mid-century builds that are ripe for value-add renovation. This area is popular with both end-users and investors focused on the Cape Coral flip and rental market. Properties here generally offer more moderate pricing than the Southwest while still providing waterfront access and solid rental potential.

Caloosahatchee River Properties

Homes directly on the Caloosahatchee River offer unmatched views and fast Gulf access, but have been among the properties most impacted by the correction.

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