Posted on Wednesday, February 28, 2018
If there is one thing to take away from this month’s look at Naples real estate it is this – more homes are for sale, more buyers are buying and inventory remains at a tight nine months; a level very supportive of further price increases in the short term. The unusually rainy winter “up north”, a strong economy, new tax breaks and baby boomer demographics all seem to contribute to very positive real estate demand here in Naples.
This month we wrote an offer for $1,000,000 property and placed another $1,000,000 property under contract. Clearly our marketing methods are working for our sellers and buyers.
Here are a few highlights:
This is a great time to buy or sell a home in Naples, Florida.
The highlights above may be all you need to know, but please keep reading. The overall market is one of the best in a while but as our readers know, results vary by neighborhood, property type and many other factors. We need to get into the numbers to show you how things are going. Here we go!
One year ago the median Naples property (single family and condos) sold for $325,000. This month we are at $375,500 for a 10% year over year increase. Clearly the buyers are back and excited about this market.
At the heart of property prices in any real estate market is supply and demand. The Naples market inventory is at 9.55 months and about the same as last month. If supply and demand rules hold true we should see further price increases. Any supply level under 12 months tends to be positive to prices.
There may be important shifts in the months ahead, however, so keep reading our newsletter! At the time of this writing the new Federal Reserve Board chief held his first news conference and stated he sees an economy growing faster than expected and supportive of interest rate hikes. So what? Well the “so what” is mortgage rates are rising and will probably continue to rise. Cash buyers, about 50% of the market these days, will care less, but a lot of people will pause for thought. Demand may slow here.
Balancing rising rates are those international buyers. The weakening dollar means real estate here looks cheaper and cheaper if your are buying with foreign currency. About 21% of our market buys in foreign currency. Get ready to welcome the Western Europeans and Canadians back to this market.
Let’s look at price reductions for more interesting news. Where seller’s used to take 16-20% price reductions to sell their home, sellers now need 9%+ reductions (on average) to sell. Better than late last year so sellers are gaining ground when negotiating with buyers. Interesting!
Another interesting area to look at – The Luxury Market. Naples luxury properties (defined as properties listed above $2,000,000) sold for $2,714,000 and slightly up from year ago prices of $2,600,000. However a word to the wise, inventories are still too high at 17+months. The trend we spotted last year continues – luxury homes are priced too high, prices may fall and we have a ways to go before the luxury markets achieves a price equilibrium point of 12 months inventory. The market will sort it out but it will be interesting to watch price behaviors as tourist season ends in three months.
Why are condos doing well and luxury properties suffering? We have a theory here and it is just a theory. Downsizing. We see large luxury home prices falling and supplies building, we see slow “big house” markets in luxury markets up north – like Lake Forest, Illinois. We see our customers downsizing their homes. We see new buyers less interested in spending money on larger homes but more interested in spending money on experiences – like great vacations. Be careful here Naples and caution to the spec builders. It is a little too early to tell but the trends we saw last spring might be starting to tell us something about large luxury homes. The future of real estate here may look like more affordable homes and condos.
Readers will remember condo prices fell a full year before single family home prices in the Great Recession so condos may be a “canary in the mine” indicator to foretell future trends. So what happened this month? The canary is fat and happy – no worries here! Even though we are in the longest economic expansion in history we see another good year ahead – barring unpredictable global events.
We all know real estate is local, so what is happening in different neighborhoods? Let’s take a look. Oh good, more data!
Olde Naples – Who doesn’t like Olde Naples? Walk to the beach, retail shops and restaurants needing no car or even a scooter. The real estate pace has slowed significantly here however. Inventories are at 14+ months and much better than last month – we may be approaching price stability here again.
Pelican Bay – one of the strongest real estate markets historically but now only managing equilibrium at 12 months inventory – just like last month. Expect prices to move sideways here but still a wonderful place to live and enjoy those beach amenities!
Windstar On Naples Bay – “A one of kind community with a yacht club, a golf course and a private shuttle to Keewaydin Island – all on Naples Bay”
So how is inventory? 9.6 months – so expect prices to rise here in the short term. Open houses are slammed, there are no houses for sale on one of the popular town house streets on the tenth fairway and do not forget, when you buy at Windstar on Naples Bay you get Tom Fazzio’s first Florida golf course and a yacht club all on Naples Bay! And … residents and non-residents alike may purchased well priced boat slips right on Naples Bay!
Crayton Road – “The charm of this near north side neighborhood away from the maddening crowd is truly wonderful”
The current 12 month inventory improved over last months 15 month level so expect price stability here in the short term. We helped one of our customer write an offer here this month AND placed a $1,000,000+ property under contract. Our marketing methods are working well for our sellers and buyers here.
Royal Harbor – “On water living and walkable to town and new development on the way”
Royal Harbor inventory is at 4.67 months and frankly, red hot. You rarely see inventories this low in recent months. We expect very strong support for price increases in this area in the months ahead. Curlew in particular – with its proximity to the “Trio” development coming out of the ground at US 41 and Davis, convenience to 5th avenue, a spa within walking distance and an ever-increasing Naples “downtown” footprint – there is a lot to like on the north end of the peninsula.
Port Royal and Aqualane Shores – “one of the finest enclaves anywhere”
Unfortunately, inventories continue to worsen here. At 27 months we slipped from last month’s figure of 25 months – twice the level we like to see for price stability. The build up started last March and seems to continue. We need to see price drops or more buyers or both to get this market moving again. Are homes selling here? Of course, but it is clearly a buyer’s market. Join us and make an offer for a spectacular home!
Marco Island – “Island life and the beach at Tiger Tail offer a remarkable experience”
Inventories climbed to 13 months (same level as last month) – but not bad really – so expect stable prices here in the short term. Houses and condos may be less pricey here compared to Naples and include incredible boating, golf, tennis and beach lifestyles. Check it out with us – there is a lot to love about Marco Island. Our colleagues at Marco Island Coldwell Banker provide excellent service.
Following our own advice we may have an exciting new project to announce next month so stay tuned! Think on water luxury in Paradise.
What we continue to find interesting on Marco Island is the struggling luxury single family home market – defined as properties above $2,000,000. Many of these properties offer incredible bay views and yet inventories are 20 months+ up from 19 months+ last month. Our readers will know this figure is a big improvement but we have a ways to go before we reach levels supportive of current prices. Similar to Port Royal we need price drops or more buyers are both to get the Marco Luxury market moving.
And the story on new construction? The big market dynamic of new construction continues and perhaps we are now overbuilt slightly. It is tough to capture real data from the developers but the scuttlebutt is “we are a little far out over our skis” meaning overbuilt. There are an estimated 18 new communities in Collier County at a variety of price points with some fantastic floor plans. Developers offer some nice incentives to encourage sales. If you are considering new construction right now, this is a good time to be looking.
So our market is coming though Hurricane Irma just fine. The months ahead will tell the tale but sunny weather and millions of boomers moving to Florida may continue to drive the markets up. We will see.
Please give us a call if you are considering buying or selling in Naples. We would love to talk with you!
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