Inventory Surges in Florida Paradise Destroyed by Hurricane Ian

Miami Herald

4 days ago

Nearly three years after being devastated by Hurricane Ian, the idyllic island of Sanibel, Florida, is now facing a surge in housing inventory, which is far outpacing home sales, as owners try to offload their properties to avoid rising costs and future storms.
Florida, and especially its coastal cities, has long been among the most popular destinations in the country for American snowbirds and retirees looking forward to spending their golden years on the state's sunny beaches. However, the growing threat of natural disasters, fueled by climate change, and rising housing costs, including home insurance and homeowner association (HOA) fees, are eroding the state's charm, as well as its affordability.
In places like Sanibel Island, which owes much of its success to its status as a retirement and vacation haven, the threat of more frequent, destructive extreme weather events and higher home insurance premiums could be profoundly disruptive, shaking the foundations of its economy and weakening its housing markets.
Hurricane Ian caused catastrophic damage in Sanibel in September 2022, destroying several sections of the Sanibel Causeway that connects mainland Florida to the island, which is home to approximately 6,500 people year-round. Several homes were hit, and Sanibel residents, like many on Florida's Southwest coast, scrambled to salvage what they could and get back on their feet.
"When Hurricane Ian hit, there was not a building on the island that was not impacted by that storm, whether it was by flood or wind. Every single unit or structure on the island was impacted in one way or the other," John Lai, president and CEO of the Sanibel and Captiva Chamber of Commerce, told Newsweek.
"And then to add insult to that injury, there was our only bridge to the island, heavily damaged in that storm and needing to be restored before we could get cars back over here," he added.
That impasse lasted about two months before the Sanibel Causeway was restored-an impressively quick turnaround, but not from the perspective of those waiting for it to be fixed.
"That slowed down the infrastructure repair," Lai said.
"It slowed down mitigation and insurance accessibility and then obviously slowed down the fact that we needed to get materials to rebuild."
"So the restoration process was a little bit longer because of the fact we needed to wait for that bridge to be restored for us to get back over here with vehicles, particularly motor vehicles."
It has taken longer than expected for Sanibel to recover, but that process is now well underway, Lai said. More than half of the island's hotels, signature boutique shops, world-class restaurants and attractions have all reopened since 2022.
Every structure damaged by the storm had to be rebuilt, Lai said. While this was "burdensome," there is widespread excitement for brand-new buildings rising like phoenixes from the ashes of businesses destroyed by Ian.
"We are starting to see now the desirable island that we had pre-Ian, but even better than before," Lai said.
"We have completely restored our beaches to their pristine condition as they were before. Our attractions are all open and brand-new and every beach access has reopened here," he added.
"From my perspective, we have done very well over the last two and a half years. The causeway was reopened in a surprising five weeks only. The utilities were then reinstalled within a few weeks, including water, sewer, and power. And then the cleanup began," Eric Pfeifer of the Pfeifer Realty Group told Newsweek.
"In general, most of the single-family homes were restored within six to 18 months. The condominiums and commercial buildings took longer than the homes due to many insurance claim delays," he said, caused by the difficulties in accessing the island after the hurricane hit.
Sanibel's housing market has failed to take notice of the island's stunning recovery. While the median sale price of a home in Sanibel was a staggering $1,410,000 just months before Ian struck, in May 2022, it was $860,000 in April, down 18.1 percent from the previous year and 60 percent from its pandemic peak, according to Redfin data.
During the same month, the number of homes sold in the city, 28, had dropped by 36.4 percent compared to a year earlier, and the market was far from competitive, with the typical home spending an average of 110 days on the market before going under contract.
Zillow data shows that there were 607 homes for sale in the Sanibel Island market as of April 30, while Bill Robinson, chief executive officer of the Sanibel and Captiva Islands Association of Realtors, said that there were 274 active listings in the city of Sanibel.
As of March 31, 96.5 percent of the homes on the market on the island had sold for under their originally listed price, according to Zillow.
In part, this is a phenomenon that is taking place across most of the Sunshine State. Inventory is rising because Florida has built more new homes than any other state in the nation over the past few years, and because owners have finally decided that mortgage rates will not significantly fall any time soon, so they might as well put their property on the market now.
However, while the state, like the rest of the country, is still experiencing an inventory shortage, buyers are staying on the sidelines because affordability remains strained, with mortgage rates hovering near the 7 percent mark, HOA fees rising, and high home insurance premiums continuing to increase.
The result is that, across Florida, inventory increased by 13.8 percent year-over-year in April, with a total of 230,793 homes listed on the market, while sales decreased by 10.9 percent. As a result, prices are falling statewide: the median sale price of a home was $411,200 in April, down 2.9 percent from a year earlier, according to Redfin.
"Interest rates and home insurance have played into inventory going up," Robinson told Newsweek. "But then you know, pre-2022, inventory was at a historic low. So it had nowhere to go but up."
Sanibel's surge in inventory and drop in sales, however, are nearly three times as high as those reported statewide in Florida. Pfeifer said that this is in part the result of the pandemic-driven homebuying frenzy, rather than the impact of Ian.
"As a licensed realtor for 24 years on Sanibel, I suggest we look at the context regarding home values," he said. "The COVID-19 pandemic created the greatest real estate market in the recent past with many customers working from home in their new property in Florida. This excessive demand compared to a normal limited supply increased prices as high as 35 percent over a two and a half-year period. These values were not sustainable," he added.
"The prices started leveling off in 2022 due to a normal cycle, and then hurricane Ian happened. That shifted a sellers' market to a buyers' market, which obviously brought prices down," Pfeifer said.
"If someone who purchased during the pandemic is choosing to sell now, in a down market, yes, they are losing money. But if we compare values to 2019, pre-pandemic, the values are actually up about 3 percent to 4 percent, annualized."
While active inventory is definitely higher than normal, this, too, can be explained by the current housing market dynamics, Pfeifer said.
"On average, approximately 215 homes and 160 condos sell on Sanibel each year. During our season in 2024, there were a proportionate number of sales compared to prior years. However, in June through December 2024, the market slowed significantly and we had fewer sales compared to prior years," he said.
"Our current inventory comprises those homes that did not sell last year in addition to the homes that would have normally gone on the market this year," he added.
"Additionally, based on our demographics, some owners have expedited their plans to move to a retirement facility or move back up north to be near family. And finally, yes, there are listings this year due to the concern of additional storms."
Lai said that Sanibel has started seeing the number of tourists to the island pick up again, though the demographics have changed. While the typical visitor used to be in the 65+ age range, Sanibel is now seeing a surge in tourism among Americans aged 45 to 55.
"That's something that had not changed in my lifetime before. I've spent 36 years here in Lee County and on Sanibel Island. And as long as I've been here, the 65+ age range has always been the dominant demographic that we've seen here on the island," Lai said.
When it comes to attracting people to the island permanently, Sanibel is currently undergoing efforts to make it a more desirable and safe place to live, introducing land development changes that allow for more resilient, elevated buildings and roads. This, in turn, has the potential to lower home insurance premiums-an appealing prospect for homeowners struggling with rising rates.
It is unclear how a new bill that would prevent local governments from introducing tougher building codes after a hurricane for the next two years would impact Sanibel. SB 180, which was passed by both the Florida House and the Senate, is currently awaiting a signature from Governor Ron DeSantis.
Local real estate agents are optimistic.
"The future of Sanibel is extremely bright due to the construction of new homes, new businesses, new restaurants, new condos, and new hotels. Each of these new structures will be built more resilient than before," Pfeifer said.
"I personally believe we will feel this change beginning in 2026 and culminating in 2027. Immediately after hurricane Ian, many people told me it would take five years to get back to normal. At that time, I was in denial. However, I think those people were correct," he said.
"Hurricane Ian was a major natural disaster. It does take time to heal when you factor in insurance, construction labor and materials, and living on a barrier island. These disasters happen everywhere across the country. Sanibel is a very special place, and people want to live, vacation or move here."
The issue with the island's housing market is not strictly a Sanibel issue, Lai said.
"It's absolutely a Florida issue," he said. "I think it's somewhat nationwide, but it's a little bit exacerbated in Florida because of the insurance challenges that the coastal communities find themselves in right now."
If the state manages to go through this year's hurricane season with little to minimal impact, the island will "absolutely" see its housing market rebound, Lai said.
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