We round out 2012 in sunny Naples and the hot topic continues to be Inventory! Where is the inventory? We spent much of 2011 having plenty of properties to show prospective buyers and now many “new” resale properties are those that were taken off the market earlier this year and now are back, yet there is nothing new about them! On the flip side, motivated sellers have witnessed their properties go under contract in a blink of an eye.
The Highlights:
Our friends in the mortgage game speculate that the 30 year fixed rate will remain at historic low levels irrespective of the financial cliff side show that is giving everyone in Washington and on Wall Street a run for their money. Quantitative easing measures on behalf of the Federal Reserve could keep mortgage rates artificially low for at least the next 12 months. This forecast bodes well for a market such as Naples, Florida where seasonal and local buyers are poised to make a move. Many buyers have already moved illustrated by the following statistics:
The Naples Area Board of Realtors released the following data for November 2012:
– The overall median closed price increased 14 percent from $175,000 at the end of November 2011 to $200,000 for the 12-month period ending November 2012.
– Overall pending sales increased 20 percent in the $500,000 to $1 million category, from 960 units to 1,153 units, and increased 11 percent in the $1 million to $2 million category, from 429 units to 478 units, for the 12-month period ending November 2012.
– Overall inventory decreased by 15 percent, from 7,625 listed properties in November 2011 to 6,518 in November 2012.
– Naples coastal area overall pending sales increased 17 percent and closed sales increased 10 percent for the 12-month period ending November 2012.
The Takeaway:
Real estate in Naples is becoming scarce due to perception. There could be more properties on the market, but at time of press they are lacking. Sellers perceive that the best time to put their properties on the market is after the New Year, to coincide with the beginning of the “busy season”. Naples Meridian reported in early October that the “season” kicked off in September and since then we have witnessed the median price increase and inventory figures decrease.
Will we see prices drop once sellers decide to place their properties on the market?
We believe that there is more than enough pent up demand to absorb the influx of new properties that many are anxiously awaiting. Within our team at Naples Meridian there has been an overwhelming request for beach or bayside condominiums. Properties priced under $450,000 need to be renovated while available properties that have been renovated are priced from $650,000. This large gap in the market speaks to the lack of inventory and therefore scarcity exists in the mind of the buyer.
The Local Pulse:
Wes Kunkle, Managing Broker of Weichert, Realtors on the Gulf stated, “many buyers are coming down earlier than in past years and we are finding that they often prefer to go to contract before they return North for the holidays. In the past, they would leave and make a purchase decision after they went back up North. The tight inventory has resulted in a greater sense of urgency”.
Urgency and scarcity go hand in hand and when it comes to real estate, buyers in Naples may need to come to terms that the tide is turning. Sellers may be holding the cards in the New Year and buyers will need to get crafty if their New Year’s resolution includes home ownership!