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It’s a confusing time with mixed messages from the market, allowing for various narratives—ranging from armageddon to a healthy recovery. Many realtors and economists are choosing their own interpretations. What we know for sure is that the Naples market is not reflective of the national market. There’s no simple answer to what’s happening, just the data: New listings are up significantly, and sales are lagging.

YES THE MARKET HAS COOLED! 

BUT are we looking at another 2007/2008 housing bust? All indicators and experts say NO!!!!!  One main reason: The pandemic triggered a one-time shift in relative demand for housing in many areas, affecting home prices over several years. Bank of America analysts noted that this shift is unlikely to reverse. They emphasized that the current home price appreciation is driven by demand fundamentals rather than speculative excess, which was a significant factor in the housing boom preceding the 2007-09 recession.

NAPLES IS NOT THE NATIONAL MARKET…….

One key difference in the Naples real estate market is that 99% of buyers purchase property here because they want to, not because they’re relocating for job opportunities. Additionally, Naples is predominantly a destination for second home buyers. Who wouldn’t want to own a home in a city voted the best place to live in the United States? In fact, 90% of sales are to second homebuyers or retirees. This dynamic means that sellers are not in a hurry to sell and are unlikely to accept low offers. Similarly, second homebuyers are not in a rush to buy; they have the luxury of time to wait until they find exactly what they want. This scenario creates a unique market environment, especially during an election year.

IMPACT OF ECONOMIC UNCERTAINTY ON SECOND HOME BUYERS.

The current national economic uncertainty is significantly influencing the behavior of second home buyers. Factors such as the upcoming election, inflation, fluctuating mortgage rates, and volatile stock markets are creating a climate of caution among potential buyers. The upcoming election has the potential to impact the luxury home buying market considerably. As the election approaches, luxury home buyers are likely to closely monitor political developments and market conditions to make informed decisions about their investments.

Historical data shows that in past election years, real estate transactions have slowed down in the season leading up to the November election. Specifically, data indicates a 9.8% to 15% dip in transactions compared to non-presidential election years.

CONDO MARKET IN NAPLES

New laws are affecting sales in the condo market in Florida.

The structural integrity reserve law mandates that all Florida condominiums three stories and higher and 25 to 30 years old undergo a milestone inspection. The results guide the maintenance of financial reserves for future upkeep and repairs. This will necessitate mandatory costly assessments on current and future owners, contributing to buyers’ hesitancy to purchase condos before the end of the year. Fortunately, this law does not apply to Kalea Bay. However, we continue to have to educate buyers about why the new law will not affect those purchasing units in newer buildings.

HERE ARE THE CURRENT STATS FOR NAPLES 

OVERALL MARKET PERFORMACE:

  • Total closed sales for single-family and condo properties across all price ranges have decreased by 12% compared to this time last year.

CONDO SALES:

  • Overall condo inventory is up 109% from last year.
  • Pending listings have decreased by 11%.
  • New listings have increased by 20%.
  • Properties on the market have increased by 45%.

IN THE $3 MILLION AND UP 

  • In the $5 million and above category, overall days on the market have increased by 88%.
  • In the $3 million to $5 million range, days on the market have increased by 50%.
  • Inventory for condos priced between $2.5 million and $5 million has increased by 66%.
  • Inventory for condos priced above $5 million has increased by 98%.

NORTH NAPLES CONDO MARKET

  • New listings have increased by 20%.
  • The average closing price has decreased by 4.5%.

WHAT DOES ALL THIS MEAN?

If someone wants a second home in Naples and intends to buy they may decide to hold off right now,  but that doesn’t mean they won’t eventually buy, so those transactions are not lost but rather delayed.

  • Historically home sales have gone up months after an election year in 10 of the last 11 elections cycles.
  • Until there is a clearer picture of economic stability, these buyers are likely to remain on the fence, prioritizing financial security over the acquisition of additional property.It’s just a dip, there is a silver lining, we just need to patient.

    NAPLES IS STILL THE NUBMER ONE PLACE TO LIVE AND THAT HAS NOT CHANGED.

    Looking to sell and need advice? We are the Kalea Bay experts.