By Robert Nardi
Data reflecting the Naples area housing market activity during June showed signs of a return to pre-pandemic summer activity when market conditions were balanced. According to the June 2022 Market Report by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), pending sales decreased 36.8 percent in June to 794 pending sales from 1,236 pending sales in June 2021. In addition, closed sales fell 38.4 percent in June to 952 closed sales from 1,545 closed in June 2021. On the positive side, an 80.5 percent increase in inventory during June to 2,294 properties from 1,271 properties in June 2021 should spark sales. With 2.2 months of inventory available in June (up from .8 months in December 2021), the journey back to a balanced market is starting to take place. In addition, nearly 50 percent of our inventory this past June had a price reduction. These price reductions should be viewed as new listings because the newly lowered price is now attractive to a larger pool of buyers. Thus, there are more opportunities available for home buyers.
The NABOR® June 2022 Market Report compares single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. In addition, NABOR® sales statistics are presented in chart format ( CLICK HERE ) for those that would like to see all the statistics.
Median closed prices in June increased 31.8 percent to $604,000 from $458,281 in June 2021, but median closed prices for single-family homes decreased 7.7 percent to $750,000 in June from $812,500 in May. Conversely, median closed prices for condominiums in June increased 2.5 percent to $497,000 from $485,000 in May.
What does this all mean?
If you live in Naples all year round, you will notice that restaurants have fewer patrons this summer because fewer people are here. Why? Because with COVID restrictions lifted, there is no immediate need to get down to Florida to live a “normal” life. During the beginning COVID years, even people who owned here stayed throughout the summer. They were hoping that their state would lift the mask mandate, etc. Therefore, fewer people are down here, and thus, there is less demand. Also, for two years, Florida was a preferred vacation area. All states have lifted the mask mandate and opened up. Therefore, tourists are going to other vacation areas within the United States of America and abroad.
International travel has increased, and it appears many are enjoying Europe or domestic travel like Alaska, which seems very popular. On the upswing, international travel is making its way back slowly to Naples.
Add to the mix higher mortgage rates, worries about a possible recession, an ailing stock market, and inflation all contribute to demand tapering off. When demand lessens, inventory increases, and prices decrease. However, the price decreases I am seeing are minimal, not drastic. I still believe that these slightly lower prices will be more attractive to buyers, but we will not have the debacle of the great recession of 2005.
Rentals are still in high demand!
If you are a senior and decided to live in an independent living facility instead of just selling your home outright, it may be a good time to rent it annually. Especially if you have a single-family home with a pool, it is the most sought-after rental that we have in our inventory. Annual rent could be anywhere from $4500 and up, depending on the condition, location and amenities offered. Also, moving your home from your homesteaded domicile to a rental can provide quite a few tax advantages. You may want to discuss it with a real estate attorney or accountant.
What does the future hold?
Our inventory is going up, and I believe we will have a market where supply and demand will be in equilibrium over the next two years. The economy will be more robust, and inflation will taper off, and once inflation is under control, then mortgage interest rates will come down. Therefore, even if you are buying today at a higher mortgage interest rate, you can always refinance in the proceeding years once the interest rates come down.
Lastly, Southwest Florida is still attractive to buyers and always will be. The weather, beaches, low real estate taxes, no state tax, highly rated hospitals, and an overall strong economy. By the way, Collier County has the lowest real estate taxes in Florida. 1.25% plus if you homestead, you get an additional $650 deducted from your tax bill at the end of the year. What’s not to love?
Enjoy the rest of your summer! Before you know it, Fall will be upon us!