Posted on Monday, July 31, 2017
There is no doubt about it, it is just tougher to sell homes right now. Days on market, price concessions, sold price trends all point to tougher times for sellers right now. But all is not lost! Inventories are tight and supportive of price increases. Read all about these trends this month along with some interesting views for the future.
One year ago the median Naples property sold for $325,000. This month we are at $314,900 for a slight 3%+ year over year price decrease. We are in that “in between time” in the Naples calendar year when US and Canadian visitors return up north and Wester European visitors have yet to arrive – much like last year which ended with terrific results. Perhaps it is the calm before the storm.
At the heart of property price behavior in any real estate market is supply and demand. The Naples market inventory tightened to 5.54 months due to a whopping increase in volumes from prior months. If the “law” of supply and demand holds true we should see further price increases as sellers gain power over buyers in the face of less property availability.
This time last year supplies were 5.58 months – almost identical to today. So all other things being equal we should see a similar summer market to 2016. There may be important differences though. For example, the Fed raised rates last month and we may see some mortgage rate increases and some buying headwinds. We will see.
Seller’s are working very hard right now to move homes. The average price reduction from original price to sold price to actually sell a home climbed to 13%+ and days on market climbed to 68 days. The market is trading OK but at lower prices and slower rates. As a comparison to last year, “days on market” were only 50 days vs. 68 days today – so you can see some year to year slowing.
Luxury property may have found some footing this month after a very tough few months of falling prices and slowing sales. Average prices increased slightly to $2,950,000. Inventories also firmed at 10.48 months. Buyers looking for luxury real estate in Naples right now take note – we may be forming a “bottom” with increased prices and firming inventories. Tune in next month to follow this trend or call us at 239.595.3921.
We are pleased to report Coldwell Banker captured the largest market share of luxury property sales in the State of Florida for the year ending 2016. Going from strength to strength Coldwell Banker is rolling out its new Global Luxury Brand and I am here to tell you it is very impressive. Luxury home sellers AND buyers will enjoy the new offerings. Please contact us at 239.55.3921 to see how we do it.
Our readers will remember the Great Recession started with condo prices falling a full year before single family home prices. As a result, Condo prices may be a “canary in the mine” indicator to foretell future trends. So what happened this month? It looks OK to us. Average condo prices fell 3% but inventories are only 5+ months – a level supportive of a good future market. Let’s keep an eye on this one though and see if those prices can bounce back up in the next few months in the face of short supply.
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 – We have a wonderful lot for sale at the corner of Gordon Drive and 13th Avenue south. A gentleman from New York City called on the lot this week and we received some solid interest. Someone is going to build their forever home on this one. One of the best locations available is Collier County. Please take a look.
Who doesn’t like Olde Naples? The “urbans” love to walk everywhere – beach, shops, restaurants with no car or even a scooter. But … is real estate selling at these prices? Absolutely – 34 homes sold in the last 120 days. Inventories popped up to 8+ months however and we need to watch this trend. So far things look good.
Pelican Bay – We sold another property here recently and found this neighborhood to have one of the strongest seasons in some time. Inventories tightened again to four months so buyers will be challenged with scarcity and we expect prices to rise.
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”
You really need to walk though the heritage center in the club house and see the story. Nancy Lopez, The Shark, Larry Bird and many notables added a lot to this club over the years. This lifestyle is having a favorable impact on the neighborhood. Bids are now out for a new development with performing arts right across the street (I should hear more about this later today), the Naples Botanical Garden pulled in over 200,000 visits this past year AND our friend Rebecca at 360 Market is hitting it out of the park with new dining and on water experiences.
So how is inventory? Climbing to seven months. 34 homes are on the market and 19 have sold in the last 120 days. If homes are not selling here they are either priced too high or need a condition update or both. Inventories do not get much tighter than this. And do not forget, when you buy here you get Tom Fazzio’s first Florida golf course and a yacht club all on Naples Bay!
Crayton Road – “The charm of this near north side neighborhood away from the maddening crowd is truly wonderful”
The current 5.48 month inventory is very good news for future prices here. Keep your eyes open in this area as the buyers may be looking slightly north of town again for those luxury homes and any old properties in need of repair may be torn down – we will see!
Royal Harbor – “On water living and walkable to town and new development on the way”
The “Urbans” have spoken. Royal Harbor went from strength to strength and followed last report’s positive news with a further drop in inventory to 6 months – mimicking Crayton Cove but with more on-water options. Another interesting trend here … the area holds so much future promise with a walkable culture coupled with new commercial developments in the area. If you are in town you can see the “Trio” development coming out of the ground at US 41 and Davis. On water, single family homes, convenience to 5th avenue, a spa within walking distance and an ever-increasing Naples “downtown” footprint – there is a lot to like in this area.
Port Royal and Aqualane Shores – “one of the finest enclaves anywhere”
The news is a little tougher here. Inventories have climbed to 16+ months and are now above the theoretical equilibrium point. We expect downward pressure on prices at this point. People are buying here – in fact they bought 20 properties in the last 120 days alone – but we need to see inventories tighten.
Marco Island – “island life and the beach at Tiger Tail offer a remarkable experience”
Hooray again for Marco island! Inventories remained below equilibrium at 9 months (although climbed from 7 months at last report) so we still see support for modest price increases. I will have lunch this week with a Marco Island realtor and long time to gain more “on the ground” perspective. 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.
What we continue to find interesting and challenging about 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 climbed this month to 17 months from 14 months. Although the numbers are better than a year ago we would like to see inventories tighten up. The good news? 31 properties over $2,000,000 sold in the last 120 days.
Readers often ask us “what is going on around town with new construction?” Well the short answer is we are seeing a lot of activity -perhaps we are overbuilt slightly?
I will meet with a local builder in about two hours and I know I will hear about new projects and some great new designs. 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 has cooled a bit with slower selling speeds and some slight price pull backs but low inventories should provide a foundation for better days ahead. Will the Western Europeans buyers look past the strong dollar and deliver a strong summer real estate season? We hope to see those Euros flying out of their pockets!
Please give us a call if you are considering buying or selling in Naples. We would love to help you!
One final note – our readers know our statistics are based on three month trailing averages to smooth month to month affects so please take this into account when reading our views.
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