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Equity Markets Are Nervous. Are We In A Real Estate Bubble?

Posted on Tuesday, January 06, 2015

Regal Acres Infrastructure 1012292019

(Big time development in full force in Naples, Florida)

The equity markets chased oil down yesterday and exhibited the same kind of nervousness we saw last fall.  Is real estate next? Are we in another real estate bubble? We get these questions a lot these days. Naples 2014 real estate prices were up 15%+  following an 18% increase in 2013.  Recent real estate price increases coupled with memories the big 2006-2007 bust give folks reason to think we are in some sort of bubble. But as they said in one of my favorite lines from the movie Gladiator – “not yet, not yet”.


Despite the many writings these past few weeks regarding investment bubbles of all sorts we would like to challenge the notion Naples real estate has reached some sort of bubble. Sure, investors, flippers and regular folks have bought into real estate here again and prices are up but … let’s take a look at the fundamentals this morning and see for ourselves.


(a new pool going in to a spec house in the Royal Harbor area)

First, we are not investment advisors so before making investment decisions we recommend consulting with your professional financial advisor.

Ok, with that out-of-the-way what is one of the fundamental forces driving real estate markets? Supply and demand. We all know this. What does supply and demand look like in Naples right now? Naples real estate demand continues to increase as supply continues to decrease driving prices up. This is normal folks, especially after one the toughest recessions we have seen in a while. Let’s look at the numbers (all numbers in this article are from the Matrix MLS) and see if there is support for these current prices.


Let’s look at supply first. There are 4,215 properties for sale this morning in the all Naples market – less than last month.  The availability of actual property for sale across town just grew a little tighter even as the equity markets acted up.  Ok that does not feel “bubble like.”

Also worth noting, supply tightening in the Naples re-sale market is occurring at the same time new construction projects are gobbling up an estimated 50% of the total home sales.  So not only is re-sale home supply tightening new construction in the area does not seem to be slowing things down.  This feels like a boom not a bust to us.
What about demand? Are people really buying at these increased price levels? Yep. 2,781 properties were purchased in the last 120 days – more than the last trailing four month period.  Demand as measured by actual closed sales is increasing.


1520 Curlew Elevation
(a new on water new construction home available next month)

When you added it all up you find the months-inventory in our market stands at 6.06 months – lower than last month. So what? Well an inventory level of twelve months is considered “equilibrium” where prices should hold. When we see inventories of less than twelve months prices should rise.  A six months+ inventory should be very supportive of price increases.  Not a bust. If the inventory figure were say 18 months I would say we are looking at bubble like conditions but we are actually at the opposite end of the picture.

Could it all change?  Sure but let’s look at some of the other economic forces at work here. We  think demand will continue to remain solid over the next year due to several factors. Demographics show 8,000 boomers retire every day and more than a few are coming here. Internationally we see strong interest continuing from western Europe. Our favorable tax treatment draws more business and people in to our State. An early and strong winter in the northern United States also drives people to buy down south. A lot of positives.
So … good demand, low supply – no bubble yet.
What could make it all change? Watch those volumes. At some point higher prices will start to decrease demand – buyers just won’t buy at some future higher price level we just do not know when this will occur. Today volumes are increasing, not leveling out or dropping so we are not there yet but let’s keep an eye on it.

cochrane lanai

(Condo living with private beach shuttle on Naples Bay)

Want to know another key indicator to keep an eye on? Watch the condo market. In many ways the condo market here is the “canary in the mine”. Prices in the condo market declined a full twelve months before the single family home market started to decline in the last bust.  What do condo prices look like this morning?  Based on an analysis of 39,324 listings, prices are going up, not down AND prices remain only about 50% of the last peak.  Lots of support here for more market growth.


Will the condo market predict the next bust in the single family home market? Maybe, we need to keep an eye on it. We will keep you posted on condo specific volumes and supplies in our next newsletter but so far so good.
And a final thought. Anyone try to get a mortgage lately? Still tough – a good thing I think. If your credit score is 650 or less and/or your income records is shaky or your home does not appraise out (appraisers are still shell-shocked and conservative right now) good luck obtaining financing. It will be very, very tough. Despite low rates we do not have the easy money fuel which drove the last bubble and bust. Good so far on the credit side we think.


Ok you get it, supplies, volumes, early indicators and credit all say no bubble yet.


Also, The new edition of our eBook “Understanding Naples Real Estate” is now available making predictions for the 2015 Naples real estate market as well as offering up advice to sellers and buyers.

To get your free copy go to .

Want to know more about living in Naples, Florida? We have toured and owned property in Naples for thirty-eight years and know we can help you out. Please give us a call at 239.595.3921.

Hope to meet and talk with you soon,
Mark Goebel PA, Nan Goebel PA and David Goebel, PA
Co-Founders of the Naples Best Addresses team

Coldwell Banker
Mark Goebel, PA and Nan Goebel, PA
REALTOR Coldwell Banker 5th Avenue South

Mobile: 239.595.3921 239.595.3920

Facebook: NaplesBestAddresses


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No legal, investment, or tax advice is being given in this Blog.  Consult with legal, financial and tax professionals before acting on any real estate transaction.  Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
We are pleased to announce a portion of our real estate earnings go to support the The Naples Botanical Garden, Habitat for Humanity Collier County, The Race For The Cure Citrus Ride, The Seacrest Country Day School and The Naples Winter Wine Festival.
Some of the data relating to Naples homes for sale and Naples real estate for sale on the website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Contact us to learn more about Naples real estate trends, the florida rental market, Naples design ideas like coastal contemporary and transitional designs or just get a feel for the place like Naples Florida population trends.