Naples Real Estate Report Summer 2013

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Naples Real Estate Report – Summer 2013

The Naples real estate market can be very dynamic and complex at the best of times. The diversity of housing from multimillion dollar beach high rises, to very affordable two bedroom condos offers a wide array that is not present in other housing markets. Buyers will do best working with a Professional Realtor that has the local knowledge and analytics to find the best options and values for any type or price range.  Call Vito Bauer @ 239.777.7080 for your private and confidential real estate consultation.

In a nutshell:

  • 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.

Naples 2013 homes sales through July 31 were higher than any other similar time period in Naples history. Buyers that were sitting on the sidelines, waiting for prices to settle have realized that the real estate market is moving without them and once again they could be priced out from their dream of owning Naples home.

Naples Home Sales vs. Avg. Selling Price

Seven Month Period Ending July 31, 2013

           

The reason home sales are very strong, is that Naples 2013 real estate still remains very affordable. While the average sales price is up 14% in 2013, the average annual increase is just 1.4% since year 2000. On the other hand, demand is up 300% since 2000, on a much greater selection of home styles, quality and community’s.

Home price have risen for all Naples areas, and property types. Price increases can be seen particularly the most affordable neighborhoods. Even so, prices would have to rise 45% to match the average price at the peak in 2007, when demand was much less.

With the affordable real estate prices, high demand and low inventory, we could easily see the average home prices rising 12% to 18% over the next 12 months. If home prices were to increase 12% per year, it would take until sometime in year 2018 for price to match what they once were.

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 & 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 unrealistically low housing prices over the last few years.  Most of our real estate is still selling at 30%-50% discount to the pick prices of early 2007.  For the investors this translates to 60%-100% profit on most of the properties until they reach prices of 2007. A combination of low housing prices with the strong demand leaves current real estate market in Naples with record breaking home sales. No wonder when buying real estate in Naples, once again your biggest competition are investors flipping homes for profit.  We expect this trend to continue in 2014 season with new listings being priced higher until the market will reach its full value.  If you were thinking about buying your second home in Naples now is the best time to do so.  Call Vito directly at 239.777.7080.  Our service and advice and is always free for buyers.

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. This trend seems to continue.

Homes Selling for Under $200k as a % of Total Sales

Six Month Period Ending June

                                                             

Where is real money being invested?

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

No. of Transactions vs. Sales Values

Six Month Period Ending June 30, 2013

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. Cash purchases in Collier County increased 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

Six Month Period Ending June 30

                         

US and Foreign Cash flows into Naples Luxury properties

It is not just Naples lower priced homes selling for cash. There are a high percentage of cash buyers through all price ranges.  

For example, in 2013, 67% of buyers in the < $200k range purchased with cash vs. 30% in 2007 and in >$1million range 80% was purchased cash in 2013 vs. 62% in 2007.  One explanation could be recent multi-year uptrend in financial markets and as a consequence of diversification money is being parked in what represents good buy at a current valuation – the real estate.  Another explanation is slowly improving US economy in combination with possibility of inflation and non-existent interest in savings accounts that is making people to invest their cash in real estate.  After all money sitting under the mattress is subjected to inflation and constantly losing value.

Percent of Naples Cash Buyers by Price Range

Six Month Period Ending June 30

Naples Foreclosures

In 2009, Naples bank foreclosures and short sales represented 40% of all Naples home sales and nobody wanted to buy them. In 2013, distressed sales represent less than 20% of all sales and shrinking.  The investors are buying them so quickly that both bank owned properties and short sales have strict guidelines from the federal government now regulating the minimum listing period on the market before the investors can buy them.  This year in Naples a typical distressed property has multiple offers and is selling 3%-20% above the asking price. For more on buying short sales and distressed properties go to: http://bauerinternationalgroup.com/buyers/short-sales/

Distressed Sales as a Percentage of Total Sales

Six Month Periods Ending June 30

 

Area distressed sales were originally concentrated in neighborhoods with a high number of local working families such as Golden Gate Estates, Golden Gate City, Naples Park and Naples Manor. While properties in desirable second home communities had few distressed sales. Now with such a large reduction in distressed properties, local working neighborhood no longer make up the majority of distressed sales.

Foreclosures and short sales will continue to occur, but the large majority of them 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 what is 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, developers 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 what doubles the selection of just a year ago.

Please visit us at www.BauerInternationalGroup.com for more information about Naples real estate.  If you find this report informative and have benefited from Bauer International Group expertise, please forward this Naples Real Estate Report – Summer 2013 edition to your friends and recommend contacting Vito Bauer @ 239.777.7080 with any real estate needs in beautiful Naples Florida.

Vito Bauer – Principal Realtor “Trusted Source for Homes in Southwest Florida”

Cell: (239) 777-7080, email: Vito.Bauer@BauerInternationalGroup.com

 

 

BAUER INTERNATIONAL GROUP – YOUR LUXURY NAPLES FLORIDA HOME DESTINATION

CALL VITO FOR PRIVATE, CONFIDENTIAL AND FREE REAL ESTATE CONSULTATION

Cell: (239) 777-7080

Email: Vito.Bauer@BauerInternationalGroup.com