Posted on Thursday, January 28, 2016
Year over year average real estate prices are up 10.92%. You may not have to read further. Pretty darn good considering. Despite the worst start to the US equity market maybe ever and a strong dollar pricing out some international buyers the Naples market “keeps on keeping on.”
There are a few caution signals we will speak to in this blog but we see more room for rising prices especially in certain buildings and neighborhoods.
Readers of the blog will know Naples sees more year round families, business professionals, boomer retirements, fantastic climate, great lifestyles and favorable tax treatments – all of which provide natural demand for Naples real estate.
Over the last twelve months the average Naples area property selling price increased 10+% with single family homes out pacing condos slightly. Volumes are still running at 95.5% of last year so the market continues to trade briskly despite increased price levels – a good sign for the future.
The winter season is now on. After a brief time out between Thanksgiving and Christmas, traffic is again picking up. At these lower inventory levels and solid volumes the 2016 season promises to put fuel on the fire and drive prices higher.
As we often share with our customers, as long as you have good volumes, supply levels should forecast the short-term price trends. We stand at 7.37 months supply – a good level and well below the theoretical 12 month “equilibrium”. So what? As long as volumes hold up look for prices to keep going up this season. Also please remember pricing trends differ street by street and building by building so get with us and let us help you figure it out.
(Offers and showings continue on our on-water properties – new construction, on the water is tough to beat)
Readers of the blog know we take a look at Naples real estate market trends at month end – including a very detailed look for all you analytics.
Are we in for a continued boom? We think so. Even with all the disturbing global and national financial market news. Why? Firstly, prices are highly likely to continue to rise in the next few months. We have some concerns about world events, equity markets and weakening in some national real estate sub-markets but today’s combination of Naples supply levels and strong purchase volumes we think prices will continue to rise for a while.
The inventory of existing homes is at 7.37 months. This is slightly weaker than last month’s 6.47 figure but far below the 12 month price equilibrium point. At 6.47 months we expect prices to rise. Another annual double-digit price increase is possible. So far our “supply based” forecasting method is proving accurate over the last twenty-four months.
(well priced condos like this one move quickly)
Will the buyers put up with these newer and higher prices? Yes for now. In fact buyers stepped up to the table strongly again last month as “Original Prices to Sold Prices” were within 3.6% of asking price and tighter than last month’s 3.7% spread. New data for this month is unavailable so look for an update on this statistic next month. Translation? Sellers are getting more and more of what they want.
This is a great time to sell as serious buyers remain in the market. If you are thinking about selling call us at 239.595.3921 – so far the sellers are still winning in this market with tight close to ask ratios and low inventories.
Another market confidence booster … property is selling speed is accelerating. Average property “selling speed” improved again this month to 35 days from 36 days. Properties have not sold this quickly in over a year. Properties sales are still moving along nicely but remember they need to be priced right and in good condition.
(Naples provides some great lifestyles – return from the Gulf Of Mexico to your back yard and walk over to the Naples Bay Resort for some Spa treatments and a nice meal)
Another market sign to watch – condo prices. Remember during the last bust, condo prices dropped almost a full year BEFORE the single family home decline. We like to look at condo prices as a good leading indicator. This past month we saw condo prices rise 5%+ IN ONE MONTH and inventories rose to 6.69 from 5+ months. Translation? These results support the notion condo prices still have room to rise.
One final statistic to watch for future predictions – foreclosure rates. Some of our volume is due to out court based system and bank abilities to speed up and slow down the process but it useful to look at this for a minute. Foreclosed condos are now 31 vs. 28 last month and foreclosed single family homes improved significantly to 33 vs. 50. Well the foreclosure rate is pretty darn good right now and buyers have stepped in when the rates increase – so no hint of future slow down here.
We also read more good news on the distressed property front. The Naples News reported home equity levels increased these past few months and far fewer homes are “underwater” making for a much healthier market. Please read their full article at
Are we in a bubble? Here is a question we get a lot – especially with 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? With short supplies, good “original price to sold price” ratios, and increased selling speed it is clear the Naples real estate market is solid and prices should continue to rise for a while. We will keep watching right along with you and check our early indicators but we think we are good for now.
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. At these low supply levels and volumes the market looks good for now.
Ok the big market is good but what about the numbers neighborhood by neighborhood ? All real estate is local – and this is especially true this month. Some neighborhoods are fighting higher inventories and we expect price pull backs while others are on a real price climb. 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 the charm of this place But … is real estate selling at these prices? Yes but buyers are starting to gain the upper hand. Inventories are increasing here to 11.66 months and approaching the price equilibrium point. Will high season beat back supply further? Probably, but look for prices to move sideways here for a while.
Pelican Bay supplies are at 9.44 months – good for price increases but the longer term trend is a little worrying. Pelican Bay has seen seven straight months of 3 month trailing inventory increases. Nothing to be alarmed about. Price appreciation potential is there but Pelican Bay is no longer the red-hot area it was last year.
(on water views are fetching bigger prices – like this beautiful on-water old Key West style home on Naples Bay)
Inventories at Windstar on Naples Bay decreased dramatically to 26+ months from 40+ months as properties gan to sell. Some of this is the “law of small numbers” where one or two sales or listings make a big difference but nonetheless we expect downward price pressure in Windstar of the next few weeks. Don’t forget to check out the golf greens and those fantastic club house renovations!
(Life at Windstar on Naples Bay can be pretty amazing)
The Crayton Road area continues to ease up with supply increasing to 7.15 months from 6.36 months last month – five straight months of 120 day trailing supply levels. What does all of this mean? Expect more price increases here but buyers are beginning to reach equal footing with the sellers.
The Royal Harbor single family homes market continues to jump around. Supplies jumped to 18 months from 8.8 months as buyers are finding it tougher to buy $3.5 MM homes … but some sub $2 MM values and some very nice choices remain. With the big price run up some of the buy-teardown-build crowd may be priced out for a time. 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.
(custom on-water homes with master suites looking out on the water are in big demand in the Royal Harbor area right now)
Port Royal and Aqualane Shores inventories held steady at 19+ months from 20 months last month. – not what we want to see as we are well above the equilibrium point. So what? Well theoretically, prices should start pulling back at these levels. When people ask are people really buying properties at these prices? The answer is yes – in fact 17 properties sold in the last 120 days here – up from 16 last month. Property is selling here. This is a fantastic community and season is likely to improve volumes.
Marco Island continues to soften as inventories rose to 13+ months up from 11.2 months last month. We are now at equilibrium and prices should move sideways on the island for a while. Houses and condos may be less pricey on the island compared to Naples and boating, golf and tennis and that incredible beach offer a great lifestyle.
(take the short car ride down to Marco and don’t be afraid to tear one down and build our own place down there)
What we find continue to find interesting on Marco is the struggling luxury single family home market – defined as properties above $2,000,000. Many of these properties offer incredible bay views and buyers may be on firmer footing here than in Naples. Inventories held steady at 41+ months this month compared to 42 months last mont. Buyers be ready. If you like the Island and you are looking for a great place sooner or later prices will fall at these levels.
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 fine)
The big market dynamic of new construction continues. 20+ homes sold in one month at the Isles of Collier Preserve this summer. Consider all the new construction around town that is a lot of real estate selling in thirty days.
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 50% of the buyers going to new construction, inventories of existing homes are still solid and very supportive of further price increases. What a market!
A few things sellers need to know. Aggressively priced properties in poor condition are not selling very well. 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 to get on the 35 day “days-on-market+ trend.
(buyers better be ready to buy when well priced properties like this one come on the market)
Buyers in this market better be ready when they find that “Best Naples Address” for them. Why? Because buyers are competing in a short supply world with other buyers. Cash is king (a pre-approved financing letter is helpful) but whatever you do get with a real estate team like ours who knows this market, get a great online search tool like the one we can provide for no charge, 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” in full force in this seller’s market.
(The International Award Winning Naples Best Addresses Team at Coldwell Banker)
So … the hot market continues and prices should rise. You gotta love strong real estate markets as they trickle down earnings and wash over the whole community. A welcome change from the recent past!
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 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan and son David. Talk to Mark, Nan and Dave about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
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