With harvest moons, warm cider and the Thanksgiving holiday festivities on our radar we feel this is the perfect time take a moment to reflect and prepare for the real estate buying season in Naples.
Inventory and Price Reductions
Overall, we had the usual flurry of buyers who decided by early August that properties they had been eyeing all year were finally worth the wait. This summer the difference was that twenty-six percent of homes on the market in July reduced their pricing at least once. The Naples Board now has a system in place to track scheduled showings for properties. This data does not capture every scheduled appointment, yet it does provide a barometer for information. In July it was reported the average listing under $ 1 million received 17 visits as compared to only 13 visits in January prior to going under agreement. As inventory tightens buyers tend to want to view more properties before making a buying decision. By September, twenty-eight percent of available inventory experienced a price reduction and overall 500 listings were removed from market. Removing properties in August and September is normal behavior as these are the slowest months for real estate activity in Naples. These same properties are often re-introduced to the market by November or December. We speculate that due to current market conditions pricing of these properties may be revised prior to their re debut.
Summer Sold Locations
The Naples beach area continues to be the biggest draw. Year on year during the summer months areas from Olde Naples northward to Gulfshore Blvd and beyond to Pelican Bay and Vanderbilt Beach witness the greatest activity. This summer sold properties in these areas increased by 25 percent and single family home sale increased by 40 percent as compared to a year ago. An increase in the single-family home sector is interesting as this points to an uptick in both the family and investor market segment. Investor buyers typically seek to renovate older homes with an aim of renting the property for a profit during the winter months. The pace of activity in the single-family sector was felt in “real time” this summer as the median price for condominiums along the beach priced between $ 1-2 million decreased 10 percent.
Pre-Season Prep: Beach Areas Remain King
The all-important beach areas is still where the “action” resides at least for now. My friends on the listing side of the house have been busy bringing properties to market in these areas. While gated communities that offer every amenity possible are very desirable, the data at time of press points to the greatest activity near the Gulf of Mexico. New inventory here is small yet mighty with 200 listings brought to market in October and 145 thus far in November. We highlighted last week our top 5 beach and downtown listings under $ 500,000 given that they do exist. Yet we recognize that the price points in these neighborhoods start at $ 1.5 million with the greatest range positioned from $2 million to $ 4.5 million. This year it is important to underscore that unlike a handful of years past, inventory figures leading up to the height of the buying season is barely adequate for the traditional high demand during the winter months. Sellers witnessing this downward trend in pricing may choose to remain off the market which places even greater pressure for existing inventory to be optimally priced.
The Naples real estate market does not follow the traditional supply and demand rules. Given that there is truly no inherent urgency to buy or to sell, unless there is change of (family) circumstance, the flow of activity is completely subjective and requires a meeting of the minds based on the perception of value. The activity this summer disclosed that price conscious buyers made up the largest segment of market activity. Based on the price decrease trend that began this summer, we believe that price corrections may continue into early 2020 as buyers will continue to gravitate towards properties that meet their criteria and provide a value proposition. A new equilibrium is emerging in the Naples real estate market where it is too soon to tell how far the pendulum will swing.