Will the Naples Real Estate Market Crash Again?
Recently I met with a couple who debated whether they should list their home for sale now or wait until the winter season when the tourists and snow birds arrive. I’m always curious to know why people want to move so I asked, “Why do you want to wait?”
Their answer surprised me.
“We’re hearing all over the place that the market is a little slow right now. Hopefully it will pick up again during the season. We’ll definitely have more buyers in town during winter than we do now.”
I don’t disagree that there are physically more buyers in Naples during the winter than there are now. And yes, many more people will put their home up for sale in the winter, too. This leads to one potential problem.
There will also be more competition among sellers to attract buyers during the season.
As for the Naples market being slow, that’s a different story. Are we experiencing a shift in the market? Possibly.
Real Estate Cycles
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When we start talking about real estate, there is one fact you need to know. The real estate market, no matter where you live, is cyclical. It’s either a buyer’s market or a seller’s market without much in between. Personally, I don’t think a market can be balanced or even. One side always has the advantage to some degree.
Look back a few years, and you’ll see this is true. Who can forget the wild party years of 2002 to 2005? Prices soared and many of us thought they would never come down. Think back to 2006, and after, and we found out just how quickly and how much real estate prices can drop.
By the time buyers were willing to come back to the market in 2009, 2010, and 2011, they had almost too much to choose from; they also had control of prices. Sellers had to be willing to negotiate or their home would never sell. Buyers got great deals as a result.
By the end of 2012 and into 2013, inventory began to dry up. When a home hit the market, sellers had the advantage and began to field multiple offers. As a result, prices went back up. Thankfully, builders have returned to the market and are filling in the inventory gap with new construction.
Inventory is on the Rise
Now here we are in 2016, and the cycle has changed again. Inventory is increasing again which means buyers will begin to have more choices.
Builders are building on every corner of available space, or making space to build something new.
Homeowners that were waiting for the prices to go up are listing their properties.
Investors who bought cheap foreclosures and rented them out now want a return on their investment and are looking to sell instead of renewing leases.
All of this increases the inventory levels at different price points. If the trend continues, the advantage will go to the buyer again. They’ll have their pick of properties. Sellers who try to get top dollar for their property may find themselves disappointed or forced to accept lower offers.
International Buyers Look Elsewhere
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For years, especially during the downturn, the south Florida market was hot, hot, hot for international buyers. Properties were so inexpensive and the exchange rate was so favorable that plenty of international buyers and investors scooped up available properties. The high end market soared.
Now, the luxury housing markets that were believed to be immune to housing crashes are feeling the hit. The Hamptons in New York, Aspen in Colorado, and even our very own Miami luxury markets have been affected. While you may not be selling a $10 million property, the lack of these high dollar buyers does impact the entire market.
Supply and Demand
Real estate is all about supply and demand. There are two numbers to watch to get an idea of what the Naples real estate market is doing:
Number of homes coming to the market (listings)
Number of homes going under contract (pending)
Take a look at this graph, provided by the Naples Board of Realtors.
In the second quarter of 2016, pending sales were down 11 percent and 14 percent fewer sales closed. At the same time, inventory increased by a staggering 35 percent when compared to last year.
How is that possible? Buyers have more choices, and if they’re not in a hurry, they’ll wait for the right property or price. At the same time, the listings that have stayed on the market for months, and sometimes years, are still there. Inventory goes up but sales fall. Buyers aren’t seeing what they want, or they aren’t finding it at a price they’re willing to pay.
What About the Election?
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Yes, an election year can impact real estate. People become unsure and uneasy of what will happen once the results are in. Regardless of the outcome in November, the Naples market will still have inventory to deal with, buyers who want a new home, and sellers looking to move. Now that the inventory is going up, it’s going to take time to work through it all.
What Does This Mean to You as a Potential Seller?
If you’ve been waiting to sell your home until prices increased and you finally had equity again, that time has arrived. We’re in a window of opportunity right now. The Naples real estate market is still in a seller’s market, but it’s transitioning to a buyer’s market. Once more homeowners and sellers arrive in town from the north, the seller’s market may be a distant memory for a while.
Don’t wait until the season gets here to sell your home. By the time the colder months arrive, you’ll find yourself competing with a dozen or more properties just like yours. Yes, winter brings more people, but other homeowners are thinking what you’re thinking right now. Listing your property now means you’ll only compete with two or three other sellers. Believe me, people who are interested in buying begin looking months before they make an offer, and new buyers are always moving to the area.
When your home is priced right and ready to sell, you attract buyers. Why wait until there are more properties for them to choose from? Those buyers will become much more demanding once they realize they can take their pick of homes. Your home may sit on the market longer than you want or you may be forced to take a lower offer just to move it.
Now is the time to list your property.
The reality is that not every community is the same. If you’re considering selling your home in the upcoming season, let’s talk now and discuss what’s happening in your micro market, your community, and your subdivision.
Contact us today! We’re an email or phone call away.