Properties In Demand While Inventory Tightens
Home sales were bridled by low inventory during October, but new listings are on the rise according to the October 2021 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island). Overall closed sales for October decreased 32.1 percent to 858 closed sales from 1,263 closed sales in October 2020. But irrespective of the home buying frenzy that took place during the second half of 2020 (including October 2020), closed sales in October were historically higher than average for a typical October in Naples, even with the lowest inventory level on record by NABOR®.
Broker analysts who reviewed the October Market Report anticipate more sellers will enter the market over the next few months as the lure of paradise is already beckoning seasonal and foreign visitors back to our shores now that many international travel restrictions have been lifted and the threat of COVID-19 has been reduced.
The report shows pre-season interest already in play as October’s pending sales (1,186 pending sales) and showings (33,578) were above summer month levels.
Overall Median Prices
The overall median closed price in October increased 16.9 percent to $450,000 from $385,000 in October 2020. The COVID-19 pandemic affected buying behaviors and sales of single-family homes outpaced condominiums as people sought more open space in 2020; but those buying behaviors have now shifted. While overall inventory decreased 76.1 percent in October to 1,240 properties from 5,181 properties in October 2020, condominium inventory decreased 84.4 percent in October. As such, there were nearly half as many condominiums (435) available compared to single-family homes (805) at the end of October. Not surprising, the median closed price for condominiums increased 31 percent to $370,000 from $282,500 in October 2020, while the median closed prices for single-family homes increased 18.8 percent to $615,000 from $517,750 in October 2020.
Closed sales
“Closed sales are down for one reason: we just don’t have the inventory,” said Molly Lane, Senior Vice President at William Raveis Real Estate. “But that doesn’t necessarily mean prices will keep rising at the rate we saw this past year. With inflation surging, now is the time to sell your home in Naples because interest rates will eventually rise so the number of potential buyers will thin, and this will likely also level out list prices.”
Mike Hughes, Vice President and General Manager for Downing-Frye Realty, Inc., commented, “In the past, if you couldn’t find a home to buy, you’d just rent for a while until something came along. But there are few rentals today and this is exacerbating the low inventory issue because sellers can’t just pick up and move when their home sells. A REALTOR® can help them develop a plan that includes finding a place to live once their home sells.”
Hughes also pointed out that these kind of “hot markets” don’t last forever. “It’s impossible to predict the future but we know from history that things happen—like pandemics, inflation, or hurricanes—that have impacted the housing market in Naples.”
FAQs
1. Why were home sales lower in October despite high pre-season interest?
Home sales in October were impacted by a low inventory of available properties. Although new listings are rising and pre-season interest was strong, the overall number of closed sales decreased due to the limited supply of homes.
2. What are the current trends in median home prices in Southwest Florida?
As of October, the overall median closed price increased to $450,000, a 16.9% rise from the previous year. Single-family home prices rose to $615,000, while condominium prices increased to $370,000. The price increases are a result of the tight inventory and strong demand.
3. How does inventory affect the real estate market in Southwest Florida?
Inventory levels have a significant impact on the market. As of October, inventory decreased by 76.1% for all properties, with condominiums experiencing an 84.4% drop. This shortage of available homes is contributing to higher prices and reduced sales.
4. What is driving the increase in new listings?
The increase in new listings is driven by seasonal and international buyers returning to the market as travel restrictions lift and the COVID-19 threat diminishes. The anticipation of more sellers entering the market is expected to ease some inventory constraints.
5. How have buying behaviors shifted post-pandemic?
During the pandemic, there was a greater demand for single-family homes with more space. However, buying behaviors are shifting back, with increased interest in condominiums as well. This shift is reflected in the rising median prices for both types of properties.
6. What challenges are sellers facing in the current market?
Sellers are facing challenges due to the low availability of rental properties, making it difficult to find alternative housing after selling their homes. This situation is exacerbating the inventory shortage and complicating the selling process.
7. What advice do experts offer for those looking to sell in the current market?
Experts suggest that sellers should act now if considering selling their home, as rising inflation and potential future interest rate increases could impact buyer demand and stabilize prices. Working with a REALTOR® can also help in planning for housing needs post-sale.
8. How can I view available properties in Southwest Florida?
You can view all properties for sale in the Southwest Florida area by checking listings in Fort Myers, Estero, Bonita Springs, Cape Coral, and Naples.
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