Location and Inventory

By Robert Nardi

The Naples real estate market enjoyed another month of increased home values driven mainly by another month of below-typical inventory levels. According to the area's top real estate brokers, resale home inventory in Naples this year will unlikely spike to levels we enjoyed before the pandemic. However, since 2019, the number of new listings has remained consistent, with most months enjoying an average of between 1,100 and 1,300 new listings. According to the April 2023 Market Report by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), some findings are:

  • Overall inventory increased 64.4 percent to 2,868 homes for sale from 1,745 homes for sale in April 2022.
  • The median closed price for single-family homes increased 3.1 percent to $825,000 from $800,000 in April 2022.
  • Within the condominium market, the median closed price increased 14.3 percent to $526,000 from $460,000 in April 2022.
  • New listings decreased 25 percent to 1,116 new listings from 1,488 new listings in April 2022.

If you wish to see all the statistics, the NABOR® April 2023 Market Report provides price ranges and geographic segmentation and includes an overall market summary in a chart format ( CLICK HERE).

What does this all mean?

Higher mortgage interest rates are slowing property sales in Naples because:
 

  • Home buyers are forced out of the market because they cannot qualify for the loan because of the added expense of a larger monthly payment.
  • Buyers who wish to purchase Naples’ properties have their homes up for sale in other states but face challenges of selling quickly because of fewer qualified buyers.
  • On the selling side in Naples, higher interest rates prevent prospective sellers with a lower interest rate from selling. Sitting on the fence slows the replenishment of inventory and lessons purchasing simultaneously.

In contrast, if you own in Naples, the good news is that your property has typically doubled in value since 2019, providing sellers with a nice profit for their next home purchase. With a hefty down payment, these sellers can minimize their next home's mortgage obligation to make monthly payments affordable, even at a higher interest rate.

Location and Inventory

I moved to Naples 21 years ago, and at the time, all my REALTOR® would tell me is, "You want to be West of 41, nearest to the beach." Apparently, at the time, it was very much in demand. Then in 2004, we had Hurricane Charlie, then in 2005 Wilma, then in 2017 Irma, and then in 2022, finally Ian! When reviewing Naples's inventory, properties off the water and east of 75 are in demand. Of course, after Ian, people are concerned about the storm surge. In addition, a majority of property West of 41 is in a flood zone which would require you to purchase flood insurance if you have a mortgage.

A great example was in January 2019, the neighborhood of Port Royal had 1.3 years of inventory; today, it has 1.3 years. But in January 2019, the Vineyards had ten months of inventory; today, it has less than a month. Even in areas east of Collier Boulevard (SR 951), there are less than four months of inventory.

Some Advice for Buyers

When purchasing a single-family home in Naples, please do your homework. Know the areas you wish to live in and then research a home's insurance and utility costs. In addition, if the property is part of a Homeowners' Association (HOA), verify all paid assessments for Hurricane Ian and, if any, are still coming from the HOA. Lastly, try to get the listed home's Sellers Disclosure which tells you the age of items like the cooling and heating systems, water heater, and roof. Roof age is most important. Many insurance carriers will not insure if a roof is 20 years or older. In the past, an insurance carrier would not issue a homeowner's policy if a roof inspection revealed structural or age issues. However, the new homeowner could sign an affidavit stating they would put on a new roof within a designated time post-closing. Insurance carriers would then insure the property. However, this is no longer an option. As the purchaser, you would have to look for a third-party insurance carrier, i.e., Lloyds of London, to insure your home. Generally, when this occurs, your home insurance would typically double in price.

With a condominium purchase, you would follow the same type of investigation for a single-family home. However, the most significant difference is roof age. Generally, the condominium's structure is managed/maintained by the association. So having a roof over 20 years old would not affect the purchase. However, I would review the association's budget and make sure they have a line item for roof replacement with sufficient balance.

Now more than ever, do your due diligence before purchasing property!

Questions? Please feel free to call me at 239-293-3592 or via e-mail  Robert@NardiRealty.com.