Cindy Carroll, President of the residential division of Carroll and Carroll Real Estate Appraisers and Consultants presented her insights into the state of the local Naples real estate market last week. Her detailed knowledge of the historical benchmarks and economic factors at play prompted us to provide this detailed review of her findings. Naples Meridian has been reporting for the past 18 months how the changes in inventory levels have driven the market, Cindy Carroll’s insight provides a grand picture of the past and present situation:
Naples: A Look Back in Time:
1990: The Naples market experiences a small correction as a result of a buying frenzy in 1988 and 1989
1992-1996: The market plateaus
1997: Sales begin to increase and listings start decreasing
2001: The market experiences a slight uptick
2004: Things change drastically. The market ramps up to reach record highs in the Olde Naples and Port Royal neighborhoods
2005: The Naples Market hits its peak
2006 & 2007: Oversupply of inventory throughout Naples
2008: The stock market crashes; April 2008 signals the highest level of inventory.
2009: The Naples market hits rock bottom and inventory begins to decrease.
“ Nothing can continue forever” ( i.e. falling inventory) C. Carroll
Today there is approximately 4.7 months of available properties to purchase (inventory) throughout Naples. A balanced market has about 1 years’ worth of inventory. Most neighborhoods are experiencing an extreme shortage which is categorized as having less than 5 months worth of available properties to purchase. Areas that have a large concentration of properties priced under $ 300,000 have been hit with the greatest shortages over the past year.
Overall inventory is down 26% for the under $ 300,000 category and the median price has risen 12% over the last year.
Given this extreme shortage the market value of properties can no longer be analyzed using sold prices. Properties that were sold 3 to 4 months ago do not reflect the current market as prices have risen since these properties went under contract. Therefore the true market value needs to be assessed utilizing pending sales figures. (i.e. the contract price that the seller and buyer have agreed to ). Pending sales are not available to the public until the property legally exchanges hands and is sold. Appraisers are currently reaching out to real estate agents; requesting them to disclose the pending sales figures in order to understand the tempo of the market and appraise comparable properties. This is an unprecedented phenomenon as the pace of the market is moving at a faster rate than the number of closed sales. This market is being dictated by the shortages and pricing dictated by numbers that are yet to be disclosed to the public.
Where is the Market and Where are we Headed?
“Who knows where the market is..who really knows! “C. Carroll
Caroll suspects that over the summer months property prices began to creep upwards at a staggering pace. Buyer demand did not wean which typically occurs during the summer and inventory has continued falling even with the onset of the availability of new construction homes.
In 2012 properties being built by developers were once again on offer in Naples. Sales centers throughout the area were busy taking new reservations and construction teams began building their sites. By the end of 2012 there was enough buyer demand to absorb the availability of new construction properties and to decrease the inventory within the resale market! In 2013 this trend continues as developers keep taking reservations and resale inventory keeps falling.
Carroll believes that each property class is working its way back to 2004 price levels. Each neighborhood throughout Naples will behave differently as some areas will experience increases past the 2004 benchmarks and others will level out. The overall message is that the Naples market is not a balanced market and the relentless demand for properties coupled with the shortages of supply are driving prices up in all categories.
Our market is constantly shifting. Given the unique makeup of our buyers and their varied motivation for purchasing properties only time will provide the answers to where our market is headed. One thing remains clear, the trajectory of our market is headed North, at a feverish pace.
Naples Meridian will be tracking buyer trends as the season unfolds in Naples; we have a feeling that it will be one for the books!