By Robert Nardi, Broker/Owner
Buyers eager for more home choices were happy to see an increase in new listings during April. According to the April 2021 Market Report, released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), there were 1,460 new listings added to the pool of homes for sale in Naples during April.
Since January, the Naples area housing market has enjoyed a 14.3 percent increase in new listings compared to new listings during the same time in 2020. Buyer demand in April took another bite on our inventory. April had 2,037 pending sales (homes under contract) and 1,882 closed sales, which resulted in only 1,432 homes remaining for sale by the end of the month. The 8-month supply of homes in April 2020 was reduced to a 1.1-month supply of homes at the end of April 2021 based on the Southwest lifestyle of sun, sand, and weather.
The number of new listings is going up, and they are selling fast because demand is simply outpacing the inventory replenishment. Historically, new construction sales accounted for 25 percent of all home sales in Naples. But raw material shortages are forcing many local builders to press pause on future sales as it is becoming increasingly difficult for them to determine market prices a year from now. Remarkably, closed sales in the $1 million and $2 million and above price categories outperformed all other lower-priced home categories tracked by NABOR®.
What does this all mean?
Demand continues to outpace supply, and as far as economics go, that means that prices will continue to increase. Over the past month, I have seen multiple offers come in on a listing within 30 minutes of it going live in Multiple Listing Service (MLS). I have witnessed escalation clauses increase 10-fold (meaning if a buyer makes an offer, then the Buyer is willing to increment his/her bid to surpass any other offers by a certain amount determined by the Buyer).
An escalation amendment will only work if the offer is cash. If you had a mortgage contingency with an escalation clause, it would be weighed less of an offer compared to cash. Even if the offer with a Mortgage contingency were $20,000 more than the cash offer, the Seller would still have to worry about the appraisal. In this rapidly escalating market, having a cash offer is having the edge in negotiations. The good news is that even though people are offering cash, they can still pursue a mortgage; however, when it comes down to the closing date, the loan must be in place by that time. If it is not and the Sellers will not give a closing extension, the Buyer may have to forfeit his/her escrow deposit. Select cash and getting a mortgage are becoming more prevalent. Many of the Buyers call their Financial Advisors, and they instruct their clients to pursue a loan instead of paying cash. Residential loan rates are anywhere from 2.75% to 3.75% (factoring in the loan amount, whether the loan is a 15- or 30-year mortgage, the Buyers’ credit scores, etc.)
The difference today from when we had the great recession beginning in 2005 is that the underwriters are extremely strict. If someone is pursuing and receives mortgage approval, they can afford to purchase the home. In the great recession, they did “No Doc” loans. The mortgage company would only verbally document, and the lender required no hard copies of necessary financial documentation like W-2’s, 1099’s, checking account statements, etc. Yes, lenders gave loans liberally and freely. No longer is this the case.
Making a move!
The rise in homeowners’ equity during this hot market means everyone who bought a home in the last five or six years is in an excellent position to make a profit if they choose to sell now. However, the rhetorical question they would have to ask themselves is, “If I sold my current property, where would I go?” Since every other property has gone up in price, what could I buy, and will I even be able to find a property with such little inventory? The good news is that if you are thinking of renting an apartment or moving into an independent living facility, this might be the perfect opportunity to make your move with the accumulated equity you may have in your property.
Rentals are in demand!
Rentals are very much in high demand. If you are thinking about renting your property in Southwest Florida seasonally (January, February, and/or March) or annually (instead of selling), now is the time to prepare and get it on the market as soon as you can. If you wish to rent it out seasonally, the property will need to be fully furnished. If it is annually, then it would need to be unfurnished. If you need help with preparation or renting, I have a large rental division that could assist you.
Lastly, if you are looking for either a seasonal or annual rental for yourself, family or friends, please visit www.BuyNaples.Net.
Happy buying, selling and renting this summer!
NARDI REALTY
To find out more, please call (239) 293-3592 or visit www.BuyNaples.net