Posted on Monday, September 26, 2016
One year ago the average Naples property sold for $307,000. This month we are at $309,000 for a .5% 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 7+ 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 some buyers to knock down supply.
My weekly “walk around the office” tells me business is there – just a little harder to find than last year. A recent discussion with a county leader tells me new construction may be slightly over built and deals will certainly pressure the resale market in the months to come. Let’s take a look at the latest results in detail and see what it all means.
Year over year median real estate prices for ALL property types were up .5%. Any price rise is pretty darn good considering a looming national election coupled with Fed decisions, BREXIT, the end of summer season and a strong dollar pricing out some international buyers. Caution signals are still with us and we need to dive deeper into the numbers.
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. Natural demand is driving real estate here.
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 2,771 homes were purchased in the last four months which is down from 3,059 sales at this time last year. Volume slow downs need watching. 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. 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 quite a bit this month – 16%+. That’s a lot of price concession. Perhaps sellers started out more optimistically – or just threw in the towel – but sellers came down quite a bit before selling.
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 to 7.07 months. Anything under 12 months should allow for price increases but we need to watch the trend.
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 for now.
This is a great time to sell Naples property as serious buyers remain in the market – in fact, we closed another on-water property with spectacular views last month above appraised value. We put another property under contract last week and we have a new showing on a fabulous place today. If you are thinking about selling, call us at 239.595.3921. Selling in the early season months may indeed be a great idea.
Another data point to watch – property selling speed slowed further this month. Now it takes 62 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 – price it right and if you are not seeing offers or repeat visits in 4-6 weeks you should 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 this 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 6.9 months – supportive of more price increases. Perhaps we are through with a “normal” condo price adjustment and we are now on firmer footing. We will see.
Foreclosure rates are up slightly with 22 condos and 36 single family homes now in foreclosure. Last month we saw the figures at 20 and 25. Not a big jump and probably a function of the courts and our foreclosure process more than the market. We will keep an eye on this one.
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 adjustment than a sharp drop but we need to keep watch. 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!
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 11.3 months and are approaching equilibrium – where prices move sideways for a while.
Pelican Bay also slowed with inventories rising to 8+ 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.
Inventories at Windstar on Naples Bay are up to 9.5 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. Just as we expected inventories increased with this approach. There is support for further price increases here.
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.
The Royal Harbor single family home inventory continues to face challenges. Supplies are better this month at 17+ months from 18+ months last month. This market may be rebounding due to 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.
The big news for Royal Harbor is the announced plans for the US 41 and Davis Boulevard development. Get ready to hear more on this but if the plans come forth look for Royal Harbor and the whole east triangle to gain in popularity. The rumor about town at this point looks good for the project.
Port Royal and Aqualane Shores
Port Royal and Aqualane Shores inventories increase to 17+. After a brief dip this summer below 12 months and better price supports we now see some inventory building. Expect prices to move sideways or drop here. One of the most incredible real estate areas in the United States has a lot to offer.
Marco Island inventories increased to 10+ months from 8+ 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 increased to 22+ months from 18-19 months but are 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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Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 40 years of visiting and living in Naples.