Could future oil prices and housing market direction be tied together? We are beginning to think future oil prices may dictate a lot of things, including the direction of the housing market.

Oil Prices and Housing Market Direction

Up until now, the stock market and housing market has been influenced by the market’s perception around the Fed and 10-year interest rates. How the Fed navigates inflation versus throwing the economy into recession has steered the markets up until now. Of course, food and energy costs are a part of inflation. The thinking has been, either higher interest rates will cure inflation or higher prices will.

Dependent on Oil

There is an old saying in finance that says nothing cures high prices like high prices. This assumes demand will soften for an item once it reaches a certain point. The problem with oil is, we are dependent on it. Not only do we use oil for our cars, but it is also used at many everyday things like clothing, roofing material, etc. It is a very long list.

High prices may not cure high prices because it is a need, not a want. The fear is the Fed may be forced to raise rates higher than Wall St thinks. This would be a double whammy because the consumer is not only being hit with higher costs everywhere, but they will also be hit with rising rates.

This will have an effect on housing prices going forward if this happens. Many believe it is already having an effect. Back on February 26th I wrote about if oil got to $115/barrel I didn’t think it would be good for our economy. In essence, it just felt like anything north of $115 would be a breaking point for the economy. As I write this article, oil futures stand at $119/barrel.

Scary Thing

The scary thing is oil could easily go to $130/barrel or worse. If that happens, $5 plus gas is on the table, and I just do not believe our economy can take that for long. This will also cause the Fed to be more aggressive than they have in the past, and Wall St has not priced that in yet.

The Fed has worked hard to placate Wall St, but the jig may be up soon. Do I feel the Fed has been honest about inflation to this point? No, I do not. But who am I to call them out? It does not matter what I have thought through this process. What I am saying is, time may be out, and they may be forced to deal with this.

It is also possible the Fed has some geniuses that know more than we do.  I should hope so. Maybe they have a better handle on this than we think. If they are right, real estate should be just fine and interest rates should settle down within a year.

Lots of Upcoming Economic News Expected

For the next two weeks people will be talking about the Consumer Price Index, the Producer Price Index, core inflation, unemployment numbers, workforce participation, and company earnings.  These are all the things that give us clues as to the economy and inflation, and the direction the Fed might take.

For my part, I’m watching oil. I think it’s as simple as that. I’ll analyze the other things once oil prices are under control. Until then, I believe we’re just massaging numbers and fooling ourselves as to how great things are and not dealing with the issues.  If we get oil prices down, the Fed has more choices. Failing that, watch out.

If rates rise, it will cost buyers more. Rising buyer costs ultimately hurt sellers because it limits what buyers can afford to pay. That leads to lower price gains, or reduced prices, depending on how soon the Fed acts.

For now, watch oil. If you have real estate to sell, call Brett or Sande Ellis 239-310-6500 or visit for a free instant analysis of your home.

Good luck, and Happy Selling!

New Listing in Cape Coral- Open House Sunday 12-3 PM

3457 NE 11th Ave

One of my finance professors in college named housing best hedge against inflation and I never forgot that.  He said tangible assets like real estate, gold, silver, etc. retain their value as the dollar is devalued due to inflation.

Construction Costs Going Up

In fact, as inflation heats up, the cost to build new construction only goes up. Because our market has been under-supplied for years, we are forced to build our way out of this. The only thing that could change the equation is if demand slowed.

Demand has slowed somewhat due to rising interest rates and insurance costs. Consequently, inventory has risen the past several months, and this should temper price increases like we’ve seen the past two years.

Whether home prices will appreciate or decline slightly no one can say. What we do know is the stock market has been volatile and has mostly headed down in 2022. Real Estate may be a much safer play in the short run, and the long run.

Housing Best Hedge Against Inflation

As you can see by the chart, since 2000 real estate has outperformed inflation. This includes the real estate crash years in 2006-2009. While searching the Internet I found more data dating back to 1967 that shows real estate outperformed inflation as well.

We May Already be in a Recession

Many people say the US will enter a recession in 2022. Others believe it will be 2023, and still others believe we are already in one. Negative growth impacts stocks, and as such we have seen a pullback in stock prices. When the Fed raises interest rates it is not usually good news for Wall Street.

Rising rates can dampen home affordability, and therefore it can have a negative impact on real estate prices short-term. We still believe now is a good time to buy before rates go higher. We did a video on our YouTube channel ( which shows how waiting to buy in hopes prices will come down actually costs a buyer when rates increase.  Send me an email if you’d like a direct link to that video

Whatever happens with real estate prices in the short run it should be less volatile than stocks and should protect against inflation. The other nice thing about real estate is you can live in a home; you can’t live in a stock. You can rent out a home for income when you are not using it.  Real estate has so many advantages over stocks, including some tax deductions.

Is Your Home Working For You?

If you have a home that’s not quite working for you, now may be a good time to sell. Real estate prices are strong and while inventory is growing, it is still a good time to sell. If you wait to sell, you are occupying a home that doesn’t quite work for you, and it may be harder to sell when more homes enter the market in the future. Not to mention, interest rates could keep climbing.

As interest rates climb less and less buyers qualify for your home. If you are getting a loan on your next home, it may cost you more in the future. Interest rates have held steady the past week or so waiting on direction from the Fed at next month’s meeting. The inflation outlook will dictate how that goes, and we are expecting another rate increase in June, and perhaps several more this year. Either high prices will slow this economy down, or high rates will. It may be a combination of both, but rest assured the Fed will slow down the economy to get inflation under control.

The question is, will they overshoot and put us into recession? The other question is where is the best place to put our money in uncertain times.? Real estate may be a good option, and now is a good time to get into the right real estate for you.

Always Call the Ellis Team at Keller Williams

To get your home sold Always Call the Ellis Team at Keller Williams Realty 239-310-6500 or visit to search the MLS, or to get your home’s value instantly. Our marketing reaches more buyers, which brings more offers.

Good luck, and Happy Memorial Day Weekend!

How does Inflation and recession Affect Housing?

We just pulled new numbers from MLS and found that housing inventory grows most in the higher price ranges since March.

Overall single-family home market inventory in Lee County grew to a 1.18 month’s supply, up from .82 month’s in March.  Where we see the most differential between the two graphs is in the $300k price and up. Housing inventory grew the most as the prices go higher. The spread in each subsequent price range grew higher.

Housing Inventory Grows Most in Higher Price Ranges
May 2022

This explains why we are seeing price reductions again in the housing market. Some sellers got a little ahead of the market, and that was OK while the market was rising rapidly. Today, the market is price sensitive again. Sellers must be priced correctly in this market.  Competition from other sellers is coming as more listed properties hit the market each day.

March 2022 housing inventory
March 2022

It is still an excellent time to sell your home, but you must be competitive in the market. Overpricing your home in this market may not accomplish what you want.  We are not saying prices are headed down. That would depend on how many more sellers choose to list compared to how far and fast interest rates rise and how that affects demand.

Marketing and Pricing Crucial

What we are saying is marketing your home extensively and pricing it correctly are critical. Gone are the days you can just list it in MLS and post on some portal websites and it will sell. To receive Top Dollar, it takes marketing and correct pricing. especially when housing inventory grows most in higher price ranges..

If you follow this advice, we think you will be happy with the result. Sellers that do not do this will not receive top dollar for their home, and worse, might miss the market altogether.

The Ellis Team has been through changing markets many times in our career.  If and when the market does change, there will be some sellers that look back on 2022 and kick themselves because they missed one of the greatest opportunities in their lifetime.

Maybe the market isn’t as hot as it was 6 weeks ago, but it is still excellent. Throughout the history of real estate markets most sellers would kill to have a 1.18 month supply of homes on the market as competition. This is an opportunity for current sellers, and perhaps those wondering when the market would top.

We cannot say for certain if the market has topped and where it will go from here. Rising inventory levels and price reductions tell us it has at least paused, which markets sometimes do. Markets don’t always go up or down. Sometimes they meander awaiting direction from buyers and sellers.

We have so many factors pulling and tugging at this market, and it will be interesting to see which forces win out. Rising rates usually cools the market, as does fear of recession. However, Florida is still a popular destination that many would like to relocate to.

Thinking of Selling?

If you are thinking of selling your home, please reach out to Brett or Sande Ellis 239-310-6500. We can guide you through the market and help you explore your options. We can even help you find your next home which is easier not that inventory is rising. Or visit for a Free instant home valuation online.

If you are looking to buy, our buyer specialists are here to help guide you as well. Just call 239-489-4042 or visit to begin searching the MLS like a pro.

Good luck and Happy Selling!

Ellis Team Weekend Open Houses

Open House Saturday 12-3 PM

Eagle Reserve Lakefront Pool Home
Open House Saturday 12-3 PM

3951 Spotted Eagle Way

3 Bed 2 Bath Pool Home on Lake


Open House Saturday and Sunday 12-3 PM

Waterfront Pool Home Gulf Access
Gulf Access Pool Home

2519 SE 22nd Ave

4 Bed 3 Bath Home Direct Access Waterfront Pool Home


Open House Saturday and Sunday 12-3 PM

Pool Home on Golf Course
Cape Royal Home

3 Bed 2 Bath Pool Home on Golf Course

11849 Lady Anne Cir

See Listing Inventory Rose 40% Since February published just a few weeks ago. Since that article, inventory has now risen 64% since February.

Is Real Estate a Risky Investment with Inflation and Possible Recession?


Finally, we have some good news for home buyers in 2022.  This article will spell out some facts that are benefitting home buyers right now and a scenario that may help in 2022.

Good News for Home Buyers

For the past several years home buyers have been competing with other home buyers in addition to personal investors and investment companies seeking return. Yields in the bond and stock market have been hard to come by in recent years, so Wall Street money started flowing into real estate.

With bond yields rising some money is starting to flow into bonds even though that is risky in a rising interest rate market. When rates rise, the price of bonds falls, so investing in bonds is risky until rates settle out. Just the same, some money is going in on bonds.

For stocks, the price multiples were so high it was hard to get any yield and investors were simply banking on higher prices in the future. Now that the stock market has been correcting in 2022, we may see money start flowing into stocks later this year.  Yield is much easier achieved at lower price multiples, and we are seeing that.  The only wildcard is future earnings and their impact from inflation and possible recession.

2 Scenarios

If money starts flowing into stocks again it could do one of two things.  It could take money out of main street and back into Wall St.  Or it could further fuel Wall St money and make its way back to main street via increased shared investment into real estate.  The answer probably depends on how far the stock market eventually falls and what the opportunity is there.  We didn’t see Wall Street money come over into real estate big time until stock valuations became quite high.

These investment companies have been scooping up homes and placing them in rental programs by the bunches.  All these sales are competition for home buyers and essentially take inventory off the market. If this trend slows, it could help home buyers in 2022.

We are seeing increased inventory on a weekly basis.  This past week single family inventory grew another 81 homes in Lee County while pending inventory dropped 38 homes.  That is a difference of 119 homes in one week. Not only is current inventory increasing, but future inventory may too if investors slow down their purchasing.

Wall St Vs Main St

The decline of stock market value may lead to this.  If investors start selling funds like Blackrock (BLK) whose stock is down 17.13% in the past month there may be less future investment in homes.  If Wall Street determines that real estate is about maxed out in price due to rising interest rates, they will simply evaluate their purchases on total returns of rent vs price and leave out expected future price appreciation due to almost free money.

Buyers have been getting hit by rising prices and rising interest rates. Rates are still probably headed higher, but price increases could slow down as inventory grows. Not only is inventory growing in SW Florida, but it is also growing in many markets across the country.

If the US enters a recession as interest rates continue to rise, it could further slow home buying. In this case, home buyers will have more choices to choose from, and perhaps lower home prices to offset those rising rates.

We believe in almost any scenario home buyers are better off getting in now before rates rise higher. Mathematically, if rates rise another 1.5% to 2%, it will take a drop of about 20% in home prices to make up for that, and we do not see that happening.

If you are trying to buy or thinking about buying, we may have more options for you than a month ago. Simply go to to see All the inventory updated in real-time. Or call 239-489-4042 for a buyer specialist.

If you are thinking of selling, go to to see your home’s current value online, or call 239-310-6500 for a Top Dollar Specialist!

Weekend Open House

Open House Saturday 11 AM-2 PM

2519 SE 22nd Ave, Cape Coral FL

Direct Access Waterfront Pool Home Cape Coral Florida


Southwest Florida listing inventory rose 40% since mid-February as interest rates have also been rising.  Are the two numbers correlated? We’re not sure, but they could play a factor.

Listing Inventory Rose 40%
SW Florida listing inventory rose 40% since February 15th

We do know that many builder homes that have been under contract for a while are coming back on the market because buyers no longer qualify for the home they purchased many months ago. Home buyers are scooping them up, but that also means those buyers are not buying a resale they might have otherwise purchased.

Local Buyers Feeling the Pinch

Some local buyers have been squeezed out by out of state buyers and institutions buying property in SW Florida at a rapid pace. Not only are interest rates rising, but so are home prices and insurance. All combined it is pricing many out of the market. Many Realtors are noticing homes taking a little longer to sell and not quite so many offers on each property.

Another thing Realtors are noticing is the quality of offers has changed. A few months ago a property might receive 20 offers of which 7 were cash. Today that same property might receive less offers and none or few are cash.

Some properties are still in high demand and generate cash offers while others not so much.  Overall listing inventory is still very low, but it is climbing a bit. Back in 2019 we had over 7,000 homes on the market. Today we are at 1,503. Back in February we were at 1,071.

There is a difference between official numbers and MLS numbers we pull. I am pulling inventory every Tuesday compared to the official numbers pulled the last day of the month.  We believe we will spot trends before the official numbers are released 3 weeks later. In essence, we won’t receive official April numbers until about May 22nd or so.  Because we pull those numbers internally every week, we can report to you before the media does.

Latest Information

Ellis Team clients always have the latest information, and News Press readers of this article are not far behind. Opportunity is best realized when markets make a move and being the first to spot emerging trends maximizes our client’s ability to capitalize on that opportunity.

We are not saying the market Is changing today.  The best characterization would be slight shifts in the market, but still very strong.  I remember several times over the last 34 years we have seen a major shift coming and we were able to advice our buyers and sellers accordingly. By being the first to spot the trends we were able to save our clients a lot of money and change their lives.

Not every client comes to us before the market changes.  People must buy and sell at various times, and they are just in the market we are given at that time. In that case, we bring our considerable marketing and expertise to bear to bring them the best outcome for them. Best outcomes come from experience, wisdom, and marketing muscle given the circumstances. Rest assured, as the market changes, we will always put our clients in the best possible situation for them.

50 Basis Point Rise Expected

As we write this article the Fed has not announced their decision yet. We expect 50 or75 basis point change to rates, and mortgage rates have already baked that in to current rates. We will be looking at the outlook for future hikes in June and how the market reacts to the Fed decision and inflation.

All these factors affect home affordability, and eventually it can affect home prices here in SW Florida. You can always speak to Brett or Sande Ellis at 239-310-6500 and we can discuss your situation. Or visit to get an instant analysis on your home and track future direction of prices.

If you are thinking of making a move in SW Florida, call the area’s top team in real estate. We’ve sold over 5,000 homes locally and we study the market like nobody else. Listing your home with someone else could cost you thousands, and it could cost you a sale altogether. You don’t want to miss this market, because it’s the best one we’ve seen in our career.

Good luck, and Happy Selling!

Weekend Open House

Open House Saturday 12-3 PM

2519 SE 22nd Ave, Cape Coral FL

Direct Access Waterfront Pool Home Cape Coral Florida