While many real estate markets are only starting to favor buyers, Southwest Florida has been in buyer territory for nearly two years, according to Brett Ellis, owner of Ellis Team – Keller Williams Realty Fort Myers. Ellis cautions that a significant wave of “shadow inventory” is poised to alter the region’s market dynamics, potentially surprising both buyers and sellers.
“We shifted to a buyer’s market long before 2025, this has been going on for probably a couple years, maybe 2023,” said Brett Ellis, who has more than three decades of experience in Southwest Florida real estate. The Ellis Team, which has sold over 6,000 homes, was previously the top RE/MAX team in Florida before transitioning to Keller Williams in 2016.
The Fort Myers market reached its peak in 2021-2022, but prices have steadily declined since then. Ellis attributes this extended downturn to a combination of factors specific to Southwest Florida.
Several major challenges converged to shape the region’s prolonged buyer’s market. Hurricane Ian struck on September 28, 2022, resulting in widespread rebuilding and cleanup. At the same time, the area experienced steep increases in both flood and homeowners insurance rates, followed by a sharp rise in interest rates from the low 3% range to over 8%.
“The rest of the country wasn’t really affected by that, but we were, because we were hit with the supernatural type stuff followed by the interest rates,” Ellis explained. “So we had a perfect storm, and now our prices have gone down significantly from the top.”
Ellis points to a new kind of shadow inventory, not the foreclosures seen in previous downturns, but rather sellers who withdrew their listings earlier in the year due to unfavorable pricing trends. “The shadow inventory I’m referring to in 2025 are all the sellers that didn’t like the pricing and where the market was going earlier in the year, back in March. So they took their home off the market.”
These sellers now face the reality that prices have continued to slip. “They’re really not going to be happy, because prices haven’t gone up as they’ve taken their home off the market, they’ve gone down even a little bit more. But life sets in, reality sets in, and you have to deal with the here and now.”
Ellis closely monitors daily inventory levels and has observed a notable change beginning in October. “Last Tuesday was the first day inventory went up, and again today, inventory went up just a little bit more. We’re starting to see it now, it’s the first time in months that we’re seeing that.”
The return of shadow inventory introduces a new layer to the market. Ellis believes sellers who act promptly will have an advantage. “We think there’s going to be more inventory coming, and a seller who gets on the train before all the other sellers will probably do better.”
For buyers, Ellis advises not to wait for significant drops in interest rates. “When the rates start to come down, all the buyers start to come in, because we can watch and see, even on a national scale, an eighth of a percent to a quarter percent decline in interest rates, you see those mortgage applications tick up immediately.”
Ellis expects that life events will push many shadow inventory sellers to re-enter the market. “Life happens, and you can only hold out so long in the wrong house. Death happens. Divorces happen. People, kids graduate from college. You don’t need this bigger home.”
This scenario, according to Ellis, presents a rare moment where both buyers and sellers can benefit, a contrast to the fast-paced seller’s market of 2021.
