Just a couple of years ago, Cape Coral, Florida, was one of the hottest housing markets in the nation. Fueled by remote work trends, a rush of out-of-state buyers, and the appeal of coastal living, home prices skyrocketed. Fast forward to 2025, and Cape Coral now ranks dead last among U.S. midsize cities for real estate performance. What happened?
A Rapid Fall from the Top
According to a recent report based on Redfin data, Cape Coral is now considered the worst-performing housing market in the U.S. Among 123 midsize metro areas analyzed, Cape Coral came in last. The median home price has dropped more than 7.7% year-over-year, and homes are now sitting on the market for an average of 76 days.
While most of the country has seen price stabilization or modest growth, Cape Coral has experienced consistent month-over-month price declines, with over half of all active listings showing price cuts.
Inventory Overload
One of the biggest problems is oversupply. Cape Coral currently has more than 14,000 active listings, the highest level in over a decade. This has shifted the market heavily in favor of buyers, with sellers forced to slash prices or offer incentives to attract attention.
And the issues aren’t just about volume—many of these homes are sitting empty or in need of repairs, compounding the stagnation.
Underwater Mortgages on the Rise
According to ICE Mortgage Technology, roughly 27% of homeowners who bought in the last couple of years now owe more on their mortgages than their homes are worth. This puts Cape Coral among the top U.S. cities for negative equity—a dangerous sign that the market is still far from recovering.
Buyers who paid top dollar during the pandemic frenzy are stuck, unable to sell or refinance without taking a loss.
What Went Wrong?
There isn’t a single reason Cape Coral is struggling—it’s a storm of factors:
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Pandemic Boom Reversal: Home prices rose by more than 70% between 2020 and 2022. Such rapid growth was never sustainable.
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Hurricane Ian’s Impact: The 2022 hurricane caused significant flood damage and infrastructure stress, weakening buyer confidence.
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Skyrocketing Insurance Costs: Florida’s ongoing property insurance crisis has added hundreds, if not thousands, of dollars to annual ownership costs. That’s scared off buyers and forced some current owners to sell.
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Economic Shifts: As interest rates remain high and remote work trends fade, Cape Coral is losing its appeal to investors and second-home buyers.
Can It Recover?
Cape Coral is still a desirable location with beautiful waterways, a strong boating culture, and plenty of potential—but recovery won’t be quick. Market experts predict continued price drops in 2025, especially if interest rates stay elevated and insurance costs remain unpredictable.
Still, for savvy investors and long-term buyers, this downturn may represent a rare window of opportunity—if they’re willing to weather the risk.
