April 2020 Naples Real Estate Market Report
April 2020 Naples Real Estate Market Report
Brought To You By Barry Brown
Broker Associate, Coldwell Banker
I have been writing and publishing the Naples Real Estate Market Report since 2007 and like last month have no sense of where the market is going. However, given that that we do not know how long the Corona Virus pandemic will last or what its total impact will be, all I can do is report on the results to date and take a look at the factors that will affect the market going forward.
The three key indicators, sales, inventory (the number of homes for sale) and prices were all positive for both March and the first quarter of 2020. My complete April 2020 Naples Real Estate Market Report is as follows:
1,146 homes were sold in March which was 45.1% above last march at 356 units and up 22.0% for the quarter Every month for the last 12, with the exception of June, has showed a nice increase with the period showing an increase of 113.2% or 1,256 units. If not for the virus, I would have been very bullish given March results.
The number of units for sale dropped from 5,638 to 5,497 or 2.5% which was to be expected. The months of inventory decreased from 7.3 to 4.8 months. This is normal, although it is the lowest it has been since 2015.
Prices were up in March across the board. The average came in at $731,785 which was 12.7 % higher than last month and up 22.7% from the first of the year. The median, which is a better indicator, was up 7.9% from last month and 8.0% from the first of the year. Correspondingly, the average price per square foot was up 26.1% from last month and 17.6% from the first of the year.
Prices by price range and housing type all showing increases or were holding their own.
The median list price was down 7.4% at $374,000 which is normal for March while the sales to list price ratio increased to 96.5%, which is the highest it has been since January of 2018.
As a point of reference it, will be worth watching both the financing type and type of sale. Cash sales have been running in the 50% range for the last five years while the short sales and foreclosures have made up less than 1% of the sales for four years.
If you just look at the numbers, you would think that the Naples Real Estate Market is in great shape and it would be, if not for the Corona Virus. However its impact is just starting to be felt. Pending sales have been dropping since mid March which means that we will see a dramatic drop in sales in April. New listings are also showing a significate reduction with the question being will the two offset each other or will one outweigh the other. Hopefully the number of homes on the market will not decrease, but it is a moot point as the real estate market is pretty much shut down at this point.
The two key questions are how long will the Corona Virus persist before people can start going back to work and what type of recovery will we have?
- A data analysis done by The University of Washington School of Medicine forecasts that the virus may not subside until June. Other experts expect that it will it will start to peter out as the days get longer and temperature and humidity rise. Another possibility is that it may persist until a substantial portion of the population is immune. It is also possible that we will have a vaccine or treatment soon. Vaccines take a long time to develop but a treatment could calm things down quickly. If an existing drug, already proven safe, reduces the effects of the virus so that it’s not so deadly, we can return to something like normal.
- Goldman Sacs, J P Morgan and Morgan Stanley are forecasting a rapid V-type recovery starting in the second quarter while others are forecasting a much longer U-type recovery. The Anderson/UCLA forecast concludes that the economy has stopped growing and will remain in a recession unit September.
Factors that impact real estate in general and the Naples market include:
- Will people put their homes on the market and will this result in an increase in inventory?
- How much will low interest rates affect sales?
- Will sellers hold to their prices or take less? (Generally a recession has little effect on prices.)
- Can and will buyers travel to Naples this summer to take advantage of low interest rates?
- Will buyers be looking for a place they escape to if this happens again?
- Will investors return to the market to take advantage low interest rates?
- Will people look at the stock market as a better opportunity than purchasing real estate?
Finally this will not be like the 2008 where housing prices plummeted. That recession didn’t cause the housing market to collapse. The collapsing housing market caused the recession. Mortgage lenders were issuing mortgages that had to fail. These were then bundled into bonds and distributed across the financial system. When people started defaulting on those mortgages, the financial system collapsed, and millions of homes went into foreclosure. Today is completely different as the only people who qualify for a mortgage are those who have the means to pay It back. A far cry from 2008
As always the question is “what should I do now?”
- If you are looking to sell, my advice at this point is have your paper work ready to go for when the virus abates. Till then, just sit tight and wait for the virus to run its course. You don’t want strangers looking at your home. If you have one on the market and are not living in it, you might want to leave it on. It is not hurting anything. But then again your listing is getting stale and taking it off the market would not be the worst decision. (I can go either way on this one.) If you are living in it, you might consider withdrawing it for the time being. Remember staying safe is the most import thing.
- If you are looking to buy, watch the internet but don’t rush into anything as the number of homes on the market is very low. If you find a home you love then by all means make an offer. If not, be ready to jump as soon as business opens up and country begins to return to normal.
If my April 2020 Naples Real Estate Market Report has been of interest and you would like to see my latest updates and analysis, make sure to check www.barry4homes.net as I always post my latest market report mid-month. You will not want to miss next month as it will include my latest Corona Virus updae.
Take care, be safe and don’t take any unnecessary risks!
Barry L. Brown
550 Fifth Avenue South
Naples Florida 34119
P.S. When you are ready to put your home on the market and would like a no obligation Comparative Market Analysis, please let me know. I would love the opportunity to earn your business. If you or anybody you know is looking to buy or sell, please feel free to share my April 2020 Naples Real Estate Market Report with them.
This report discusses the overall Naples real estate market and not any specific property. The source of the data is the Sunshine MLS and Naples Board of Realtors. The opinions are those of the author and should not be considered to be a specific recommendation. They along with the data are presented to help you make an informed decision.