Posted on Tuesday, March 29, 2016
(wonderful on-water new construction under $2,000,000)
Year over year average real estate prices are up 10.53%. Pretty darn good considering the worst start ever to the US equity market and a strong dollar pricing out some international buyers. Even so, prices are still going up. The local scuttlebutt predicting an end of season pop seems to be right on the mark.
You might stop reading at this point. After all where else do you see a 10%+ return and an opportunity to live a year round out door paradise these days? Some if not most of last month’s caution signals have vanished and the market has a new spring in it step.
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. 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 we saw slow and steady price increases supported by population increases.
Over the last twelve months the average Naples area property selling price increased 10+% with single family homes out pacing condos slightly. Volumes reversed declines over the last several months and popped 4.56%. Maybe folks just have to buy something before heading out-of-town for summer.
As we often share with our customers, as long as you have good volumes, supply levels should forecast the short-term price trends. Volumes increased and new offerings stabilized causing a decrease in inventories AND a market more supportive of increasing prices. This data takes our “double caution” off the board and the sun is back out and shining.
(Offers and showings continue for new on-water construction)
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 we in for continued price appreciation boom? Probably, at least for a few more months, maybe more. Why? At inventory level of eight month prices are likely to continue to rise in the next few months. We have some concerns about world events, currency exchange rates and equity markets but today’s combination of eight month supply levels and rising purchase volumes should allow prices to climb modestly.
The inventory of existing homes is at 8,52 months is slightly tighter than last months 8.65 months and reverses a growing supply trend. Less than twelve month inventory + growing volumes = increasing prices. Another annual double-digit price increase is even possible. Our “supply based” forecasting method proved accurate over the last twenty-four months.
(well priced condos like this one move quickly)
Will the buyers put up with higher prices? Probably. “Original Price to Sold Price” spreads held at 3.7% – right on last month’s figure. Translation? Sellers get most of what they asked for leaving only 3% or so on the table.
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 lower inventories and only one to two months of season remains. “List now before summer” might prove to be a good idea.
A continuing market caution this month – property selling speed slowed further to 44 days from 40 days last month. I would not read too much into this figure as selling speed remains near recent levels but the slowing is something to watch. Motivated sellers should keep their properties in good condition and fairly priced.
(Naples provides some great lifestyles – return from the Gulf Of Mexico to your back yard and ride in style to town)
Another market caution this month – condo prices. Remember during the last bust, condo prices dropped almost a full year BEFORE the single family home decline. Condo prices are starting to fall these last two months. $273,000 to $262,00 to $260,000. Condo inventories did show some strength tightening up and more supportive of price increases.
We saw real improvements 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 showed promise nonetheless. Foreclosed condos are now 33 vs. 37 last month and foreclosed single family homes improved significantly to 33 over 344. Clearly the market is starting to clear foreclosed properties out faster than the banks can (or want to) push them into the market. These foreclosure levels could be seen as normal movement and we have no real trend yet but let’s keep an eye out here as well.
Are we in a bubble? Here is a question we get a lot – especially with world events, 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? Increasing prices but at slower rates coupled with tightening inventories and increasing purchase volumes all make sense. The seems to be a rational market – no cliffs or sharp moves yet. The market is adjusting, aging maybe and climbing at a rational pace. Some of our early cautions are starting to come and go but we should be 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.
(Naples is the happiest and healthiest place in the United States of America according to the Gallup poll. Beautiful scenes like this one do actually exist here. A typical “winter” day.)
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 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 just feel part of the small town. But … is real estate selling at these prices? Well real estate is selling in Olde Naples but we see no room for price appreciation from this point over the next few months. Inventories are a little better this month at 12.54 months from last month’s 13.17 months – but no likely support for strong further price increases from here.
Pelican Bay is in better shape with supplies holding at the 9+ month level – good for price increases but the longer term trend of supply build up is a little worrying. Pelican Bay experienced nine straight months of inventory build up before leveling off last month. Nothing to be alarmed about. Price appreciation potential is there but Pelican Bay is no longer the red-hot area it was last year.
(so thankful to walk to windsurf the Gulf in the middle of winter)
Inventories at Windstar on Naples Bay decreased dramatically to 12 months from 18 months last months and from 26 months the month before – a good thing. Some of the fluctuation is the “law of small numbers” where one or two sales or listings make a big difference in the computations. Nonetheless supplies here are back to equilibrium expect firming prices in Windstar over the next few weeks. Oh and by the way did you hear the men’s 4.0+ tennis team went undefeated and won the championships this year?
(Life at Windstar on Naples Bay can be pretty amazing)
The Crayton Road area is completing its seventh straight month of inventory build up to 10+ months from 8.53 months last month. Expect more price appreciation in this beautiful area 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 31 months from 28 months last month. With the big price run up in the last couple of years 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.
(In the summer expect the manatee to stroll right up your Royal Harbor canal)
Port Royal and Aqualane Shores inventories remained at 17+ months but we are well above the equilibrium point. So what? Well theoretically, prices should start pulling back at these levels. A quick look at history here shows prices are now flat over the last 12 months so this is making some sense. When people ask are people really buying properties at these prices? The answer is yes – we just do not see much support for price increases right now.
Marco Island inventories firmed a bit to 12+ months and we now expect more support for stable prices here. We remain at equilibrium (maybe slightly higher) and prices should move sideways or drop a little 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.
(Marco Island life can be a lot of fun including fishing for the occasional spot red in the back country)
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 and buyers may be on firmer footing here than in Naples. Inventories remained at 100+ months this month (a record for this blog and yes I double checked the math) and up from 41+ months just two months before. Buyers be ready. If you like the Island and you are looking for a great place prices should start dropping here.
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. 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 recently showing 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 to get on the 44+ 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 know their neighborhoods if they feel like negotiating. 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!
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)
So … the solid market continues its price appreciation And oh yes, I almost forgot wintering here is still incredible!
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.