By Robert Nardi
Homes in the Naples area were being sold at 99.1 percent of the list price in May. A tight inventory and buyer demand continued to push prices upward in May, which resulted in an overall median closed price increase of 29.4 percent to $433,500 from $335,000 in May 2020, according to the May 2021 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island). Broker analysts reviewing the report predict continued price increases in 2021 but noted monthly showing and sales activity is beginning to show signs of deceleration from the remarkable market experienced during the first quarter of 2021. Interestingly, the May Market Report showed the same number of list price increases for the month of May (247) as decreases (247).
Cash sales in May accounted for 58.4 percent of the closed sales transactions. The cash buyers continued to create challenges for competing buyers who required financing. It took an average of 90 days for a home to go from list to contract in May 2020, but in May 2021, the average days on the market was reduced to 43 days, a 52.2 percent decrease. Surprisingly enough, cash sales were not the only contributing factor to the drop in days on the market. Another factor was the 45 percent increase in showings for May (42,380 up from 29,319 in May 2020), which ultimately resulted in a 46.5 percent increase in pending sales for May to 1,710 pending sales from 1,167 pending sales in May 2020.
The May Market Report showed that overall closed sales increased 164.4 percent to 1,618 from 612 in May 2020 (a month when all the world was in COVID-19 lockdown). For perspective, closed sales increased 36 percent in May 2021 compared to May 2019 (a non-pandemic lockdown month). Nevertheless, closed sales activity in May 2021 outperformed any other May in the history of NABOR®’s market statistics reports.
The NABOR® May 2021 Market Report provide comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. NABOR® sales statistics are presented in chart format ( CLICK HERE ) for those that enjoy looking at all the statistics.
What does this all mean?
All I can say is, "Wow!" May 2021 was a spectacular month for real estate in Southwest Florida! If you purchased a home two years ago here, most likely in this market, it has gone up 30%. Demand continues to be strong; inventory continues to be low, and in economics, with the demand high and supply low, prices have gone up and will continue to go up. However, my thought is by the end of the year, prices will stabilize, and I believe we will be in a regular housing market here. Will prices go down? I do not think they will. I believe Southwest Florida has always been undervalued since the great recession starting at the end of 2005. Prices have slowly gone up over the years, but the psychological implications of the pandemic and the ability to work from home have accelerated the correction. How many times have you put off making a move over the years? With the pandemic rearing its ugly head at people, they took on an "It's either now or never" attitude, creating this strong demand. Therefore, as a Buyer or Seller, you should get all your ducks in a row before selling or purchasing.
The "do's" of navigating in this current housing market!
When searching for a property in Southwest Florida, make sure you have a pre-qualification or pre-approval letter as the Buyer. Cash continues to be king and if so, make sure you have proof of funds. The market right now is so tight that truly every minute counts with submitting an offer. If you present an out-of-date pre-qualification or pre-approval letter with your offer, it will put you in the back of the "offer" train. Think caboose! Instead, you want to be the engine that pulls the train! Also, I recommend that you shorten the acceptance time that the Seller must respond. Time is of the essence. As a Buyer, you want to put together and present the most attractive offer you can. I would shorten the inspection period as well. I would also recommend creating an "As Is" contract. You have the right to inspect, but if you find anything wrong with the property, you can cancel the contract and receive your escrow monies back.
If you are the Seller, I would require an up-to-date pre-qualification/pre-approval letter or proof of funds letter, or a cash account showing the amount of the offer. An "As Is" contract is also attractive because the Buyer indicates that you would not have to fix anything or provide a credit at closing to fix items. I would also think about shortening the closing period if it works better for you to do so. Lastly, if you as the Seller were in a multiple offer situation, I would always direct your REALTOR® to request "highest & best" generally the next day by noon.
If you consider downsizing into a rental apartment or condo, you may want to think about holding on to your currently owned property. Rental income is at an all-time high and there are also some tax advantages of owning a rental property. Furnished properties make for a great seasonal rental, and if it were unfurnished, it would make for the perfect annual rental. Please call my Rental Operations Manager, Corine Bordges at 239-206-6457. She can schedule a “look-see” and give you estimate of the amount of rental income you could receive.
Thinking about Selling?
If you are thinking about selling your property in Southwest Florida, I would be happy to assist you with a free Comparative Market Analysis (CMA). Just send an e-mail to Robert@NardiRealty.com . It will give you an idea of what to expect as a selling price in this escalating market.
Enjoy the rest of your summer! Stay safe & cool!