Posted on Friday, July 29, 2016
Despite real estate headlines in the paper regarding a slow down here in Naples, we just do not see it in our numbers. In fact, supplies are tightening and remain supportive of further price increases. One year ago the average Naples single home selling price was $375,000 and now it is $440,000. Summer selling speeds may be a little slower, certainly, but these are great results.
There are a few areas of concern but a strong July followed a strong June again in an uncharacteristic off-season fashion. Just a few minutes ago I was in a discussion with one of Naples’ top real estate firms and they also state their volumes are up these last couple of months. 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% (we are still working off of April data due to slow data updates in the NABOR system). Any price rise is pretty darn good considering 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 3,508 homes were purchased in the last four months which is up 2%+ from last month’s figures and follows 10% and 11% increases in the last two periods. Good volumes – especially increasing volumes – means the market is trading at these price points and real opportunities exist to buy and sell homes efficiently. Nice natural demand at work.
Let’s get behind our year over year price increase for ALL property types and understand the details. Looking at some data figures, 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 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 lower at 5.58 months and therefore better than last month’s 5.92 months. Remember anything less than twelve months inventory + growing volumes = more support for higher prices.
Will the buyers put up with higher prices? Maybe not. We reported last month 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. But … sales are happening and properties are moving.
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 at the time of this writing, and it closed 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 to 44 days from 37 days. We reported this last month and are waiting for new data this month. 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, $260,000 in May and $259,900 June.
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 (things are getting more scarce) 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 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 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 with 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 better gain this month at 6.5 vs. 7.75 last month – likely support for further price increases from here.
Pelican Bay is also in good shape with supplies decreasing further to 4.58 from 4.67 months last month – 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 2 months from 4.53 months last month. 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 open back up in the fall as the sellers put their properties back on market.
The Crayton Road area inventory may have “crested” at 10+ months a couple of months ago as we are now down to 6.63 from 7.16 months last month. Wow – 10 months to sub 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 increased slightly to 20+ months from 19.43 months last month. This sub market is showing signs of strength over the last several months as inventories have decreased a bit but we expect to see more downward price pressure here for a while. 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” 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 are at 10 months – up slightly from 9.25 months last 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.
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 18 months from 27.67 last month, 34+ months the prior month and from an eye-popping 100+ months a couple of months ago. The luxury single family home market here is finally correcting. 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. 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 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.
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
Like this story? Join the thousands of others who read our free monthly newsletter. We write about the Naples real estate market and the wonderful Naples lifestyle. Sign up here.
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.