When chatter about the Naples Florida's real estate market bottoming out began last fall my first thought was relief! Hey, it's been a challenge the last few years and if you know anything about our area, you'll know that our market was one of the first to crater before all of the others began to slow largely due to the wild appreciation we saw the few years before.
Naples is a crazy real estate market. I've had trouble watching the appreciation race to the top and sat in awe as I watched prices fall to amazing lows. Following the trends here is certainly not for the weak at heart or for those who think they can pop in every few months and really understand it. A pivotal point for me happened one day about a year or so after I moved down when I was leaving my office for an appointment. I noticed a younger couple staring at a map of Collier County on a wall. The lady commented quietly to her husband, "
I can't believe there's not one house on this whole map we can afford". Continuing to my car in an effort to be timely, I couldn't help but think about what she said. My husband and I had barely eaaked into Naples back in 2002. That easily could've been us had we not been able to purchase when we did. Not too long after, the biggest real estate topic was the shortage of affordable housing. Not too long after that our market slowed and front page "affordable housing" news flashes on the Naples Daily News website were replaced with captions like the Naples real estate market is in the toilet.
Even more interesting than the numbers are the behaviors that arise during these crazy market shifts. One of the aspects about real estate I enjoy is the actual job is never the same. Everything trends! This includes property type performance and attitudes among buyers and sellers. While attending an economic presentation this Spring by
Hank Fishkind and Associates and came across a graph I think gives a very interesting and informative perspective:
If you consider the behaviors of buyers, sellers and agents in a market, they can tell you a TON about the current real estate market trend. When I came to town back in 2002 we were just coming off a slump mostly created by the effects of 9/11. The attitude of the agents and property owners here was very much in the Despondency phase shown in the graph. Although the 2003 season was unlike anything I had personally seen, the market as a whole fell somewhat flat that year but it quickly changed shortly after. Next was Depression to Hope then Relief...then Optimism hit. By the time Excitement and Thrill came, all hell broke lose and I found my hardest job in real estate was trying to explain to people that they were overpaying for property. They didn't care, they just wanted to get the deal done.
According to the graph above, Fishkind and Associates thinks the Naples market is in the Capitulation/Despondency phase. Based on everything I'm seeing and hearing, I completely agree when it comes to the luxury market (properties listed for over 1 million and luxury locations like Olde Naples, Pelican Bay and Port Royal). But when it comes to the lowest end market (properties listed for $400,000 and less) it has taken another serious turn towards the positive.
For example, over 80% of the product selling right now is in the $400,000 and less price range. Chatter around town is of well priced properties in those price ranges selling within hours of hitting the market and seeing multiple offers. This isn't on just one deal...it's happening repetitively and often. What's more curious is much of this contract activity is happening on a cash basis.
Investors are getting back in the game.
One point has remained the same during my 13 years in the business. It is a fact anytime there's a new real estate trend, lowest priced properties start selling first, then traffic increases to medium priced properties and lastly the most expensive properties begin to move. At the end of a real estate trend, lowest priced properties are dead, medium priced property activity is dying fast and highest priced properties perform best.
Inventories are very high right now in areas like Pelican Bay, Park Shore, Bay Colony, Olde Naples and Port Royal and although traffic isn't at a dead stop it's very light. There are also some AMAZING prices out there.
What's next? I have a suspicion that those folks at Fishkind and Associates know what they're talking about. Based on their findings and what I'm seeing and hearing everyday on the street, I'd have to say I'm personally at the Hope stage. There's too many signs pointing to new life.
This means:
If you are a buyer looking at property under $500,000 and you want a deal: You need to not move swiftly. Deals are out there but you are not alone. Cash is king but you are not the only cash buyer so don't expect to use that as your only advantage if competing. Attempting to negotiate heavily off best priced properties in the best locations will help you lose your deal. I wouldn't encourage you to muddy your offer with difficult terms and I would focus more on the property than trendy keywords like short sale and foreclosure. There are still alot of end users out there willing to sell for less. This will take a great deal of hassle out of your mission.
If you are a buyer looking at property between $500,000 and $1,000,000 and you want a deal: You don't have to move as fast but be diligent. This price range is next to heat up. Your best negotiation stance is
now. If I were you, I wouldn't wait til next season. Cash is king but you are not alone. You may have a better shot at negotiating on properties in this price range as traffic is not as heavy.
If you are a buyer looking at property between $1,000,000 and $3,000,000 and you want a deal: There has been alot of traffic from buyers who are making low offers with the idea that the market is going to come down even more. Many sellers are not interested in selling at huge unfounded discounts although a small percentage will. If you are interested in purchasing at current market value, now is your time to get in the game.
If you are a buyer looking at property between $3,000,000 and above and you want a deal: You are in a great negotiating spot due to the fact that there is probably more time to go before this market heats up again. Keep in mind if you are looking for the best deal, you are looking for the seller who wants out now compared to those who have no urgency in selling. There have been some tremendous negotiations in areas like Port Royal and inventories are high. Now is the time!
Central A/C
