The State of the Naples Real Estate Union

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The State of the Naples Real Estate Union

Good Day, Naples Friends! I’m here to catch you up on the latest Naples real estate trends to help you better understand what’s happening with the market. In this post, I’ll cover the following:

  • Current Real Estate Statistics
  • Inventory Levels
  • End Of Season Predictions
  • How To Protect Yourself
  • What’s Causing The Slowdown?

Current Real Estate Statistics

Here’s what happened in Naples during the last 90 days:

  • Closed sales are down 16%. It’s odd timing, considering we’re in our peak selling season.
  • Pending sales are up…but they should be way higher than 2%, considering this is Naples’ busy time of year.
  • Active listings are up 21%. That’s a huge increase.
  • Our inventory is increasing at an alarming rate (especially for this time of year) but not all areas have been impacted further muddying the waters.
  • Sales to list price ratio is up, illustrating the confidence owners have selling their properties this time of year.

A colleague said it best last weekend: “I think our Sellers are classically tone-deaf.” She meant that the market is cooling, and too many Sellers and agents are doing little to respond to the current market trend. More on this later.

Current Inventory Levels

Naples real estate inventories have been moving peculiarly all season based on the weekly inventory report I started on October 9th. Here’s the current result:

This perfectly illustrates why you should not attempt to use the same negotiation tactics across Collier County today. Some locations appear exempt from a slowdown, while others are experiencing mindblowing inventory levels. Some have not considered that inventories are still growing dramatically during a time when Naples should be experiencing an inventory reduction right now. This is another reason it pays to work with an experienced REALTOR, regardless of whether you’re buying or selling.

End Of Season Predictions

  • Expect the discounting trend to accelerate as owners and agents realize their property/listings don’t have a high chance of selling. Furthermore, those reductions of less than 1% I complained about in January are being replaced with 5% reductions, and we have just recently started to see some eye-popping price adjustments. I mean reductions that are 10%+ off the list price. We are also starting to see some of our finest REALTOR talent get on board with coaching their entire client base about where the market is headed and how to get ahead of this trend by slashing prices across locations with low performance. Sign up for listing alerts for all your favorite locations to watch for the best deals this season!
  • Expect owners to be furious with buyers (and their listing agents) after receiving a lower offer after posting what they consider a sizeable reduction.
  • Not every owner is going to reduce their price. Some are simply going to cut bait and decide to keep their property. Coaxing them back into the mindset of selling is not likely to be received well if they’ve already exited the market.
  • At least one of you reading this post will soon say (or think,) “If I had known they would have sold for that price, I would have bought it myself.” For example, a home in Treviso Bay was listed for $4,449,000 and just closed this week for 80% of the list price at $3,600,000. Some owners want to sell but won’t reduce, making it nearly impossible to detect motivation. Start looking at your options, and let me know your intentions so I can help you uncover your opportunities!
  • Most buyers are going to take off after season and disappear until next pre-season leaving a big number of sellers coming to the realization they missed their selling opportunity. Smart buyers are going to stick around and negotiate their best deal. Buyers who wait until next season will be welcomed back with the same air of confidence they see today.
  • We lost over 100 listings this week due to terminations and withdrawals. Some of these properties are temporarily off the market, but other owners think they missed their shot and are exiting the market until it turns around. Other sellers may have also decided they want a new agent. Expect this number to pick up through June.

How To Protect Yourself If You Are A Buyer

  • Use a Buyer’s agent! So many of you think you’re smart by working directly with the listing agent. The listing agent doesn’t have to help you negotiate your best deal, nor will they share all of the facts about the area where you’re purchasing to help you negotiate. Sure, they might offer a list of vendors but do you think that list will include a bad ass attorney to help you if your deal goes sideways? Do you think they will discuss the list of inspections you should get or who the best inspectors are? Do you think they will point out the flaws in construction that will likely hike your insurance rate? Ok.
  • Buying a condo? There are a great deal of variables you’ll want to know but don’t necessarily know what to ask. Let’s chat about it. I’ll help you discover the benefits and pitfalls Florida condo owners are facing!
  • It might be better to walk! Will your agent tell you that? There have been a few occassions this season I have told my buyers to cut bait. If you’re not being accommodated, I will tell you I think you can do better. You’ll likely like me enough to call me back when you’re ready to sell. I don’t remember when I had to explain why a client would lose money.

How To Protect Yourself If You Are A Seller

  • List with an agent who has already experienced a downturn. If the agent you’re considering has not been selling real estate long enough to have experienced a downturn, how do you expect them to coach you through a sale when they don’t know how it goes themselves? Some of the negotiations I’ve been involved in lately are ridiculous. A billion mistakes are being made from marketing, pricing and negotiating. Save yourself the headache, time, and frustration!
  • List with an agent who is back on their pre-covid grind. Those agents hire professional photographers, add virtual enhancements, and accompany showings. I can’t believe the number of showings I’ve been on where listings are dark and dingy and listing agents are nowhere to be found. Are you kidding me?! You deserve better!
  • Financial pressure for newer agents who have never experienced a downturn could start dishing out advice like you’re both in the same financial crisis. Sure, they’re supposed to keep your best interest at heart, but advice can seem one-sided when that new BMW payment is due.

What’s Causing The Slowdown?

So many of you have asked my opinion on why the Naples real estate market is slowing down. Interest rates, election year, insurance increase, and new condominium legislation are all culprits, plus the fact that a real estate market historically and customarily slows after the first anniversary of a catastrophic storm. But let’s slice a few of these reasons up a little more.

Interest Rates

Somebody told me we would see six different interest rate decreases this year. That has quickly turned into three. Naples will be lucky to see one in April before all our favorite friends go home! Even if we do, it’s hard to gauge how much it will impact our sales. Sure, we get more than our fair share of cash deals, but we also hide plenty of transactions as cash because many of our buyers don’t have to rely on a contingency to determine if a bank will give them money.

Election Year Uncertainty

The Naples market moves differently during election years. Here’s an illustration of what took place each February during an election. I’m going to let you make your own hypothesis or, you’re welcome to contact me directly for more insight.

Insurance Increases

Insurance increases are a big deal for our friends on low budgets, but for my clientele looking at multi-million dollar second homes…it’s not really a topic coming into play. Unless you haven’t thought it through. Does it cost $50,000,000 to insure a $3,000,000 single-family home? Not unless you’re housing some crazy priceless collection of some sort. Let’s keep the rhetoric in perspective, shall we? If you’re thinking about purchasing a home or condo, you do realize I can get a pretty close estimate of what your cost is going to be, right?

Condominium Legislation

Many buildings offering three stories or higher have already performed their structural engineering study. They also have completed their reserve study and know what improvements must be made to their buildings. For the most part, we have survived the abyss of the unknown. As a result, we are seeing some backlash of higher quarterly fees in some but not all buildings. The good news is you can ask questions and get some good answers before moving forward or passing on an option.

In Closing

I want to take a moment to thank those who have supported me! Thank you for reaching out in advance to let me know you’re coming to town and giving me a synopsis of what you’re trying to accomplish. By doing this, you are giving yourself the best shot at accomplishing your objective. As we approach the end of the season, I hope the rest of you will do the same so I can do my best to accommodate you on the days of your visit. As always, I am excited to knock it out of the park for you!

Best Regards,

Shannon Lefevre, PA
Your Naples Smart Girl!