Posted on Thursday, December 29, 2016
One year ago the median Naples property sold for $315,500. This month we are at $359,900, a 14.07% year over year price increase, primarily due to an acceleration of single family home sales over condo sales – raising the market’s median price. Natural demand, the beginning of tourist season, increased demand for single family homes and solid US Equity markets all combined to drive buyers to buy in the Florida sunshine.
At the heart of property price behavior in any real estate market is supply and demand coupled with inventory levels. The Naples market inventory increased slightly to 9.68 months this period over 9.58 months last month as trailing sales slowed. This time last year supplies were much tighter at 6.47 months. Inventories at today’s level are still supportive of price increases but it varies neighborhood by neighborhood.
Let’s look at price reductions. Although buyers pay about 4% less than asking price for a listed property right now, the sellers had to work to get there. Sellers reduced prices from their original position only 7.4% from the original price (compared to a a whopping 22%+ last month).
What about supply? Our readers know supply levels should forecast short-term price trends. Over the last few months we saw a volume slow down coupled with more supply causing inventory levels to climb to 9+ months. Readers may recall this figure last year was only 6+months. Anything under 12 months should allow for price increases but we need to watch this inventory build up.
There is also a larger inventory of luxury properties right now – both in Naples and on Marco Island. Naples luxury properties (defined as properties listed above $2,000,000) have an inventory level of 29 months – a level demanding price reductions. We will see the what the future bears here but luxury properties are a tougher sell right now.
Another data point to watch – property selling speed. Smaller price concessions from the sellers are running in concert with faster selling speeds. Now it takes 51 days to sell a place (on average) as opposed to 55 days last month.
And what about the condo market, what are we seeing there? Average condo prices jumped in December to $287,000 from last month’s $254,000. Will this trend hold in season – we will see.
Inventories in the condo market are not too bad at 9.87 months and up slightly from last month’s figure of 9.65 months. We were waiting patiently for this price jump as inventories of 9 months should support increased prices. Readers will remember condo prices ran along flat these last few months – so finally the number played out and condo prices are back on the mend.
And we all know real estate is local, so what is happening in different neighborhoods?
Olde Naples – “I made up my mind to move to Naples as soon as I stepped out on that beach.”
Our first neighborhood stop is Olde Naples. Who doesn’t like Olde Naples? The “urbans” love to walk everywhere – beach, shops, restaurants with no car or even scooter. But … is real estate selling at these prices? Well, things were better this month. Inventories dropped to 12 months from 16.38 months and we are again at price equilibrium – expect stable prices here.
Pelican Bay – “I love the tram to the beach and eating at the beach club!”
Pelican Bay saw more inventory build up unfortunately to 16 months from last month’s 14+ month figure. Last year at this time supplies were tighter at 8+ months and we saw prices climb nicely. Pelican Bay experienced nine straight months of inventory build up and now supplies are increasing again. Expect prices to lower here in the short run.
Windstar On Naples Bay – “A one of kind community with a yacht club, a golf course and a private shuttle to Keewaydin Island – all on Naples Bay”
Inventories at Windstar on Naples Bay remained at 18 months – same as last month. We reported last month some realtors encourage their sellers to take their properties off the market for the summer. We disagree with this approach, how can you sell something off the market? Now these properties are back on the market and waiting to sell. There is likely downward price pressure here for a while.
Crayton Road – “The charm of this near north side neighborhood away from the maddening crowd is truly wonderful”
The Crayton Road area inventory increased to 16+ months from 15+ months – just like many of the beach communities. Expect prices to pull back here until the buyers weigh in again.
Royal Harbor – “On water living and walkable to town and new development on the way”
The Royal Harbor inventory increased slightly to 12 months from 11+ months and the area holds so much future promise with the rise of the “Urbans” and a walkable culture coupled with new commercial developments in the area. 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. Look for stable prices here.
Port Royal and Aqualane Shores – “one of the finest enclaves anywhere”
Port Royal and Aqualane Shores inventories remain elevated at 32 months – improving from last month’s whopping 41+ months figure. After a brief dip this summer below 12 months and better price supports, we now see inventory building. Expect prices to drop and days on market to lengthen.
Marco Island – “island life and the beach at Tiger Tail offer a remarkable experience”
Marco Island inventories remained at 14+ months – same as last month. For all my dear friends and realtors on Marco who bust my chops on these numbers take heart! – the Island is a great place to live. Houses and condos may be less pricey here compared to Naples and include incredible boating, golf, tennis and beach lifestyles. Check it out with us – there is a lot to love about Marco Island but expect some price pull backs here.
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 improved to 28+ months from 33+ months and down from an eye-popping 100+ months not too long ago. 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.
And the story on new construction? The big market dynamic of new construction continues and perhaps we are now overbuilt slightly. It is tough to capture real data from the developers but the scuttlebutt is we are out over our skis a little too far right now. There are 18 new communities in Collier County at a variety of price points. Developers are offering some nice incentives to encourage sales. If you are considering new construction right now, this is a good time to be looking.
So our market is off to a good start this year, with prices up and days on market down. We need to keep an eye on inventory levels.
Please give us a call if you are considering buying or selling in Naples. We would love to talk with you!
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