Posted on Monday, October 31, 2016
One year ago the average Naples property sold for $287,500. This month we are at $299,000 for a 4.31% year over year price increase – not the double digit price spikes we saw in past months but indicative of our new “flat price” cycle reported last month.
At the heart of any market is supply and demand coupled with inventory levels. The Naples market inventory increased to 8+ months this period as trailing sales slowed in the summer months and snowbirds returning early placed their homes up for sale. The numbers are supportive of price increases but we need to see more buyers show up to knock down supply.
My weekly “walk around town” tells me business is there – just a little harder to find than last year. My discussion with a county leader last month telling me new construction may be slightly over built still weighs on my mind. The resale market and the new construction market are clearly in fierce competition with “deals” in the new world and growing supply in the old world. Let’s take a look at the latest results in detail and see what it all means.
Let’s start with the long term outlook. The longer term, big picture looks good for Florida and for Naples. Readers of the blog will know Naples welcomes more year round families, business professionals, and boomers these days – and why not with our fantastic climate, great lifestyles, favorable tax treatments, and statewide budget surpluses. The Naples Best Addresses team is supporting environmental work and building awareness to continue to improve Florida’s wonderful outdoor spaces. Natural demand is driving real estate here and will be for sometime. The long term future looks bright.
Natural demand – as opposed to speculation – is again at the heart of this month’s numbers. Even with many market uncertainties people are still buying homes in Naples – in fact 2,581 homes were purchased in the last four months which is down from 2,830 sales at this time last year. Volume slow-downs need watching. Are bur waiting for the elections to complete? Will the upcoming season bring an increase in demand? We will know in the next few months.
Let’s get behind our year over year price increase for ALL property types and understand the details. Setting aside manufactured homes and focusing solely on single family homes and condos we find single family home prices down this month and condo prices up slightly. This is the same result we saw last month. As more people move here full time, we will see if single family homes regain their price footing.
Let’s look at price reductions. Although buyers pay about 4% less than asking price for a listed property right now, the sellers had to work real hard to get there. Sellers reduced prices from their original position a whopping 22%+ this month. That’s a lot of price concessions and follows last months 16% concessions. What is going on here? Perhaps sellers started out more optimistically – or just threw in the towel – but sellers came down quite a bit before selling this month again.
What about supply? Our readers know supply levels should forecast short-term price trends. Over the last few months we saw a volume slow down coupled with more supply causing inventory levels to climb again to 8+ months. This is an excellent result for the end of the slow season. Readers may recall this figure last year was all the way up to 15+ months. Anything under 12 months should allow for price increases but we need to watch inventory and advent of season – it would be nice to see a drop.
Readers of the blog will know prices and trends differ street by street or condo building by condo building. Each month we take a look at Naples real estate market trends in a very detailed neighborhood by neighborhood manner. Here we go again!
Are the buyers done with the Naples price run up? Maybe not. Prices are up again in the slow months – what will season bring?!
This is a great time to sell Naples property as serious buyers remain in the market – in fact, we closed the deal on another cottage style residence last week. If you are thinking about selling, call us at 239.595.3921. Our proven sales process model is working. Why not see what it is all about?
Another data point to watch – property selling speed slowed further this month. Now it takes 65 days to sell a place (on average) as opposed to 37 days back in May. This is the slowest selling speed I have seen since October 2014. Lessons to sellers right now – get with a real estate team with a great marketing system AND price it right. If you do not see offers or repeat visits in 4-6 weeks you might consider a price reduction. There is also a lesson for a buyer in this. When approaching a property with a long on-market history it may makes sense to get aggressive on the offer price. Watch selling speed trends. All parties can learn from it.
A bright spot for a second straight month – condo prices. Remember our “canary in the mine” idea? Readers of the blog will know during the last bust, condo prices dropped almost a full year BEFORE the single family home bust. Average condo prices actually popped back up this month for the first time in a while. So … the canary is chirping and alive and well again. We will keep watching this one.
Condo inventories are at 8.22 months – supportive of more price increases. Perhaps we are through our “normal” condo price adjustment and we are now on firmer footing. We will see.
Foreclosure rates are stable. Not a big jump here and probably a function of the courts and our foreclosure process more than the market. We will keep an eye on the “canary”.
With the decrease in single family home prices are we in a bubble? Here is a question we get a lot – especially with looming Fed announcements, BREXIT, equity market gyrations, and a strong US dollar knocking out some international buyers.
Even with all the commotion we do not think we are in a real estate bubble in Naples. Why? Inventory levels relative to volumes give us a lot of comfort. We do see decreasing volumes with increasing supplies – but no sharp moves yet. It feels more like a normal market right now but we need to keep watching. Months of double digit price increases may be wearing out the buyers somewhat.
Will the party end one day? Of course. Perhaps suddenly. This is a boom and bust town. Watch the numbers with us. A few cracks are appearing unevenly in the figures. This is not last year’s market but no bust yet.
Ok, the big market data is interesting but what about the numbers neighborhood by neighborhood ? Our readers know all real estate is local – and the saying holds again this month. Some neighborhoods are fighting higher inventories and others showed real improvement this month. We need to dive deeper into each neighborhood to understand real estate in this beautiful paradise we call Naples. Let’s go … Oh boy, more data!
Olde Naples – “I made up my mind to move to Naples as soon as I stepped out on that beach.”
Our first neighborhood stop is Olde Naples. Who doesn’t like Olde Naples? The “urbans” love to walk everywhere – beach, shops, restaurants with no car or even scooter. But … is real estate selling at these prices? Well, real estate is selling in Olde Naples but at slower rates. Inventories increased to 11.92 months and we are now at price equilibrium – where prices should move sideways for a while – neither up or down.
Pelican Bay – “I love the tram to the beach and eating at the beach club!”
Pelican Bay also slowed with inventories rising to 10+ months. Last year at this time supplies were tight at 3+ months and we saw prices climb nicely. Pelican Bay then experienced nine straight months of inventory build up and now supplies are increasing again. Price appreciation potential is there but with less enthusiasm than last year.
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”
Inventories at Windstar on Naples Bay are up to 16 months. We reported last month some realtors encourage their sellers to take their properties off the market for the summer. We disagree with this approach. How can you well something off the market! Now these properties are back on the market and seasonal buyers are not here yet. There is likely downward price pressure here for a while.
Crayton Road – “The charm of this near north side neighborhood away from the maddening crowd is truly wonderful”
The Crayton Road area inventory increased to 10+ months from 8+ months last month. Not bad really considering the area whittled down the inventory from 10 months not too long ago. If volumes hold expect more price appreciation in this beautiful area.
Royal Harbor – “On water living and walkable to town and new development on the way”
The Royal Harbor single family home inventory continues to face challenges. Supplies are higher this month at 18+ months from 17+ months last month. This area holds so much future promise with the rise of the “Urbans” and a walkable culture coupled with new commercial developments in the area. 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”
Port Royal and Aqualane Shores inventories increase to 22+ months. After a brief dip this summer below 12 months and better price supports we now see inventory building. Expect prices to drop and days on market to lengthen. The Port Royal Club, the beach and the sense of privacy on a peninsula in the bay is remarkable.
Marco Island – “island life and the beach at Tiger Tail offer a remarkable experience.”
Marco Island inventories increased to 11+ months from 10+ months. For all my dear friends and realtors on Marco who bust my chops on these numbers take heart! – the island is a great place to live. Houses and condos may be less pricey on the island 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 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. Inventories are now at 21+ months but down from an eye-popping 100+ months not too long ago. If you like the Island and you are looking for a great place, prices should continue to drop here. The market is adjusting but you could find some real deals here with us.
In addition to our monthly neighborhood analysis we would like to provide a few more points of view to help our sellers and buyers.
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 out over our skis a little too far right now. New construction eats into the re-sale market and may explain some of the caution signals.
After the bust and the demise of many a builder in the Great Recession, it took a while for the new home builders to bounce back. By bounce back I mean once they were ready to return they still needed to draw up new floor plans to match new market preferences, obtain permits, clear land and build infrastructure, hire the sales teams and build homes. They have so much momentum now they are finally putting a real dent in the existing home market. It is estimated (and it is only an estimate as these figures are very hard to track) about 50% of all new home sales right now are new construction.
Now here is the interesting part. Even with the all of the new construction there is still support for price increases in the re-sale market. Not as much support as last month perhaps, but support remains.
A few things sellers need to know. Aggressively priced properties in poor condition are not selling very well. Who wants to be forced to make 17-20% price concessions with snail like selling speeds? A seller and I reviewed numbers together a while back and found some properties were on the market for more than 200 days! Sellers of homes with slow selling speeds are competing with beautiful new construction and your neighbor’s well priced homes. Don’t get too greedy if you need to sell your home or you may be on the market for a while. Don’t give it away, of course, but price it well and keep it in good condition.
Buyers in this market better know their local Naples markets. Why? Because buyers are competing with other well financed and savvy buyers. Know thy markets! For the buyers, cash is king (a pre-approved financing letter is helpful) but whatever you do, get with a real estate team like ours and learn about the market. In addition, use our online search tool recommendation and be ready to make a same day offer when you find your place. Speed wins here and the old adage “Time Kills All Deals” is in full force in many areas.
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Like to talk with a human for a change? Why not pick up the phone and catch up with us and let us know how we can help you. Just give us a call at 239.595.3920 (Nan) or 239.595.3921 (Mark) or 239.285.2038 (David).
All the best,
Nan, Megan, Dave and Mark
Co-Founders Naples Best Addresses
Provided by Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
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.
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Some of the data related to Naples homes for sale and Naples real estate for sale on the NaplesBestAddresses.com 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 40 years of visiting and living in Naples.