naples real estate

PAST, PRESENT, AND FUTURE

The following history and comments refer exclusively to Naples, coastal Collier County, Bonita Bay, and southern Lee County. Fort Myers and areas to the north are not included as they are different markets.

MARKET PRIOR TO 2007

Naples grew from a quiet and charming community of about 6,000 residents in the 1950s to a metropolitan area with over 300,000 residents today. In this time period, it retained its charm while becoming a more cosmopolitan and sophisticated community. (See NAPLES TODAY on this website).

As it grew, the value of residential properties increased at an appreciation rate of 10 to 20 percent per year – some years more, some years less.

In 2003 speculators arrived, often paying full price or more for listed properties. Many of these speculators favored projects scheduled to be built by developers and sold at pre-construction prices. It produced a buying frenzy with appreciation rates that increased dramatically, generally in the 20 to 50 per cent per year range. It was an unrealistic market that could not be sustained.

Speculators who invested early and sold (flipped) their properties by mid 2005, did very well. Those who bought pre-construction in late 2004 or in early 2005 were faced with closing on their completed unit(s) in late 2005. They were then competing with others who were simultaneously trying to sell their properties. Suddenly, there was an excess of inventory on the market.

Because of excess inventory, prices leveled off, and many cases declined. The market was taking a breather.

CURRENT MARKET CONDITIONS

Much of what has been published by the national media about the Naples real estate market tells only part of the story. While it is true that the market is slow, and home prices have declined from their 2005 peaks, the reports do not take into account relevant facts that distinguish Naples from other market areas.

Naples is primarily a second home/retirement/resort community. It also differs in that it is virtually immune from localized employment fluctuations that govern the economy and real estate markets elsewhere. In addition, it is less sensitive to mortgage interest rates, as many home purchases are cash sales.

National media reports also fail to recognize micro markets such as specific neighborhoods, building types, and price ranges that may be moving in the opposite direction. This dichotomy is particularly evident in the Naples area.

For example, the lower priced segment of the market is where most of the speculative buying in 2004 and 2005 occurred, resulting in much of the excess inventory when the bubble broke. It is also the most sensitive to mortgage financing and economic conditions elsewhere. Home prices in this sector appear to have reached their low point, although prices are still very negotiable where sellers are facing foreclosure, or are otherwise in pain.

The higher priced segment of the market has been far less affected by these factors. Those with wealth, seeking a second home in a warm winter climate, are not allowing temporary market conditions to deter them. Home prices and sales in this segment of the market are holding fairly steady.

Knowing what is happening in specific segments can best be obtained by consulting a knowledgeable local realtor. Call me at 239-404-0433 if you would like to discuss these matters in detail.

Two highly respected real estate authorities have recently opined:

“If you are thinking of buying a house, there’s probably not much to be gained by holding out at this point. It doesn’t look like prices are going to fall anymore.”
Wayne Archer, Director of the University of Florida’s Bergstrom Center for Real Estate Studies.

“Existing home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines.” Lawrence Yun, Ph.D., NAR Senior Economist and one of the most eminent real estate analysts in the Country.

Dr. Yun, referencing numerous statistics, graphs, and charts, stated in a recent speech before the Naples Area Board of Realtors (NABOR) that the impact on the local real estate market was “due to a lack of confidence, not necessarily due to the lack of financial wherewithal. But with the pent-up demand accumulating, it is just a matter of time before it is unleashed onto the market.”

He also believes that “by early 2008, the decline in the local real estate market will reverse, however, not to the peak levels that had the market aflutter in recent years.”

MARKET IN THE NEAR AND LONG TERM

Those of us who have studied the Naples market agree that there will still be an imbalance of sellers/buyers in the year 2008; however, prices are likely to edge upward as more buyers take advantage of this buyer’s market.

Foreign buyers, traditionally those from Canada, Great Britain, Germany, and South America, are expected to return to the Naples market with the incentive of a favorable exchange rate.

Of the many reasons for an optimistic outlook on Naples’ future, the most significant is that affluent baby boomers now reaching the peak of their earnings, and perhaps recipients of in heritance, are buying their place in the sun, now, before prices become much higher by the time they are ready for full retirement.

Consequently, demand is expected to remain strong, but developable land is diminishing due to restrictions that limit the encroachment on panther habitat and other preserve areas in eastern Collier and Lee Counties. With increasing demand, increasing construction costs, and diminishing supply of available land, overall prices are destined to increase.

If you would like detailed information about specific neighborhoods in the Naples area, or other real estate advice, call me at 239 404-0433. You can be assured of complete confidentiality, and that you will not be targeted with sales messages such as “JUST LISTED” announcements. As a matter of fact, we never take listings, or represent sellers, as explained on the SERVICES PAGE.