Naples Florida Real Estate Report

Naples August 2014 Housing Market Summary

The Naples real estate market is driven by second home buyers. And in 2014, second homes buyers drove Naples home sales to record levels:

  • The eight month period ending August 31, 2014 saw a record number of home sales.
  • Naples average home prices increased 13% through August 31, 2014 vs 2013 – but remain far below peak prices.
  • Inventory of homes listed for sale is at an 10 year low.
  • Builders are tripping over each other bringing new homes to market. Over a dozen new development began sales.
  • Sales of new construction is the highest since the 2005 housing bubble.
  • Foreclosures and Short Sales are at the lowest level since first being tracked.
  • Buyers have confidence that their equity is protected and are expecting future gains.

Naples Real Estate Sales

Naples  home sales for the eight month period ending August 31, 2014 increased 3% over the same period in 2014. The high number of homes sales over the recent years has greatly reduced the number of homes listed for sale.

Naples Florida Home Sales
Eight Month Period Ending August 31

Naples Home-Sales-Aug-2014

 

Naples Real Estate Prices

The average Naples home selling price for for the eight month period ending August 31, 2014 was 13% higher than the same period in 2013 and 30% higher than 2012.

Naples Florida Avg Home Selling Price
For the Eight Month Period Ending August 31

Naples-Home-Prices-August-2

The least expensive properties are always the least expensive and the most expensive properties are always the most expensive. Home prices in these groups had risen, fallen and rose again. For example, some of most affordable single family homes in the area are those homes built before 1990 in Naples Park, Naples Manor and Golden Gate neighborhoods. They are the most affordable now and the most affordable 10 years ago, but sales prices have changed over the years.

Avg Sales Price for Homes in Naples Park, Naples Manor and Golden Gate

Most-Affordable-Home-Pricin

In year 2005, the least expensive properties in the Naples area were not very affordable, with hardly anything available for less than $200k. After the bubble burst, and prices fell, homes selling for less than $200k, were the majority of the areas homes sales. Buyers jumped on these value at an incredible pace. Now with rising prices, the percent of homes selling for under $200k, as a percentage of total sales is falling.

Homes Selling for Less than $200k as % of Total Home Sold
For the Four Month Period Ending April 30

 Under-200k-April-2014

Home Sales in 2014 have ranged from a $25,000 condo, where the buyer also had to buy a $65,000 golf membership, up  to $12,000,000 for a tear down on Naples Bay (lot value). So very low sales and high sales can distort overall sales averages. Let’s look at the average sales price of Naples homes, by excluding 20% of the lowest selling homes and 20% of the highest selling homes.

Avg Price by Excluding the Lowest and Highest Selling Homes
For the Four Month Period Ending April 30

Middle-Priced-Sales-April-2

Every measure of sale data, shows that Naples is in a rising price environment. Let’s look at buyers buying the least expensive properties and those buying the most expensive. In 2011, 20% of buyers paid $93,000 or less for their home. In 2014 that minimum has increase to $145,000.

Avg Selling Price by Lowest and Highest Buyer Segments
For the Four Month Period Ending April 30

buyer-segments-April-2014

 

Naples Year 2013 Housing Market Update

Naples homes sales in 2013 were higher than any other year in Naples history.

Naples Florida Home Sales
Years 2000 to 2013

Sales yr 2013

Home sales remain very strong, as Naples real estate still remains very affordable. While the average home selling price is up 15% from 2012, home values would still need to increase by 61% to match the average selling price of year 2006.

Naples Florida Average Home Selling Price
Years 2002 to 2013

Naples Florida Avg Home Selling Price 2013

Because of strong demand, there has been a significant reduction in availability. Resulting in higher home values for all Naples areas, and property types. Particularly the most affordable neighborhoods.

With strong sales and higher values, the combined market value of Naples homes selling in year 2013 has increased significantly. The total market value of homes sold is up 21% in 2013 vs 2012, and 36% vs 2011.

Total Value of Homes Sold
Year 2011 to 2013

Naples Total Market VAlue

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 country, and they bottomed faster and harder. The Naples real estate pendulum swung back and forth with wider swings resulting in very low housing prices. A combination of low housing prices with the strong demand, leaves Naples with record breaking home sales.

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 as a percentage of total sales 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. Another indicator of rising prices.

Homes Selling for Under $200k as a % of Total Sales
Years 2002 to 2013

Naples Homes Sales Under $200k 2013

While 41% of Naples home sales currently are under $200,000, the average selling price for all homes sold in 2013  is $446,000. How can that be? While sales under $200k, account for 41% of sale transactions, they only account for 12% of the total sales values. Homes selling for over $1 million make up just 8% of total sales, but account for 42% of the total sales dollars.

Sales Transactions Vs Total Market Value
Year 2013

Percent of sales 2013

Increased prices is also indicated by looking at those buying the lowest priced homes and those buying Naples highest priced homes. In 2012, those 25% of buyers purchasing Naples least expensive homes paid under $118,000, compared to $145,000 in 2013. On the high end, those 25% of buyers purchasing Naples most expensive homes paid $377,000 or more in 2012 compared to $435,000 in 2013. The following chart shows this trend over the years.

The Top and Bottom 25% Segments of Naples Home Buyers
Years 2000 to 2013

quartiles Oct 2013

Naples Home Prices by Area

Generally, after the downturn, the more affordable an area became, the bigger the rebound in prices. For example, Golden Gate Estates, located in Naples outer eastern area, saw the average home price drop 63% between 2010 and 2005, but recovered 32% between 2013 and 2010. As far as trends, Olde Naples has been an exception with the average home price in 2013 being greater than 2005. Here is a sampling of communities and trends:

Change in Average Home Prices by Selected Communities
Years 2005 vs 2010 vs 2013
($ in thousands)

 Price Change By Area2

Naples Home Prices by Region

Naples has a wide diversity of housing options. From multimillion dollar homes on the beach and bays to single family homes located 30 miles away at a fraction of the cost. Generally, the further away from the beach the more affordable housing become. But there are development located miles away with large estate homes in the millions – such a Twin Eagles.

Naples Regions Map

The chart below shows how average home prices have changed within the regions shown above. Once again for the most part, those regions with the largest price drop had the better gains. The chart also helps to show how property values are the highest west of US41, and the next highest region is north and central Naples.

Change in Average Home Prices by Naples Regions
Years 2005 vs 2010 vs 2013
($ in thousands)

Avg Price by Region 2013

Home Prices West of I75

 

Those living west of Interstate 75 are either in the heart of everything Naples has to offer or not far from it. The City of Naples has the highest property values in the area, but there are also other affluent neighborhood or beach areas with home values commonly over $1 million.

Areas West of I75

The average price of a single family home in the City (green area) is $2.1 million vs $1.5 million in other affluent neighborhoods west of I75. Property values overall average $1.2 million in the City.

Average Property Values West of I75

City of Naples Avg Prices a

You can further see the range of selling prices west of I75, by breaking homes sales into segments. The chart below averages the selling price of the lowest price home to the highest priced homes, within 25% of the selling segments. For example, in the City of Naples the top paying 25% of buyers average $3.1 million vs an average of $480k for the top group in the Other area.

Average Selling Price of the Lowest Price to Highest Priced Homes

Average Selling Price Naples Segments

 

 

List Price vs Selling Price

Buyers often wonder how much they can expect to pay off of list price. As Naples is an increasing price market, buyers can expect to pay near or slightly above recent comparable sales. Of course many sellers want a lot more than that, and those homes don’t get sold.

Overall, for those homes that actually get sold, the selling price has been 6% less than asking price. But can range from paying above list price to over 15% below.

The average can not be applied as a measure of what a listed home should sell for, only closed comparables can. Some homes are aggressively priced to sell and others are priced in the stratosphere and will not sell. While the average discount is 6%, discounts are all over the board based on how correctly the property is listed.

Amount of Discount Off of List Price

discount from list price 2013 a

For example, 30% of buyers that bought a home listed for less than $200,000, had a discount of less than 3%.

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 Using Cash

Even with record sales numbers and low mortgage rates, buyers for the most part are skipping mortgages and paying cash. The percentage of cash buyers is double what it was during the bubble. There were more cash buyers in 2012 and 2013 than total buyers in 2011. Why such a high percentage of cash buyers?

  • Appealing home prices
  • High concentration of second home buyers, that can afford to pay cash
  • Investors preferring cash

Percent of Buyers Purchase Homes with Cash
Years 2003 to 2013

Cash Buyers 2013

The Amount of Naples New Construction Will Melt Your Mind

New housing development in Naples for a period of years was very limited, consisting mostly of developments that started right before the housing collapse. Those developments under construction by large home builder survived, the small and medium size home builders failed. In the last year or so, those that failed got swooped up by the big boys. Such as Lennar Homes purchasing the failed Treviso Bay – More Here.

Here are Naples new construction options going into 2014:

  • Large developments that have been building for many years – such as the Vineyards
  • Developments that started before the housing slump and survived – such as the Quarry.
  • Developments that failed and have been taken over by a new builder – such as Twin Eagles
  • Developments that have just recently launched in the last year or so – such as Riverstone
  • Developments that have been pushing dirt around in 2013, in preparation for selling homes in 2014 – such as the Esplanade Country Club. Developments in this group will have more new construction offerings than all the others listed above combined.

Naples Foreclosures

At one time Naples bank foreclosures and Naples short sales represented 45% of all Naples home sales. Now, distressed sales represent less than 20% of all sales, and both bank owned properties and short sales continue to make up a smaller percentage of sales.

Distressed Sales as a Percentage of Total Sales
2009 to 2013

Foreclosure Percent of Sales

Naples distressed sales were originally concentrated in neighborhoods with a high number of local working families. Such as Golden Gate Estates (outer area), 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 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

Months SupplyThe 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 6 months in total. And less than a 4 month supply for homes listed under $200k.

The real supply of homes available is actually less than a 6 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. Desirable properties that are price correctly are the ones that sell and churn through the system

As discussed above in the New Construction section, because of the low resale availability, developer 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. Double the selection of just a year ago.

Buying Advice

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 not present in many housing market. Buyers will do best working with an agent that has the local knowledge and analytics to find the best options and values for any type or price range.

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