The Naples Real Estate October Bulge
Hello Naples Friends! It has been arguably the longest distance ever between two posts! I’m here to catch you up on what’s been happening with the Naples real estate market and what you can expect going through the rest of our real estate pre-season!
In This Post
- Inventory changes.
- Buyer and Seller behavior.
- Negotiation alterations.
- What’s On The Horizon
Traditionally, October is one of the most significant new listing months of the year. This phenomenon began in the Dark Ages (just kidding) when residents waited for snowbirds to visit once the weather up north started cooling off. During regular markets, it’s common for some owners to remove their listings sometime shortly after Easter and re-enter the market during this time, causing a temporary glut of inventory or what I call “The October Bulge.” During peak market conditions, residents will stay on the market throughout the summer since so many people are here buying all year round. We saw a tiny influx of properties last season, but it’s tough to compare statistics to the last year due to that dumb storm we had. This Spring, I saw more properties expire, terminate, and withdraw from the market. This activity indicates that many of those would come back on the market now, and we could see some exciting changes in inventory. I performed some inventory studies close to the beginning of the month and today to compare what is happening. Here’s what I found:
- Aqualane Shores, Port Royal, and Vanderbilt Beach all had an oversupply of inventory rolling into the first part of October. All three of those locations have had an increase in inventory since. While we’re starting to see a few owners react to the sudden slowdown by decreasing their prices, intelligent buyers will find that if they negotiate smartly, they can cut a better deal without buyer competition, often spurred by substantial documented reductions.
- Coquina Sands and Naples Park also joined the oversupply of inventory list after pulling results today. You’ll find lower-priced neighborhoods typically respond quicker to price reductions compared to higher-priced neighborhoods. So it’s getting easier to find out who’s motivated and who’s still holding on to yesterday’s values.
- Nine of the 28 communities I researched register between six months and one year of inventory. A smart REALTOR listing properties in these markets should monitor the activity or lack thereof daily. Just as our Naples neighborhoods increase in price quickly, we can adjust downward with similar velocity. It’s going to become really tough for some owners to realize they aren’t getting as much as they thought they were and, in some cases, are now upside down on their property.
- Three developments actually showed a decrease in their inventory. Kalea Bay, Pelican Marsh, and Twin Eagles all saw a slight drop in their inventory. Despite the low numbers, Pelican Marsh has five properties on the market with documented price reductions. That’s a strong indication owners there are on a mission.
- 13 Naples neighborhoods still show an undersupply of inventory, which is technically less than half. This is why it is SO essential to seek out intelligent agents who know what is happening. There is a HUGE group of agents who practice in Naples who have NEVER SEEN A DOWNTURN. They don’t know how to negotiate differently, they don’t know what happens next, and they will be dishing out vast amounts of wrong information that could harm Buyers and Sellers this season.
Buyer and Seller Behavior
As the market starts to make a turn for the worse, some buyers and sellers will adopt some ancient behaviors. For tenured agents, we’ve seen it all before, so there is no shock and awe, but if you’re a new agent who has never experienced a downturn, it will get weird. Buyers are much more gracious about rising prices than Sellers are about decreasing prices. Here are some examples of what is already happening:
1% and Less Price Reductions
I have a fundamental yet efficient listing philosophy that has proven 100% successful, provided owners will adopt my program. It is directly tied to the amount and quality of the traffic the property attracts. When markets slow, so does the amount (and quality) of the traffic. In efforts to boost interest, price reductions are a big tool agents use to move the property. Unfortunately, we are being plagued with really small price reductions now. These are primarily utilized by agents who don’t know what they’re doing and from Sellers who aren’t convinced their property is worth less than it is currently listed. What neither the agent nor the seller knows is that a tiny price reduction is tipping the Buyer off that they are likely not going to be that negotiable, which can easily stall activity. Please list with an agent who doesn’t sabotage your sale!
Stiff Negotiations After Sizable Reductions
Another tactic I am starting to see again is a situation where an owner will make a sizeable reduction and then think they don’t have to negotiate off their new price. Did their agent fail to explain Buyers will likely be looking for another discount while negotiating, or did the Seller think they could sell their property without doing more discounting? It doesn’t matter because the end result is likely the same. The Seller ends up losing more than they should have. Sellers, this is when leaning on a tenured agent can really save you some bucks! We are on the precipice of a BUNCH of owners finding out they should’ve accepted that offer.
Temperature Checks For Low Balls
Buyers are starting to talk more about making low-ball offers. While there may be a few properties where you can accomplish a great negotiation, most of the Naples real estate market is not a big discount market just yet. Your timing can make all of the difference as well. Buyers making lowballs today will have a tougher time than those who wait until the end of the season. Buyers who wait for listings to season will also have a more successful go at it. Pre-negotiations are more important this year as we try to identify which Sellers will play ball and who won’t. Buyers can save much time by feeling out the owner first before blind low offers are submitted.
Hovering Over Listings
Hoverers are buyers who identify a property they like and wait for a price reduction or for what they think might be an appropriate time to offer a lower price with the hopes of having a better chance of the offer getting accepted. This is a dangerous way to purchase real estate right now because a Seller’s motivation may not be easy to read. There is some posturing going on in some Naples neighborhoods, and while property values look pretty consistent, there are some owners who would jump at a lower offer even though they don’t want to advertise a lower price. The risk here is a great property can have SEVERAL hovers. If all of those buyers are waiting for the same price drop and that seller does make a significant reduction, it will move all those buyers at the same time and very likely cause competition. The other occurrence that grows more common during a downturn is buyers will keep an eye out on pending properties they missed to see the negotiated price at closing. If significant discounts were given at closing, that could bring a buyer who failed to act some severe regret for not having had the courage to go for the property themselves. This week, a villa in Park Shore closed for one million less than the full list price! There are times in a real estate trend when agents get fatigued overhearing, “I would’ve bought it for that.” (I just heard it TODAY.) Save yourself the trouble and talk with your competent/tenured agent about your negotiating strategy, and if they don’t have one, call me.
Any time a market trend inches up or down, there’s always an adjustment to how negotiations are handled. We saw unprecedented terms at the top of the market. Examples include well-over-list price offers, waiving of inspections, and escalation clauses. Speak to any exceptional agent, and they will confirm they hated the heat of that market. Anybody with a soul saw how one-sided negotiations were at that time. Now that we’re off the market’s peak, marketing, offer instructions, and negotiations will get more level and fair for a buyer. Unfortunately, our less tenured agents who don’t know what they’re doing will fail to respond and expose their lack of business intelligence to more competent agents. Failure to respond to changing markets can cause problems for both Buyers and Sellers. For example, if your agent has defined unreasonably strict terms listed in their confidential remarks in MLS, that could be preventing showings and stalling interest on your property. Whether you’re a buyer or a seller, discuss how negotiation changes will affect you.
What’s On The Horizon?
There have been two teams in Naples for quite some time. One group believes the Naples real estate market will peak and valley like everything of value. Then, there’s the other team who believes Naples, Florida, has been undervalued since its inception. Traditionally, I have been part of the first group, but I’m starting to see a startling number of factors making me question if I’ve been wrong all along! Here are some examples of what I’m seeing:
- More than $186 million retail portfolio sale of properties located in Old Naples, Florida, from Hoffmann Families to M Development (Mark Hunt with prevalent ties to Aspen, Colorado.)
- New discussions of moving the Naples airport. This is something we greatly need to accomplish to build a longer runway for those bigger private jets and have the opportunity to get real commercial traffic without depending on RSW.
- First Ferrari, and as of September 6th, now Lamborghini? Drive down any of our major thoroughfares, and you’ll see this kind of traffic on any given day, but now you don’t have to transport or service your favorite luxury cars from somewhere else.
- The re-opening of the exquisitely remodeled Ritz Carlton opened in July…if you haven’t been, it’s worth checking it out.
- Has anybody been paying attention to the hotel development plans currently in the works? Crazy!
One thing for sure: Naples real estate has a very curious way of moving in either direction extremely fast. As I press post, some of this data has already changed. If you’re considering buying or Selling in Naples, Florida, this year, you owe it to yourself to work with an experienced agent who can help protect you in this fast-changing market! Contact me today to get started!
Shannon Lefevre, PA
Your Naples Smart Girl
- Aqualane Shores
- Audubon Real Estate
- Bay Colony Real Estate
- Collier’s Reserve
- Coquina Sands
- Grey Oaks
- Gulf Shore Boulevard
- Kalea Bay
- Naples Cay
- Old Naples Real Estate
- Park Shore Real Estate
- Pelican Bay Real Estate
- Pelican Marsh
- Pine Ridge
- Port Royal
- Quail West
- Royal Harbor
- Talis Park
- The Dunes
- Twin Eagles Real Estate
- Vanderbilt Beach