May 2020 Naples Real Estate Market Report
May 2020 Naples Real Estate Market Report
Brought To You By Barry Brown
Broker Associate, Coldwell Banker
There is no question that the Corona Virus has significantly impacted the Napes real estate market. The number of homes on the market is down slightly, closed sales are down as expected, and both sales and list prices are down. The good news is that both new listings and pending sales are trending upward. My May 2020 Naples Real Estate Market Report is as follows:
The number of homes on the market dropped from 5,497 to 5,176 or by 5.8%. This year parallels last year and is a little tight but better than I anticipated.
Sales were down as expected. However closed sales are starting to trend upward although I expect May to come in considerably lower than May of a year ago.
Unlike inventory, sales prices were a little lower than I anticipated. The average sales price came in at $572,348 which was 21.6% lower than last month but only down 3.9% from the first of the year. The median sales price fared much better coming in $348,000 which was down 7.2% from last month but even with the first of the year. Note that the median sales price is a much better indicator as it is not skewed by a number of extremely large or small sales which we can see in Naples. i.e. homes in Port Royal or older condos in East Naples. Correspondingly the average price per square foot was also down 12.9% coming in at $257.11. The good news is that the list price is still closely paralleling last year and even though it dropped 2.9% to $360,630, it is still 3.3% higher than April of last year.
When we look at sales by price range and housing type we see losses outnumbering gains, especially since last month. However one month does not make a trend and it will be interesting to see if this is the beginning of one and sellers feel they need to take less due to the impact of the Corona Virus.
77.6% of the sales that close in April went under contract at a median sales price of $338,500 before March 13th when the national emergency was declared , whereas those after came in at $325,000. Not a substantial difference but it will be interesting to see the median sale price in May. Drilling down to community and housing type provides a better picture. But even this does not consider upgrades, location, view or the community/building within a development.
The real question is how will the Corona Virus impact real estate? All the experts agreed that it would have an impact on sales, which it has and that the long term impact will largely depend on the length of the outbreak and how long it takes to return to overall social and economic stability. However here is where the “experts” differ:
- CoreLogic is predicting a gain of 0.5% nationwide for home prices this year.
- Realtor.com feels that prices will absolutely decline but has not yet forecasted a percentage.
- Zillow forecast that prices will drop by about 3% by the end of 2020.
- Fannie Mae is projecting a 1.0% increase for the year.
- VeroFORECAST projects average annual home price appreciation at 1.9% in the short-term due to the impact of coronavirus
It is important to remember that the Naples Real Estate market is a resort / retirement / destination market and additional factors impact it that do not impact the national or other regional markets. For example, in Seattle you would be concerned about the health of aircraft manufacturing and not whether potentials buyers could or would travel the Seattle. The important ones that I see it are as follows:
- Can and will buyers travel to Naples this summer to take advantage of low interest rates?
- How long will it take for foreign buyers to return to Naples?
- Will buyers be looking for a place where they can escape if this happens again?
- How much will low interest rates help sales?
- 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?
- Will people put their homes on the market and will this result in an increase in inventory?
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. An increase in conventional mortgages will indicate that buyers are taking advantage of the low interest rates while an increase in short sales and foreclosures will indicate that some home owners are being forced to sell due to lost jobs and wages.
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. No money down and no income verification caused massive speculation and people were buying homes they could not afford. These were then bundled into bonds and distributed across the financial system. People started defaulting on their mortgages when the value of their homes and properties fell below what they owned, the financial system collapsed, and millions of homes went into foreclosure. Today is completely different as the only people who qualified for a mortgage were those who had the means to pay It back. A far cry from 2008. This does not mean that we won’t see an increase in short sales and foreclosures as millions of people are out of work and many have lost their jobs.
As always the question is “what should I do now?”
If you are looking to sell, my advice at this point is to put it on the market if your property is vacant. Both new listings and pending sales are trending upwards which indicates that the market is improving. People who are thinking of buying are sequestered at home with many searching the internet on a daily basis.
If you are looking to buy, watch the internet and if you see one you really like and are not in Naples, have an agent you trust take a look at it and give you his or her honest opinion. If you find a home you love, then by all means make an offer. You can always make it contingent on a personal inspection within a reasonable amount of time.
If my May 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 update.
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 know of anybody who is looking to buy or sell, please feel free to share my May 2020 Naples Real Estate Market Report with them.
This report discusses the overall Naples real estate market and not any specific property. It only includes Collier county and excludes manufacture homes. 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.