By Robert Nardi, Broker/Owner
During April, the overall inventory in Naples increased 16.5 percent to 1,668 properties from 1,432 properties in April 2021. After reviewing the April 2022 Market Report by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), the Naples area housing market appears to be making a turn toward a balanced and healthy market. With the swell of new single-family home listings, up 5.7 percent over last year, and with 549 price reductions (33 percent of the inventory), we have 1.5 months of inventory, the highest level since March 2021. However, demand for the Naples lifestyle remains strong. Days on market for April were 16 days, considerably less than the historic 90-day average.
In April, the overall median closed price increased 39.2 percent to $599,000 from $440,000 in April 2021. Median closed prices continue to rise in the single-family home market, up 8.7 percent from March, but median closed prices during April in the condominium market decreased 1.1 percent from March. One “stand-out” observation is that with the increased appreciation over the past year, and the depletion of properties listed at $300,000 or less, there were only 96 properties below this amount in April 2022. Wow!
If you want to see the NABOR® April 2022 Market Report in chart form, please send an e-mail to Robert@NardiRealty.com. It compares single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary.
What does this all mean?
It simply means that the Naples market is starting to correct itself, however, do not count on prices plummeting. We see a lot of price decreases, but that is because these properties were overpriced, to begin with when they hit the market. The current market is dictating the selling price.
In 2004 & 2005, mortgage lenders financed Buyers through no-doc loans, which accelerated demand, causing properties to increase in value dramatically. It was relatively easy to get a mortgage by simply stating yearly income, running the Buyers’ credit score, and performing a desktop appraisal. However, in today’s housing market, Buyers getting a mortgage must go through a tremendous amount of scrutiny when securing a mortgage. Several of my customers have complained about the underwriting process because it feels like an “invasion of privacy.” Also, the Naples area is in a bit of a bubble because many people sell their homes for large amounts of monies in coastal regions and then purchase in cash here. In fact, in April 2022, 66.7% of property buyers paid cash. Therefore, people waiting on the sidelines for prices to drop dramatically will be waiting a long time. It will not be a repeat of the “Great Recession” because everyone who is purchasing can afford to buy the property.
What should you do in this housing market?
If you are a Seller in Southwest Florida, then sell your property. If it is not moving, it is likely priced too high and will need a price deduction. I am not saying a significant reduction, but some reduction. Because the market is correcting, it will take longer to sell your property. Please keep that in mind.
If you are a Buyer in Southwest Florida, keep your eye out for properties entering the Multi-Listing Service (MLS) every day. You can also enlist the help of a REALTOR® to assist you. A REALTOR® can set up automatic searches for properties with the same characteristics or if you are looking in a particular area or development. Once a property comes on the market, you will need to act quickly on it. Make an appointment immediately and if it is something you like, put an offer in with few contingencies.
The NABOR® contract’s three major contingencies are financing, inspections, and closing date. My best advice for those who have cash but want to get a mortgage is to select “Cash” on the contract. In essence, you are waiving all financing contingencies; however, you most likely can get approved for a mortgage in 35 or fewer days. Therefore, when selecting a closing date, I would make 40+ days from the effective date (when both parties come to terms and sign).
I would tighten the time frame from 15 to 10 days as far as inspections go. In addition, I would seriously consider an “As Is” contract that would allow you to inspect within the designated period. If you find something wrong with the property, you can walk away and receive your escrow monies back. However, if you see something wrong and still want the property, then “As Is” means precisely that. You are saying that you will not request from the Seller any remedial action or a credit at closing to fix those items.
Once the inspection period is over, then the only other contingency is the closing date. The NABOR® contract makes the closing date, “Time is of the essence.” You must close on the date specified in the contract. According to the agreement, if you refuse or cannot close, the escrow money you put down is forfeited. The Seller is entitled to this money as “damages.” You can always ask for a closing extension, but I highly doubt they would extend the closing date because it is a Sellers’ market.
Need help with any of this? Please feel free to write me at Robert@NardiRealty.com or phone me at 239-293-3592. Enjoy your summer!
NardiRealty
239-293-3592 | www.NardiRealty.com