Is The Naples Real Estate Market In A Bubble?

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Is The Naples Real Estate Market In A Bubble?

Naples real estate bubble
Naples Real Estate Bubble

Hello Naples Friends! Some buyers are already assuming and more are asking, “Is the Naples real estate market in a bubble?” The answer is yes! If we’re talking about the slowest popping bubble that ever existed. Our market doesn’t stop or catapult straight to the top overnight. It takes years to reach our peaks and valleys. As an example, our last big downturn was in 2010 with the peak of the last trend happening somewhere in 2006. It was a four-year pop before we reached the bottom. A fraction of you are going to want to time this next ride to the bottom just right while many of you are just going to be thankful you aren’t going to be the biggest loser in the neighborhood.

I have a BUNCH to let you in on today! I’ll be covering what I’m seeing and hearing with some examples and some excellent information you’re going to find useful if you’re buying or selling Naples real estate in the immediate future. Here are some clues that the market is changing right before our eyes.

Show Me Some Comps!

In a wildly short time frame, buyers have switched their behavior from “What do I have to do to get it?” to “Can you show me some comps?” Unless new listings are already priced well the moment they hit the market, buyers aren’t tripping over each other to pay full or even the asking price. Savvy buyers are more prepared to negotiate. Low offers on overpriced properties are a real thing in the Naples real estate arena today. I didn’t see any low offers last year. This is going to end up working really great for smart agents, buyers, and sellers.

Smart Agents, Buyers, and Sellers

Buyer Behavior

Smart agents know what’s going on because they were either trained exceptionally well or they remember this part of the trend from 2008’ish. When I start seeing big price reductions from a handful of select agents, I know there’s real trouble. It’s a huge clue that something is amiss. When I see sizeable price reductions from more than one agent, that’s another big sign something “cool” is in the air. For example, I noticed last week an 11% reduction was made on a condo in Pelican Bay. That’s an uncustomarily big reduction in that location. It went under contract the same day. There have been 106 price reductions so far this past week with the highest discount coming in at 17% for a home in Vanderbilt Beach. Guess what! That one is gone already too. The amazing news for buyers is this is the type of activity we typically see next month and granted, we’re only a few days away but it’s still a little early. Our ultra-confident buyer’s agents are starting to shake a little which means some of them are going to share their concerns with their sellers and most of their sellers are going to respond accordingly.

Smart buyers know they have more muscle but they still want to match realistic values with what they personally want to pay. They lean on advice instead of plucking their own number out of their mind. For example, I showed beachfront condos yesterday. Today, they mentioned they liked one but weren’t sure of what an intelligent offer would look like. They requested pricing intelligence to determine if they should shoot or perhaps linger a while longer. After some research, it was evident the price isn’t really that terrible. Their showing traffic is relatively strong as well. The smartest buyers are hopping on listings with big reductions pretty quickly so watch for them and be ready to pounce.

Here’s a BIG thing that saves buyers a TON of time and maybe even some reputation. Find out what the seller and listing agent are thinking BEFORE you submit a number substantially off the full list price. Less than half of the market is going to be interested in playing these games right now. If you throw a low offer at a confident listing agent and seller, they’re probably not going to react well and you could sabotage your way back to the table.

Smart sellers know when a market starts to turn they’ll want to sell sooner than ride the wave down. They will listen to their agents regarding price reductions and execute. Sometimes they’ll reduce before their agent suggests the idea. They’re also willing to negotiate and be more accommodating to repair requests. Buyers beware. Price reductions can cause a bunch of immediate interest and it’s common for sellers in this market to not offer huge discounts on a newly reduced price.

This New Pricing Hits Different Now

Naples Price Reductions
Naples Price Reductions

For the past three years or so, it’s been customary to increase the price of new offerings based on recently active, pending, and sold listings. Some of those prices were coming from sheer imagination as I’m sure you’ve seen for yourself. It has been insane! Just this past week I had a new customer ask about homes in Pelican Marsh. There wasn’t anything in her exact location but I told her I would keep her posted. One hit today. She called within moments and politely said, “This is priced at X!” I said, “Yes ma’am,” unsure of her point. She commented her friends bought one last year for $200,000 less and was in better condition. I caught her up briefly and it became abundantly clear, she is not a buyer for this market or at least that home. That is exactly how many of my calls and emails have transpired lately.

Keep your eyes open! The photo to the right here shows some of the price reductions taken just this week!

I Just Witnessed My First Price War!

I had a lengthy conversation with a friend of mine last week regarding a new listing he was getting ready to release. He mentioned he was pricing it lower than his competition even though the unit was on a higher floor and offered a similar aesthetic appeal. I said, “Hold up. You just spent the last thirty minutes explaining how the Naples real estate market was going to continue to rise forever (LOL). Your actions don’t match your words.” He just shrugged it off by saying his competition was overpriced. He went live. A few days later his biggest competitor dropped their price by $500,000 or 11% off the original offer price and his competition has just become the new price leader in that building. You can expect to see more of this as inventories increase and competition re-enters the market.

Uncertainty Vs. Insanity

My partner and I went on a listing appointment in Pelican Bay this week only to find out the sellers are wildly disillusioned with what kind of price their property will get. Our position is, to tell the truth, and if we don’t get the listing, we don’t really mind. Overquoting is a tactic used by desperate listing agents. Those agents will either talk you down later or you’ll fire them. The timing is just about right for more sellers to be faced with the reality that their properties aren’t going to sell for the numbers they expect. Some sellers will give up and take their places off the market. Other sellers will adjust when necessary and some will ride the market down while being priced just out of reach of sanity.

We’re seeing a little more “squirrelyness” (yes, that’s my own made-up word that means some people are all over the place with their thinking right now). Just today we just saw a new listing hit the market today with an embarrassingly low price. It’s still available too. Want to know about it? Call me!

Sellers Could See Their Highest Returns Right Now!

If you’re thinking about selling, it’s important to understand the fact that if we are on a slide down, what your property is worth today is the most you’re likely going to get for a while. The longer you wait, the less it will be worth. We’re going to see a lot of sellers watch their equity or perceived values fade into one of our glorious sunsets. The short message here is if you’re thinking about selling, get it on the market today!

Sellers, Don’t Let Your Listing Agent Game The System!

If you’re not listing with us, beware of the uneducated agents who use tactics to try to game the system. The seller’s agent role is going to become substantially more important now that these properties don’t just “sell themselves.” Here are six things to consider when listing your property.

Make sure your agent has the ability to show your property. We had a buyer in town this week who wanted to see 8 listings. It was weird enough there were 8 he liked. We haven’t had anybody that had that many choices! Agents for one reason or another could not accommodate showings on all but two properties. That’s an F rating on showing accommodations in my book. When you list with us, I have a team who can accommodate showings. It’s extremely rare we cannot work it out. All showings matter even when the market is this strong.

Do not rely on token price reductions as a viable way to get a contract. A token price reduction is like taking $1,000 off of a $1,000,000 listing. I like these because it assures me the listing agent is an idiot. It also tells me the seller is either a jerk or thinks their property is worth what they’re already asking. This is a HUGE turn-off for buyers and this tactic can actually stop them from having interest. Please don’t make this mistake.

Forgo the “showings begin on (specific date) and all offers due by” language. Buyers are tired and I’ve seen several of them immediately punt off of an interesting property when they see it. That ship has sailed unless, of course, you’re planning on going on the market with an ultra-low price. Be ready to be underwhelmed with lower offer prices using this tactic.

If your potential agent can’t make your property look amazing, look for one who can. In a hot market, listings can sell without photos. As the market turns, those photos better get substantially better if you want to garner as much attention as possible. Those cell phone photos don’t help anybody! Call us and find out what we can do to make your property pop!

List with an agent who is staying in town! Lots of agents take off after the season. Hey, everybody needs a vacation but some agents take it to the extreme by not having backup help in place when they leave. We hear voicemail greetings that say stuff like, “I am on a cruise from now until 10 days from now. All showings will resume upon my arrival” Are you kidding me? LOL!

Thinking about doing some remodeling before you list? I hope you’ll call us first! Some people are going to spend a great deal of time and money remodeling only to find a different market once they’ve finished. Call us and let’s determine if it’s better to list now or move forward with renovations!

Final Thoughts

That’s all I have for you today! Don’t forget, you can always shoot me a text with your other Naples real estate questions and you can always reach out for sound Naples real estate direction!

Best Regards,

Shannon Lefevre, PA
Your Naples Smart Girl!