In order to gain perspective on where Naples real estate may be headed, it is important to not only look at year-over-year changes, but also to study longer term trends.
The Naples market enjoyed nearly eight years of steady growth through 2014. Since then, although still a robust market by any measure, that growth has been less consistent. For instance, closed sales in 2018 outpaced those of the previous two years, but showed a decline when compared to 2013, 2014 or 2015. Additionally, end of year listing inventory has shown a similar trend with increasing supplies since the low of 5,277 residences for sale in 2015 to 6,261 as of January 2019.
Inventory at the end of 2018 was the highest on record in six years.
With a higher number of available listings on the market, you might conclude that there has been an increase in new listings coming on the market. However, new listing trends have shown two years of modest decline, suggesting that the growth in overall inventory is due to active listings staying on the market for a longer period.
Another factor impacting the inventory is small builders who are listing newly constructed homes in the Southwest Florida MLS. As one area broker noted, “Inventory for single-family homes under $500,000 increased the most in 2018. In fact, the highest increase in inventory for 2018 was in the under $300,000 single-family home category at 34%.”
One of the most important barometers in real estate market analysis is months of supply. This provides an estimate of how long it will take to exhaust the current inventory considering the pace of sales.
In Southwest Florida, a balanced market generally exists when months of supply are between six and 12 months. As of January 1, 2019, the market posted 7.7 months of supply, up 11% from the previous year.
Much of what we are experiencing here mirrors what’s occurring in other parts of the country. After years of feverish increases in year-over-year sales, ever-tightening inventory supplies, and rapidly appreciating values, markets are returning to a more balanced existence.
For buyers, this means more options. For sellers, it means maintaining an awareness of that fact and recognizing that price may become an increasingly important factor in getting a home sold within a reasonable time frame.
It is interesting to note that all throughout 2018 inventories of both single-family homes and condos have been fairly equal in number. We started the year with 2,961 single-family homes and 3,110 condos for sale and we ended the year with 3,140 single-family homes and 3,118 condos for sale.