The once-boisterous house party is easing up.
There has been a great reduction in the sales of existing houses within Southwest Florida. This signifies a tightening in growth of home prices according to a report given to a group of 400 real estate brokers by an economist from national trade body during the Annual Economic Summit for Naples Area Board of Realtors that took place at the Hilton Naples on Thursday.
“Sales begin to buckle before prices,” said Lawrence Yun, chief economist of the National Association of Realtors. He further noted that he was expecting Naples to experience a fall in prices within the next 6 to 12 months.
Lawrence also noted that in the long term, the continuing mass arrival of retiring baby boomers and intensified job growth will safeguard the housing market in Naples from going through a repeat of the overwhelming fall of the recession.
However, election worries (which are predisposed to affect high-end buyers who are afraid of possible reforms in the tax code), the possibility of an increase in mortgage interest rates and stock market shake ups will go up near the beginning as midsummer. This is however predicted to be in the short team but is expected to continue rising until 2018 and will make growth more difficult according to Yun.
Yun also noted that the robust dollar will limit the number of British, Canadians and other foreign buyers from buying vacation homes, something that has traditionally been helpful in encouraging the local buyer mix.
According to Yun, there is also concern in regard to the increase in rent rates which are the highest recorded over the past seven years across the nation.
He predicted that next year will register an increase of 2 percent, following an increase of 3 percent registered this year even as vacancy rates continue to rise.
Yun further noted that this increase will be the basis of price increases and will begin to push up the current mortgage interest rates. He urged the audience to be on the lookout for inflation.
Growing interest rates are going to deter many younger buyers from buying homes locally and nationally according to Yun – particularly because most of them are already experiencing the burden of enormous student loan debts while at the same time going through a hard time when trying to qualify for loans.
Yun also noted that the rate of homeownership is almost reaching its lowest point for the past 50 years, leaving many people wondering whether it’s more difficult to achieve the American dream of owning a home that it was the case during the earlier generations.
This difficulty was also echoed by Cindy Carroll, a Naples appraiser who noted than many potential home buyers are priced out of the market when median prices reach $390,000.
According to a report released on Friday and attributed to NABOR, the price of a median single-family home was around $400,000 in March while that of a Condo has reached $258,000.
According to Carroll, the increase in the already existing home prices can be attributed to condos and homes going for less than $300,000 and which can be found all over across Naples area and which are bought quickly each time they are listed.
She said that some of the fastest sales can be found in places such as Golden Gate, Golden Gate Estates and Naples Manor. These are some of the most reasonably priced areas with an average of five months of listing. The standard is in the number of months it normally takes for the current listing of homes to dispose of at the existing sales pace.
In the meantime, Ave Maria, once considered to be less accessible has registered an increase of median prices by more than 101 percent within the last one year, rising from $119,000 to $239,000 based on NABOR statistics.
Interested buyers seeking to get houses in this area are looking for affordable homes that are not being listed by new constructions, according to Carroll.
Nevertheless, new home listing is accumulating in some of the most desirable neighborhoods in Naples west of 41, Carroll Said.
In Aqualane Shores, the supply of new spec homes has exceeded a 2-year supply and there is a supply of about 2.8 years in Port Royal. That is way too high, according to Carroll.
Mike Timmerman, a Naples real estate expert with Equity Realty noted that he too had seen a small increase in new homes being built within the established areas west of 41, stretching from Old Naples to Naples Park.
Many buyers are opting for older homes especially in areas that are near the beach due to their lot value, as well, either to tear them down or flip them and build something splendid.
He said that such moves are restoring aging master-planned communities as well as the older inland neighborhoods that have recently refurbished their clubhouses and golf courses.
Although he does not consider the new home market to be overbuilding Naples, he said that these new constructions are being constructed between large selections of new products that are readily available for sale, ranging from master-planned communities to high-rises.
He noted that there is an enormous availability of new homes to cater for a whole decade.