Price Climb Slows as Inventory Heats Up for Summer
Naples, Fla. (June 28, 2024) – As competition grows in the Naples housing market – overall inventory increased 67.1 percent in May to 5,019 properties from 3,004 properties in May 2023 – monthly closed sales for the month decreased 12.2 percent to 907 closed sales from 1,033 closed sales in May 2023. We are closely monitoring the number of monthly price decreases to see whether it could turn the tide and improve sales this summer. One thing was certain in the May Market Report: summer buyers will have many more options than winter buyers.
New listings during May increased 18.4 percent to 1,201 new listings from 1,014 new listings in May 2023. Price reductions have signaled that sellers are recognizing the current market cannot sustain aspirational pricing, which will benefit our market moving forward.
In addition to 1,710 price decreases reported in May, the median closed price was $650,000, the same as the median closed price reported in April, which enjoyed 2,365 price decreases. Comparatively, the median closed price increased 8.3 percent to $650,000 from $600,000 in May 2023.
Another benefit of rising inventory and list price decreases has been the rise in the number of properties for sale in the lower end of the market. For May, properties in the $300,000 and below price category increased 104 percent to 308 from 151 in May 2023. Similarly, properties for sale in the $300,000 to $500,000 price category increased 90.1 percent to 1,032 from 543 in May 2023.
Qualifying Obstacles
We recognize the many challenges facing home buyers today. In addition to record-high home prices, which have increased 83 percent (month/month) since 2019, buyers are having a difficult time qualifying for loans.
A Different Seller/Buyer Dynamic
Unlike other cities in the U.S. where home sales are driven by people relocating for work, Naples has always been a lifestyle destination. Naples attracts a unique blend of sellers and buyers, with a significant portion of our sales involving second home purchases. Consequently, these sellers are typically not under pressure to sell quickly or worry about losing a potential buyer. Similarly, buyers in this market often have the luxury of time and financial resources to wait until they find precisely what they desire, without feeling rushed to make a purchase.
Another challenge for buyers and sellers in Naples during 2024, and across Florida, will be condominium sales. The structural integrity reserve law requires all Florida condominiums three stories and higher and 25 to 30 years old to have a milestone inspections and use the results to guide them to maintain financial reserves that will pay for future maintenance, inspections and repairs. The burden to raise these funds will require mandatory assessments on current and future owners. Sellers will need to take into account the additional cost to maintain the reserves.
Geographic Standouts
In May, the median closed price for a single family home in the Naples Beach area (34102, 34103, 34108) decreased 26.1 percent to $2,262,500 from $3,062,500. Conversely, the median closed price for a single family home in the South Naples area (34112, 34113) increased 43.6 percent to $930,000 from $647,500. The lowest median closed price reported during May was in the Central Naples (34104, 34105, 34116) condominium market, which increased only 1.4 percent to $355,000 from $350,000 in May 2023.
Summary and Future Outlook
Despite challenges such as high home prices and loan qualification difficulties, the market offers expanded options, particularly in lower price segments. Naples continues to attract a unique blend of buyers interested in lifestyle investments, further influencing market dynamics. Looking ahead, the market's resilience and adaptability suggest a balanced outlook as it navigates evolving economic factors and regulatory changes impacting condominium sales.