Rapidly rising

Entry-level homes along the Gulf Coast have seen prices rise faster than pricier comparables, according to a recent report from Nationwide. That means price gains on cheaper homes may have outpaced gains on expensive homes in dollar terms — perhaps creating a profit opportunity for niche home builders.

For a working example of the finding, imagine a home that was sold for $500,000 in Cape Coral in 2012. Suppose that home were re-listed today for $600,000, a gain of 20%, or $100,000, over five years. According to Nationwide, an entry-level home in Cape Coral that sold for $150,000 in 2012 would be re-listed today under those conditions for $270,000 — a gain of 80%, or $120,000, over the same time frame.

This trend, where entry-level homes are outpacing more luxurious comparables in price appreciation, has been happening for some time across the U.S., according to a Nationwide analysis of national housing data. But the divergence is particularly pronounced on the Gulf Coast. Among all local real estate markets nationwide, the spread between lower- and upper-tier home price gains in Cape Coral-Fort Myers is fourth-highest. In the Sarasota-Bradenton market, it's sixth-highest in the country.

Those high spreads could represent a profit opportunity for the right builder — or perhaps the right investor, says Ben Ayers, a senior economist for Nationwide.

“There's definitely a need there,” Ayers says of entry-level housing. “We're looking for more supply, whether that's coming from new building or existing homeowners selling.”

Of course, building isn't as simple as that: “The land prices keep going up, and it's not cheap to build homes,” Ayers acknowledges.