Posted on Wednesday, August 31, 2016
One year ago the average Naples single family home selling price was $300,000 and now average prices are at $310,000 – up slightly but not the go-go market of last year. At the heart of any market is supply and demand coupled with inventory levels. At the current six month supply level, Naples is still supportive of price increases and remains strong in the historically slow off-season month of August.
There are a few areas of concern but a decent August followed a good July. My weekly “walk around the office” tells me the business is there – just a little harder to find than last year. New construction continues to carry on OK and traffic is picking up a little early this year. 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 3.33%. Any price rise is pretty darn good considering looming Fed decisions, BREXIT, summer season, and a strong dollar pricing out some international buyers. Caution signals are still with us however and we need to dive deeper into this.
The 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 currency challenges slamming 20%+ of the buyer market, people are still buying homes in Naples – in fact 3,033 homes were purchased in the last four months which is down from 3,398 sales at this time last year. We do not often see volume slow downs here so this is something to watch. Will the upcoming season bring an increase in demand? We will see.
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 on condos we find both single family home and condo prices down slightly this month. As more people move here full time we see more demand for single family homes. Some buyers prefer to live outside the gates of an HOA and avoid the fees and rules.
What about supply? Our readers know supply levels should forecast short-term price trends. Over the last few months we saw slow down in volume coupled with more supply causing inventory levels to climb to 6.3 months. Anything under 12 months should allow for price increases but we need to watch the trend. So far so good.
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. Let’s look at price reductions and we will gain some confidence. This month sellers came down 9%+ from ORIGINAL asking price to sell their home. Much better. Over the life of some deals we saw figures 15-20%. This means the market – the real market – is trading nearer asking price. Sellers are either “less greedy” or buyers are “more aggressive” or some combination but … we should see volume improve when buyers are sellers are closer together starting out.
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. If you are thinking about selling, call us at 239.595.3921. Selling in the summer may indeed be a great idea.
Another data point to watch – property selling speed slowed further this month. Now it takes 53 days to sell a place on average as opposed to 37 days back in May. I am tempted to take this stat more seriously as it is at a two year high. 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.
Another market caution this month – condo prices. Remember our “canary in the mine” idea – something we might see forecasting possible challenges? 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 have started to fall these last few months … first $273,000 in January, then we saw $262,00 in February, then $260,000 in March, $257,000 in April, $260,000 in May, $259,900 in June and now we are at $230,000. The canary is starting to sing.
All is not lost however. Condo inventories did improve over the last few months (things are getting more scarce) and the new inventory levels are more supportive of prices. So … it looks like a normal adjustment to us. Falling prices tend to increase sales which tend to decrease supply and eventually prices firm up again. We’ll keep an eye on it with you. If we do not see a bounce up in condo prices in the next few months we will have more to say here.
We saw a positive condo market sign in another leading indicator statistic last month – foreclosure rates. Some of our foreclosure volume changes are due to the vagaries of our Florida system but the changes are worth looking at nonetheless. Foreclosed condos dropped to 20 from 25 and are far below the 100+ numbers in the past. Good news here – stable markets making some adjustments. No cliff but some concerns at this point.
With all of the single family price increases and a slight pull back in the condo market 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.
(Natural demand still finds jaw dropping beauty in the Florida sunshine)
Even with all the commotion we do not think we are in a real estate bubble here. Why? Inventory levels relative to volumes give us a lot of comfort. We do now see decreasing volumes with increasing supplies – but no sharp moves yet.
Will the party end one day? Of course. Perhaps suddenly. This is a boom and bust town. But “not yet.” 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 8.8 months from 6.5 months and price increases may start to take a breather.
Pelican Bay also slowed a bit with inventories rising to 5.08 months from 4.58 months – a level still supportive of price increases. Remember Pelican Bay experienced nine straight months of inventory build up before leveling off two months ago. It seems the adjustments are complete for this micro market for now. Price appreciation potential is there again.
Inventories at Windstar on Naples Bay are at an enviable 4.73 months. Be a little careful with data in Windstar. We learned some realtors encourage their sellers to take their properties off the market for the summer. We disagree with this approach as sales continue year round in Naples. We expect inventory to increase as sellers return and put their properties back on market. For now it looks like a very good market!
The Crayton Road area inventory also increased to 8+ months from 7.16 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 18 months from 20+ last month. This market may be rebounding die 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 (read more about that here). 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.
Port Royal and Aqualane Shores inventories increase to 13+ months from 11.71 months last month. After a brief dip last month below 12 months and better price supports we now see some inventory building. Expect prices to move sideways here – perhaps down slightly. One of the most incredible real estate areas in the United States is now at a great supply and demand level. Wow.
Marco Island inventories improved to 8.4 months from 10 months – a really nice turn and a sign buyers are finding real value on Marco Island. For all my dear friends and realtors on Marco who bust my chops on the numbers here take heart the island just ruined in a great month. Like Windstar, we think a lot of sellers pulled their homes from the market for the summer so, prices are a bit hard to predict on Marco until season arrives. 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 hovering around 18-19 months but are down from an eye-popping 100+ months a 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 new construction boys are busy but existing home sales are running along just fine.
The big market dynamic of new construction continues. New construction is eating into the re-sale market and explain some of the caution signals.
After the bust and the demise of many a builder, 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 did all that and boy are homes selling. So much so 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 perhaps, but support remains.
A few things sellers need to know. Aggressively priced properties in poor condition are not selling very well. A seller and I reviewed numbers together a while back and found some properties on the market for more than 200 days! Sellers of homes like this 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 in a short supply world with other buyers in some neighborhoods BUT the same buyers may find more amenable sellers in other neighborhoods. Know thy markets! Get with us and we will help you figure it out.
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.
The International Award Winning Naples Best Addresses Team at Coldwell Banker.
Why not pick up the phone and catch up with us and let us know how you are doing? Just give us a call at 239.595.3920 (Nan) or 239.595.3921 (Mark) or 239.285.2038 (David).
Please also consider reading our book “Understanding Naples Real Estate” to get started on a real estate search or just give us a call about things to do in this wonderful place.
All the best,
Nan, Mark and David Goebel, PA’s
Co-Founders Naples Best Addresses
Mark Goebel, PA and Nan Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921 239.595.3920
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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.