Posted on Monday, June 27, 2016
Naples real estate continues to expand into the summer months with another strong showing in June. There are a few areas of concern but a strong June followed a strong May in an uncharacteristic off-season fashion. Summer can be a great time to buy and sell. Let’s take a look at the latest results.
Year over year median real estate prices for ALL property types were up 3.28% year over year – slowing from last month’s 8.27% figure. Pretty darn good considering BREXIT, summer season and a strong dollar pricing out some international buyers. Even so, prices are still up year over year.
You might stop reading at this point. After all where else do you see a 3.28%+ return and an opportunity to live in a year round outdoor paradise these days? 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 professional and boomers these days – and why not with our fantastic climate, great lifestyles, favorable tax treatments and statewide budget surpluses. Natural demand folks 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 3,440 homes were purchased in the last three months which is up 10%+ from last month’s figures. Nice natural demand at work.
Let’s get behind our year over year price increase for ALL property types and understand the details. Over the last 12 months we find single family homes jumped 17.33% while condo prices fell 5.49%. How interesting! This could be that more people are living here year round and moving to single family homes or speculation on condo flips has waned or a number of other factors. Just as we suspected and shared with our readers there is a lot of interest in single family homes right now.
What about supply? Our readers know supply levels should forecast short-term price trends. These last few months volumes increased and new offerings stabilized causing a another monthly decrease in inventories AND a market more supportive of increasing prices. Nice.
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!
The inventory of existing homes is at 5.92 months is lower and therefore better than last month’s 6.84 months. Less than twelve month inventory + growing volumes = more support for higher prices.
Will the buyers put up with higher prices? Maybe not …sellers came down an average of 16.6% over the property’s market life before the sale was made! This compares to 7.8% in reductions last month. Looks to me like the sellers are making more and more price concessions to move property.
Don’t get us wrong. This is a great time to sell Naples property as serious buyers remain in the market – in fact we put another property under contract today at the time of this writing. Over 3,440 Naples properties sold in the last four months. 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 to 44 days from 37 days. I would not read too much into this figure as selling speed remains near recent levels and the recent slow down follows two periods of acceleration. I think we are ok for now.
Another market caution this month – condo prices. Remember during the last bust, condo prices dropped almost a full year BEFORE the single family home bust. 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 and now holding at $260,000 in May and $259,900.
It looks like the condo market is finally backing up a bit. Is it our “canary” for bad things to come? Probably not. Condo inventories did improve over the last few months and 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 two months we will have more to say here.
We saw a positive condo market sign in another leading indicator statistic– 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 stayed even at 25 and are far below the 100+ numbers in the past. Good news here – stable markets making some adjustments. No cliff.
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 BREXIT, equity market gyrations, a strong US dollar knocking out some international buyers and unpredictable Fed policy.
Even with all the commotion we do not think we are in a real estate bubble here. Why? Tightening inventories on increased volumes give us a lot of comfort. If we had decreasing volumes and increasing supplies we would sing a different tune. So far we have a rational market – 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 as cracks will appear unevenly in the figures as the next bust approaches.
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? Live in town, walk to great restaurants and the beach and feel part of the small town. But … is real estate selling at these prices? Well real estate is selling in Olde Naples and in fact are starting to see more room for price appreciation. Inventories are a better this month at 7.75 months vs 8.97 months last month and 11.06 months before that – likely support for further price increases from here.
Pelican Bay is also in good shape with supplies decreasing further to 4.67 months from 5.4 months last month and 6.9 months before that – good for price increases from here. 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 improved significantly to 4.53 months from 7.38 months last month! Some of the improvement was due to sellers throwing in the towel and taking properties off the market. But how can you sell your place that way !?! We think the new market here is great for sellers as there is less to choose from! We should see price increases here but some neighborhoods have an abundance of homes for sale and face selling challenges.
The Crayton Road area inventory may have “crested” at 10+ months a couple of months ago as we are now down to 7.16 months from 8.52 months last month and 9.57 months the month before that. Wow – 10 months to 7 months is a nice correction – expect more price appreciation in this beautiful area.
The Royal Harbor single family home inventory continues to face challenges. Supplies tightened to 19.43 months from 26.4 months last month and from 40 months the month before that. This is the sort of market adjustment we were waiting to see as price reductions or expired and withdrawn listings took hold. There is more work to do here but we are headed in the right direction again. On water, single family homes, convenience to 5th avenue, a spa within walking distance and an ever-increasing Naples “downtown” foot print there is a lot to like in this area.
The big news for Royal Harbor this month 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.
Port Royal and Aqualane Shores inventories decreased to 11.71 months and finally support current prices with a 12 month – equilibrium point. Nice to see this. 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 firmed again this month to 9.25 months from 10.49 months last month and support prices increases from here. Houses and condos may be less pricey on the island compared to Naples and include incredible boating, golf, tennis and beach lifestyles.
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 fell to 27.67 months from 34+ months last month and from an eye-popping 100+ months a couple of months ago. If you like the Island and you are looking for a great place, prices should 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. 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. Well 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 last month 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 even in these good times. 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.
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 you started on a real estate search https://www.naplesbestaddresses.com/offer/ or just give us a call about things to do here.
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
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.
We are pleased to announce a portion of our real estate earnings go to support the The Naples Botanical Garden, Habitat for Humanity Collier Count and The Naples Winter Wine Festival.
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.