The top of the last economic cycle in Naples was late summer/early fall 2015 when overall inventory fell to 4.27 months. Today, Naples real estate is stable.
From August 2015 to August 2016 overall inventory increased 53 percent. “That’s a stunning number,” said Cindy Carroll, of Carroll & Carroll Appraisers and Consultants. All of the years prior to that, going back to 2007, inventory declined anywhere from 20 percent, 22 percent, even 40 percent, and then that all turned around in fall 2015.
The primary factor contributing to the increase was buyers who had bought new construction a couple of years prior and then came back on the market as a resale and competed directly with the builder. Not only were they not getting the price they paid for the home, but they weren’t even recouping the cost of any extras they paid for out of pocket.
That, and some other factors, resulted in a slowing of the market, Carroll noted, followed by a correction in some parts, and then a stabilization. Since 2016, the general trend has been stabilization in the Naples market.
Now, Carroll says, we need to be on alert for the market to go up again, which tends to happen every 7 to 10 years. Carroll says she can track this going all the way back to the 1980s. So if 2015 was the last top of the market, 7 to 10 years would put us at 2022 to 2025. She does point out that it may not be market wide, but more likely neighborhood by neighborhood.
In Naples, we tend to see trends develop in our coastal communities first. Then, if any trend is sustained, it reaches out to all areas.
A Closer Look at Single-Family Homes
Another sign of stabilization in our market is that the 0-$300,000 single-family home inventory is up 25%, from 278 properties in August 2017 to 347 in August 2018. This segment had been consistently losing inventory year over year and had seen median price increases anywhere from 20% to 25% coming out of the recession. Most recently, the number of closed sales is down 25% and the median price is up only 4%. This is an interesting change in the market, noted Carroll.
In the $300,000 to $500,000 price range, inventory is up 21% and the number of closed sales is only up 2%. Homes from the 0-$300,000 segment are spilling over into this price range. We now have quite a bit of inventory building up in the $300,000 to $400,000 segment that used to be below $300,000.
The $500,000 to $1 million segment has remained steady with no big changes in inventory or sales. And the $1 million and up segment continues to perform well.
A Closer Look at Condos
As of August 2018, the Naples market had 2,353 condos for sale. Half of that inventory falls in the 0-$300,000 range. The median price and the number of closed sales are unchanged when comparing August 2017 to August 2018.
This segment of the market is having a difficult time, said Carroll, because some of it is old and some have very high fees. “There are probably some really good buys out there, but when you add the fees onto it, it just doesn’t work,” she said. Because of this, she expects this condo inventory to sit for awhile.
Strict rules in some condo communities are also holding back sales. Modified declarations or a change to rental policies or parking restrictions may create a more secure neighborhood, but if they keep investors away and limits your buyer pool, it could spell disaster in the future. “Values could erode because of these rules,” Carroll pointed out.