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Posted on Tuesday, November 01, 2011

In the last seven days we have seen two outstanding national enterprises weigh in on the future of Naples real estate and reach opposite conclusions.

First we have the FISERV view: “Many of the regions that will be hardest hit were already beaten up during the previous two dips.Naples, Fla., for example, is expected to take the biggest hit of any metro area, a price drop of another 18.9% by the end of next June, according to Fiserv.”

Then we have the views of a noted economist, Dean Baket as reported by Bloomberg Businessweek and Florida REALTORS. “Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks  – in the 4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey.‘It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,’ says economist Dean Baker. ‘Prices may go lower, but not by much.’”
So which is it? I like the teachings of my undergraduate economics professor who first drew up the supply and demand curve in front of me. We all know that one – supply and demand interact to drive prices. In Naples real estate “supply” is down – good for prices and variable by area. Demand is just ok – volumes running along OK but not great – neutral for prices. If supply keeps falling and volumes hold this should be favorable for prices.
Be very, very careful drawing conclusions for any one area with any of this. I know of one area in Naples with a two year + inventory and it is going to be very tough to support prices there. I know of a neighborhood we showed to a client last week with only six month inventory – now all other things being equal I like the price support there.
What do you need to do with all of this if you are buying or selling? Get yourself a REALTOR, a local one who lives in the market and has a point of view on all of this. Forget about averages, my statistic professor often drummed home the point you could drown in a lake with an “average” depth of one inch – and so it is with real estate – DO NOT draw conclusion from broad data – get local, with a human, and find out what is really going on at street level.

What are your thoughts on all this?

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. Talk to Mark and Nan about life in Naples and why they chose this place to live full time over all others.