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Naples Florida Real Estate Report

July 31, 2013 by Robert Ducharme No Comment

Naples Florida Real Estate Report

  • Naples real estate prices continue to rebound.
  • Inventory      of homes listed for sale is at an 8 year low.
  • Builders      are tripping over each other bringing new homes to market.
  • Buyers have      confidence that their equity is protected and are expecting gains.

June 30, 2013 Update

While the number of Naples homes sales began rebounding in a big way starting in 2009, only recently have home prices also started an upward movement.

Naples Home Sales vs. Average Selling Price
Six Month Periods Ending June 30

Since 2009 the number of home sales increased 54% while the average home selling price has increased 26%. Another way of saying it: demand is now 54% stronger for an average home price that is 26% higher – higher prices, greater demand. Most of the real estate price increase occurred between years 2012 and 2013, where the average home price increased 13%.

Naples Home Sales vs. Average Prices
2013 vs 2009 and 2012
Six Month Periods Ending June 30

Because of undervalued pricing and strong demand, home sales have already been at a blistering pace over the past few years, resulting in a significant reduction in availability. With strong demand and lower inventory, home prices are rebounding

While demand and home prices are up since 2009, home prices still remain 50% below their peak. And more along the average price levels of 2003. Buyers are seeing real value in Naples with home prices similar to a decade ago.

To understand how much demand and pricing has recovered since the bottom, take a look at the combined total home sales in 2009 of $1.2 billion vs $2.4 billion in 2013. A 100% increase in the amount of funds being exchanged between buyers and sellers.

Total Value of Homes Sold
Six Month Periods Ending June 30

Why is the Naples Florida’s real estate market doing so well? Real estate prices in Naples ballooned at a rate greater than the rest of the county, and they bottomed faster and harder. The Naples real estate pendulum swung back and forth with wider swings resulting in very low housing prices. A combination of low housing prices with the strong demand, leaves Naples with record breaking home sales.

Naples Home Price Segments

Homes selling for under $200k have been a very hot segment of sales. The chart below shows homes selling for less than $200k as a percentage of all sales. Back in year 2006, when Naples housing prices were much higher, there was little availability for less than $200k. Home sales for less than $200k represented just 3 % of all sales. When home prices fell sharply, home sales of less than $200k grew rapidly, eventually accounting for over 50% of all homes sold. As the downward price spiral stopped, and then started to recover, the percentage of homes selling for less than $200k began decreasing. A trend that looks to continue.

Homes Selling for Under $200k as a % of Total Sales
For the Six Month Period Ending June

While 41% of Naples home sales are under $200,000, the average selling price for all homes sold in the first half of 2013  is $465,000. How can that be? While sales under $200k, account for 41% of sales transactions, they only account for 11% of the total sales values. Homes selling for over $1 million make up just 9% of total sales, but account for 45% of the total sales dollars

Who is Buying Naples Real Estate?

Half the sales are to existing Naples residents. This is a combination of first time home buyers, current owners upgrading to a property they never dreamed they could afford and of course, many investors. Savvy local real estate investors have been buying while the getting is good. The other 50% of home sales have been to second home buyers. That needs repeating:

50% of all Naples homes sales are to those not permanently residing in the area!

Naples Home Buyers are Heavy in Cash

Naples bargain basement pricing of the recovery brought the return of cash buyers. Increasing from 30% of all home sales in 2006 to 70% in 2011. In 2012 and 2013 some cash buyers decided to take advantage of historic low interest rates, and go the mortgage route, rather than pay cash.

Naples Home Buyers Using Cash vs Mortgage
For the Six Month Period Ending June 30

It is not just Naples lower priced homes selling for cash. There is a high percentage of cash buyers through all price ranges. For example, in 2013 67% of buyers in the $200,000 and under range purchased with cash vs. 30% in 2007.

Naples Foreclosures

At one time Naples bank foreclosures and Naples short sales represented 40% of all Naples home sales. Now, distressed sales represent less than 20% of all sales, and both bank owned properties and short sales continue to make up a smaller percentage of sales.

Distressed Sales as a Percentage of Total Sales
Six Month Periods Ending June 30

Foreclosures and short sales will continue to occur, but the large majority have already been worked through the system. With home prices either holding steady or rising over the past 4 years, the pool of potential distressed sales will continue to decrease.

Naples Shrinking Supply of Homes for Sale. The supply of Naples homes listed for sale has been steadily decreasing over the last six years. Once peaking at a total supply of 12,500 homes, the supply is now under 4,000. A reduction of 60%. Naples at one time had a three year supply of homes listed for sale, now it is less than 5 months in total. And less than a 3 month supply for homes listed under $200k.

The real supply of homes available is actually less than a 5 month supply. Many sellers have their properties listed much higher than recent comparable sales and have no intention of selling their home near those comparable values. They view prices on the rise. More importantly, many homes listed are those that buyers just don’t want. They are too far out of the area, or have traffic noise, or a poor view, etc. Priced right desirable properties sell.

Because of the low resale availability, developer have wiped the dust off their new development plans and have been pushing dirt around. The Naples area now has over a dozen communities with new construction. Double the selection of just a year ago.


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