NAPLES REAL ESTATE MARKET 1ST QUARTER 2023
As we move out of two and half years of one of the most dynamic luxury real estate markets and transition into a new cycle, the market today is stable. There is still an underlying apprehension as to what 2023 will bring, especially as we near the end of the normal Naples “season .” Most news regarding the housing market is taken at a national level, which doesn’t paint a complete picture of the market in Southwest Florida. The devastating impact of Hurricane Ian slowed demand slightly near the end of the year, but tourism has picked up in the last few weeks, and much can be answered with the following information.
WHAT NUMBERS SHOULD WE COMPARE TO?
Homeowners need to compare to years that we experienced a normal real estate market. Not what has transpired in the last two years, with people flocking to Florida during the Pandemic. When home prices skyrocketed over 75% since January 2020. December 2019 to March 2020 would be the realistic real estate market to compare too. Those market stat levels should be monitored rather than year-over-year projections from the past two years. When comparing the market, look at the original list price vs the actual sale price …
– Dec 2019-Feb 2020 homeowners received 97% of the list price.
– Dec 2020-Feb 2021 homeowners received 98% of the list price.
– Dec 2021-Feb 2022 homeowners received 104% of the list price.
– Dec 2022-Feb2023 homeowners received 95% of the list price.
Florida Realtors® Chief Economist Dr. Brad O’Connor. “We expect the state’s residential real estate market to return to a more typical pace,” O’Connor told the audience at the 2023 Florida Real Estate Trends summit. “I believe 2023 will look more like the ‘traditional’ housing market year.
PRICES WILL RELAX, BUT NOT PLUMMET
If you’re waiting for the Naples housing market to crash, you’ll be waiting for a while (like, probably forever). That’s because, for housing prices to plummet, inventory has to go way up. Are inventory levels up? Yes, but not as much as you think. When going from ZERO inventory, anything above zero is going to be noticeable. In the category of home sales priced above $2 million, the inventory is showing a 3.3-month supply for February 2023. In February of 2022, it was a 1 month supply. But in February 2020, it was considered a balanced market with a 6.6-month supply of inventory. Inventory levels are still below historic norms, and demand for desirable properties remains relatively stable. In Fact Naples is still considered the top median home price. Even ahead of Palm Beach.
- Markets with the Highest Median Sales Price: Aspen ($12,350,000), Whistler ($5,100,000), Naples ($4,550,000), and Telluride ($4,250,000).
And we aren’t the only ones to recognize Naples as the most desirable place to live. Scholaroo, a nonprofit educational research company and scholarship website engine, has released its list of the best U.S. cities to live in 2023, and Naples, Florida was No. 1.
OUR OBSERVATIONS SO FAR IN 2023.
– Inventory has increased.
– Buyers have time to look and take their time. It is not the mad frenzy pace of last season.
– Sellers are not receiving multiple bids. From January to April 2022 the majority of properties listed received multiple bids. By August of 2022, multiple offers on a listing had all but disssapered.
– In 2023 multiple bids are non existent.
– When homes are priced correctly based on TODAYS numbers seller’s should expect to still receive 98-100% of their asking price.
– The Average Days on market has increased. In some price categories the average days have doubled.
– The negative to the market are those seller’s not being realistic on today’s market and pricing.
– The homes sit longer and affect all those listings around them. (Pending sales in Naples were up in February over December of 2022. But that could have been due to the 1175 homes that took price reductions in January. Which brought the overall percent of current list price value down to 95%)
– We have seen huge price reductions in the multi million dollar category. Example: A Bay Colony unit was priced 20% over the last sale July 2022 in the same building. That would have been correct based on the market conditions in 2022. Not the case anymore. That listing took a $300,000 price reduction after 30 days. And another $300,000 reduction 30 days later. It finally went pending well below the last sale price that occurred in July 2022, and was on the market for over 100 days.
THE TAKE AWAY….ITS STILL A GREAT MARKET!
The days of a yearly 40% price increase are over. Seller’s need to be realistic with today’s market, which is still a seller’s market but closing in on a balanced market. Homes and condos that are priced competitively will still sell quickly and for close to 100% of asking price.