What do Sanibel Island Real Estate Sales look like one year after Hurricane Ian?

Here is a little background to put the current stats for Sanibel home sales and condo sales in context:

For Sanibel Island single family home sales and duplex sales, the last normal/average year to use for comparison was 2019 with 211 sales. Covid started in 2020 and sales increased that year to 289 single family homes sold on Sanibel as people working from home could actually now work from the Island. 2021 was likely the peak of the “Covid Frenzy” real estate market with 355 single family home sales on Sanibel. 2022 continued strong, but we had far less inventory for buyers to select from, and of course the 4th quarter was somewhat non-existent due to the impact of Hurricane Ian in Southwest Florida. The island had only 184 home sales in 2022, but again, there wasn’t much left to sell. The average Sanibel home sales price rose each year from $949,790 in 2019 to $1,597,868 in 2022. The median price also rose during that same time from $835,000 to $1,313,000.

These staggering numbers can be attributed to:

1. Covid creating a work from home situation

2. Baby Boomers retiring

3. Low interest rates

4. Florida no state income tax

5. Climate change creating colder winters.

As of September 21st, 2023, there have been 222 closed sales of homes on Sanibel Island with an average home sales price of $1,260,665 and a median of $932,500. Approximately half of these Island sales were ground level homes being sold gutted. Another 20% - 30% were elevated homes sold AS-IS needing repairs. So, the differential in Sanibel Island home sale prices obviously incorporated the repair cost, and therefore I conclude the approximate remaining delta in value (reduction) was somewhere between 5% and 10% of an estimated Pre-Ian value. 

Today (September 19th, 2023) there are only 80 homes for sale on Sanibel Island. This low number is due to the depletion of inventory during the Covid Frenzy as well as the return to our more traditional seasonal business. Prior to Covid, we would have encouraged sellers NOT to list in July, August or early September. Therefore, we expect a significant increase in inventory of Sanibel Island homes for sale in the next 60 days. 

Possibly the biggest change affecting Sanibel real estate sales is the insurance issue. Homeowner’s insurance is readily available, and there is no increase in premiums. Flood insurance is still readily available, but non-conforming home flood insurance premiums are going to increase significantly over the next few renewal periods. Wind insurance is the biggest threat. As of today, there are only a few carriers who will even consider writing a new wind policy on barrier islands. Citizens, owned by the State of Florida, will writer policies for us damaged homes with a replacement cost up to $700,000, only. There are a few carriers who will write on newer homes with newer windows, doors and roofs. Cash buyers may elect to “self insure” but most buyers will not purchase without wind insurance. To spur the local economy, San Cap Community Bank offered portfolio (in house) loans without wind insurance. This was very risky but it appears to have been a good (lucky) decision this year. There is always private insurance, such as Lloyds of London, but the premiums are ridiculously high. We expect/hope that more carriers will surface as we exit storm season this year, but some insurance brokers think the underwriters will want to see two years of no storms. 

A similar story is occurring with Sanibel Island condominium sales: 127 sales in 2019 with an average of $694,393 and a median of $601,000. In 2021, there were 287 condos sold on Sanibel and in 2022 we had 123 sales with an average sales price of $1,136,199 and a median of $950,000. Once again the drop in the number of Sanibel Condo sales in 2022 from 2023 is a direct reflection of the reduced inventory of Sanibel Condos for sale.

The current state of the market for Sanibel condos is a different story that that of Sanibel homes due to insurance companies. Like most commercial buildings along Periwinkle Way, condominium associations have not yet received their insurance claim money. Most associations will need to hire an attorney and litigate to receive money. This could take years once the litigation process starts. Without knowing the amount of insurance proceeds, the associations cannot calculate their assessments required to pay for the work. Therefore, for most complexes, the work has not yet begun. There are a few exceptions to this with a few condominium complexes who had healthy reserves prior to the storm.

In order to sell a condominium, we must be able to articulate all of the risks to a buyer including:

1. Future assessments forthcoming

2. Timeline to close out common element permit

3. Time to get a contractor into each unit

4. Cost of remodel

5. Timeline of remodel

6. Future condo fees (The majority of the fee is insurance related, and no one can calculate how high the fees will go. Can the association even renew??)

This year, 77 condos have closed on Sanibel Island with an average sales price of $910,390 and a median of $795,000. This delta from 2022 includes the remodeling cost PLUS an X factor to mitigate the risks stated above. If we see an uptick in condo inventory this fall, it will most likely be from owners (not willing to wait and) selling at a discount so they may move elsewhere. This is what most buyers are expecting to see, unfortunately. 

Without hotel rooms and condos to rent, the visitors will not come. Without visitors, the local businesses will not want to reopen. With the exception of Doc Fords, Rosalitas Cantina and a few others, most restaurant owners are opening to keep their employees and retain the loyalty of customers. I do not think many restaurants are making money. Without restaurants and small local businesses open, the island will feel like a construction site. We know nothing will change this winter, but the current local economy cannot survive missing the next season 2024-2025. 

The demographics of the current prospective buyers remains similar with the biggest change being age. Younger buyers, who are still working, are more willing to take on the challenge of a two to three year build back. Their vision of the rebuilt Sanibel includes new restaurants, new condos, new hotels, and overall greater resiliency. Combine this, with the projected influx of money into Fort Myers Beach and Captiva, and the future looks even brighter to the younger buyers. 

We have seen examples of speculators purchasing property on Sanibel, and yes, we may see more single family homes in the rental market. This is most certainly not the majority, and I do not yet see a concern for the feel of the community. 

My biggest concern is that the Sanibel condo associations will not get enough insurance money, and some owners will walk away from their units. On top of possible foreclosures, the next concern will be maintaining affordable condo fees due to rising insurance costs. 

We obviously cannot control the insurance companies. I wish a local politician could help. Aside from that, we need to continue working on expediting permits for the condos and hotels. As far as grant money, it should go to the local small business owners (outside of construction, real estate and law firms) so they can renew their leases and stay in business until our build back is complete on Sanibel Island. 

Our coastal communities are going to be incredible once they are built back with new and remodeled homes, condos, resorts and restaurants. We believe that over the next few years we will see a rise in property values across all areas undergoing this transformation.