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How’s the Market?

Posted on Tuesday, January 30, 2018


How's the Market?



How’s the Naples Real Estate Market?   Season is Here!


What a tourist season we are having.  The unusually cold winter “up north”, a strong economy, new tax breaks and baby boomer demographics all seem to contribute to a very positive real estate demand here in Naples.

Here are a few highlights:

• Condo and home prices are up double digit % year over year

• Over 2,400 properties sold in the last 120 days

• Overall supply is tight and supportive of further price increases

• Days on market sped up considerably compared to two months ago

• Luxury homes are still a little slow

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 sold for $305,500.  This month we are at $375,000 for a 22%+ 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 9.52 months and about the same as last month.  If supply and demand rules hold true we should see further price increases. Any supply 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 Federal Reserve Board is meeting contemplating raising the discount rate, the dollar is weakening and the ten year bond is rising.  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 you 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.   

Another interesting area to look at – The Luxury Market. Naples luxury properties (defined as properties listed above $2,000,000) sold for $2,525,000 and down from year ago prices of $2,775,000.  Worse, inventories are still too high at 20+months.  The trend we spotted last year continues – luxury homes are priced too high, prices are falling and we have a ways to go before the luxury markets achieves a price equilibrium point of 12 months inventory.

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.

We all know real estate is local, so what is happening in different neighborhoods? Let’s take a look.

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 20+ months and we expect downward pressure on prices.  Did Old Naples overbuild those spec houses?

Pelican Bay – one of the strongest real estate markets historically but now only managing equilibrium at 12 months inventory.  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? Right at equilibrium so expect prices to move sideways here. 20 homes are on the market and 7 have sold in the last 120 days. 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 … non-residents can still buy 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 15 month inventory is a little high and representative of a recent run up in prices and spec building here.  Still a very solid market and beautiful area. Our readers will know our predictions were correct for this area – buyers started looking north of Old Naples last year to buy and build those bigger homes.  Is Naples Park and the Bayshore Triangle next?   We will see!

Royal Harbor – “On water living and walkable to town and new development on the way”

Royal Harbor inventory is at 8 months – the hottest area this month and very supportive of price increases.  Please remember the Royal Harbor 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”

Unfortunately inventories are just too high here to support prices but if you want a wonderful home in a great community this is a one of a kind place.  Inventories are at 25 months – twice the level we like to see.  The build up started last March and seems to continue unfortunately.  We need to see price drops or more buyers or both to get this market moving again.

Marco Island – “Island life and the beach at Tiger Tail offer a remarkable experience”

Inventories climbed to 13 months – 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.

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 19 months+.   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.

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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