Naples Real Estate Report
Naples Real Estate Market Summary
The Naples real estate market is driven by second home buyers. And these second homes buyers have driven Naples home sales to new levels.:
- Year 2014 saw a record number of home sales.
- Naples average home prices increased 14% in 2014 and 2013 – but remain far below peak year prices.
- Inventory of homes listed for sale is low.
- Builders are tripping over each other bringing new homes to market. Over a dozen new development began sales in 2014.
- Sales of new construction is strong.
- Foreclosures and Short Sales are at the lowest level since first being tracked.
- Buyers have confidence that their equity is protected and are confident about future gains.
February 2015 Update
The Naples real estate market continues to be very active. While the number of sales in January 2015 was less than January 2014 - 643 vs. 726, The average price of homes sold was up 12% - $588k vs. $525k. The lower number of home sales was expected, as prices are up, and the number of homes listed for sale is down.
Looking at the number of homes under contract vs. the number under a purchase agreement waiting to close, is a good measure in determining how active a real estate market
Listings vs. Under Purchase Agreement
@ Feb 27, 2015
The overall pending rate of 44% indicates a very active housing market. The 87% rate in the under $200,000 group indicates there is a very high percentage of sellers and buyers reaching agreements.
The homes listed for sale days on market, is also low. The following chart shows the average days on market for the homes listed for sale, and for those listings under a purchase agreement.
Naples Average Days on Market
Active listings will have a combination of good values and not so good values. The average days on market for those home with purchase agreements is always less than those listed for sale. The reason being is the best values sell, and those are the ones with purchase agreements.
Naples 2014 Real Estate Sales
Naples set another record for the number of homes sold. Year 2014 was the third consecutive year of setting a record for the number of homes sold.
Naples Home Sales by Year
Naples Home Prices
Year over year average home selling prices increased 14% in both year 2014 and 2013.
Average Home Selling Prices
As can be seen on the graph above, 2014 average home selling prices are below a 3% average growth rate starting in year 2002.
Average Prices By Area
Naples covers a large geographic area, and average prices include multi-million dollar condos, as well as homes in outer wetlands with low values. Let see how regions would vary by beach, west of Interstate 75 and east of I75.
The beach area has the highest home values in Naples. The average home selling price beach homes, bottomed much later than the rest of Naples, but has also recover at a faster rate. The beach average pricing in 2014 is similar to year 2005 average pricing, while the rest of Naples is at 2004 pricing or later.
Average Homes Price by Areas
While the beach area represented just 16% of home sales in 2014, it accounted for 43% of the total sale values.
Values vs. Number of Sales
This small group of buyers, buying very expensive properties, drive the high average home price. If we look the the median price, (where 50% of buyers paid less than the median and 50% paid more) we see most buyers purchased their Naples home way below the average price.:
Naples Median Price of Home Sales
While the average Naples home selling price in 2014 was $507,000, 50% of home buyers paid under $266,000.
Home Price Recovery Trends
All Naples home sectors are in a rising price situation. Home values in some sectors did not fall as hard as others. The sectors the fell the hardest were the least expensive homes, they are the one rising quickly.
Let's compare home prices of a desirable second home community and for a community with a majority of local working residents. Pelican Marsh condos owners, would consist primarily of second home residents. Single family homes in Golden Gate City, Naples Manor and Naples Park, would have a majority of local working residents.
Pelican Marsh Condos vs. Local Workforce Single Family Homes
Average Home Selling Values
As shown in the chart above, Pelican Marsh values did not drop as steep, while the local workforce home have a greater recovery climb.
In the chart below, we compare the 20% of buyers who purchased the least expensive homes available and the 20% of buyers that purchase the most expensive homes. In 2011, those buying the least expensive homes available, paid $95,000 or less. In 2014 that same group of buyers, buying similar homes paid $155,000 or less.
Home Prices in Second Home Neighborhoods
Here is a sampling of neighborhoods with a high concentration of second homeowners, and recent price changes.
Average Selling Prices
Because Naples is second home community, it has a very high percentage of condo homes - 67%. Tens of thousands of smaller two bedroom condos were built in the 70s, 80s and 90s. Many buyers during the 2000s were mostly focused on new construction or newer built condos and ignored those early built condos. As time went on, the availably of new kept getting further away from the Naples core.
There is a trend of buyers returning to the older built two bedroom condos. The reason being:
- There are no new two bedroom condos available for less than $400k. They are not being built, except for the bundled golf communities.
- Except for the very higher priced condos, anything new is a long distance from the Naples core.
- Existing two bedroom condos are in the best Naples location.
Some buyers are preferring the better location the older condos provide, and either updating the condo or remodeling them.
Average Selling Price - Two Bedroom Condos - Under 2,000 Sq.
Non-Golf Central Naples Area
Selling Prices vs. List Price
I often get asked, how much of a discount should a buyer expect off of list price. Currently the average is around 4%. This rate is similar to 2002 before the explosion in home prices, probably suggesting that Naples is in a balance market between sellers and buyers.
Average Discount Off of List Price
While the average discount is 4%, the actual range of discounts vary by price range, and by how well the home is priced. If the home is priced high, the discount will be higher. If the home is aggressively priced based on other closed comparable, the discount will be smaller.
Naples Cash Buyers
When the easy credit policies of the early 2000s were halted, cash buyers entered the Naples market in big numbers.
Percent of Naples Sales with Cash Buyers
Cash buyer represent a large segment of second home buyers. There were more cash buyers in 2014 than total buyers in 2008.
Naples Bank Foreclosures and Short Sales
Percent of Foreclosed and Short Sales of Total Sales
Nearly 85% of all distressed sales were from local working family. It was the combination of the easy credit, and the doubling of their homes value from 2003 to 2006 that lead to so many distressed sales. The doubling of home values enticed many existing home owners to refinanced their home with a larger mortgage amount or get a line of credit on the home. These new funds were used for new car purchases, boats, etc. When prices fell, they lost the home but kept the boat.
Naples Housing Supply
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 in the low 4,000s. A reduction of 60%. Naples at one time had a three year supply of homes listed for sale, now it is around 5 months in total. And just around 2 months for the hot $200k and under segment..
The real supply of homes available is actually less than what is shown on the chart. Many sellers have their properties priced much higher than recent comparable sales and have no intention of selling their home near those comparable values. They view prices on the rise and that they will eventually get their price.
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. Desirable properties that are price correctly are the ones that sell and churn through the system