The Naples real estate market for the month of March is continuing to show strengthening. The buyer’s market continues, however, it weakening especially since last year.

HOMES:

Homes available for sale, as of March 31 – totaled 3784. Of this total 659 were potential short sales, and 136 were foreclosures. This translates to 10.8 months of inventory (normal market is between 5 and 7 months) versus last year 21.1 months. This statistic most clearer reflects the higher level of sales activity of homes in the Naples area.

A total of 366 homes closed in March. Last March a total of 318 homes were closed.

Pending sales for the month of March was 700 homes versus last March’s figure of 575 homes.

The median sold price for a single family home in the Naples in March was $244000 in a year over year comparison March 2009 saw the median sold price at $177200.

An indicator of future closed sales in addition to the current month’s pending sales, is the total number of pending sales. The total number of pending sales includes not only the current month (700), but also an cumulation of those homes which have not yet closed from previous months. The total pending sales as of the end of March was 1370 homes. Of the 1370 homes, 735 were potential short sales and 185 were foreclosed homes (bank/lender owned).

CONDOS:

Condos available for sale as of March 31 – totaled 4036. Of this total 426 are potential short sale condos and 83 foreclosures. This translates to 14.9 months of inventory versus last year’s 29.9 months.

A total of 377 condos closed in March versus last March where 263 condos were sold.

Pending sales for the month of March was 627 versus last March’s figure of 465.

The median sold price for a condo in the Naples area was $165000 compared to last year’s median of $164000.

The indicator of future closed sales in addition to the current month’s pending sales is the total pending sales. In March a total of 1141 condos were pending sale. Of this number, 529 were potential short sales and 81 foreclosures.

The statistics used for this post were taken from the Sunshine MLS on April 1st using data obtained for the month of March.  The March data is primarily at this time, the final statistics are generally available on the fifth business after the end of the previous month.

The condos for sale in Naples continue to show signs of improvement. While still a buyer’s market, the condos available for sale are declining as well as the months of inventory declining.

The month of February started with 4114 condos available for sale in the Naples area. In a year over year comparison it is a decline of 1028 from last February’s 5142. This represents a decline of about 20 percent.

The graph below shows the comparison between the years of 2008 thru 2010.

Naples Condos for Sale - Comparison 2008 thru 2010

The months of inventory, a measure of judging current demand for condominium housing, in addition to if it is a buyer’s or seller’s market. When the months of inventory ranges between 5 and 7 months, it is considered a neutral market – neither buyers nor sellers have control over pricing. When months of inventory are excess of 7 months the buyers control the market as far as pricing. The reverse is true for when the inventory is 5 or fewer months.

The months of inventory at the start of February was 16.1 months compared to start of last February where there were 30.0 months of inventory. The decline in the months of inventory is about 46 percent representing another sign of the real estate market for condos in Naples is continuing to improve.

The graph below shows the movement in the months of inventory for 2008 thru 2010.

Naples Condos for Sale Months of Inventory 2008 to 2010

The composition of the condos for sale in Naples (traditional, foreclosures, and potential short sales) is another aspect of evaluating the real estate market. The greater the percentage of traditional sales the more strength within the market place. The percentage of the various types of listings, as noted above, should be reflected throughout the real estate cycle. The real estate cycle is listing, pending sale, and closed sale. When the percentages are inconsistent during the real estate cycle signals issues within a particular type of listing group can be noted and effective decisions made.

Below is a graph reflecting the composition of listings at the start of February.

Composition of Naples Condos for Sale at the Start of February 2010

The Naples condos market is not as strong a buyer’s market as last year both the number of condos listed for sale and months of inventory is lower than last year. With the reduction of condos for sale and the lower months of inventory, it still remains a strong buyers’ market.

As of the first of January there were a total of 3988 condos for sale. At the start of January 2009 a total of 4939 condos were listed for sale. This represents a reduction of 951 condos or roughly 19 percent.

Below is a graph depicting the change in the number of condos for sale at the end of the month for the immediate past 2 years.

Number of Naples condos for sale over 2 years

Another measure of the changing market is the months of inventory available for sale. This year the months of inventory is 16.5 months. Last year the inventory was 28.7 months. This is a reduction of 12.2 months in a year over year analysis. Buyers and sellers should monitor this statistic – months of inventory of less than 6 is a seller’s market (demand exceeds supply), while an inventory more than 6 is a buyer’s market (supply exceeds the demand).  A neutral market is 6 months – is when the market is in balance – demand and supply are equal.

Below is a graph showing the months of inventory during the past two years.

Naples condo inventory for sale over 2 years

Another important aspect of Naples condos for sale is the composition of the various types of listings.

Traditional listings are condos for sale which is neither bank owned nor a seller attempting a short sale. This is what typical occurred prior to the real estate bubble bursting.

Foreclosures are condos listed for sale and are bank owned properties.

Short sales are listings where the seller a property owner (seller) is attempting to sell the condominium and the value of the condominium is such that when the condo is sold, the seller does not have the funds or resources to cover the short fall (difference) between sales price and the amount of the mortgage owed to the lender(s) nor the closing costs associated with the sale. This type of sale requires the approval of all parties holding a lien against the property.

The composition of listings is only one part of the equation in looking at a local real estate market. The other stages – pending sales and closed – are important to consider in determining the strength or weakness of the local real estate market.

The graph below shows the composition of the percentage of listings according to the type of listing.

Composition of Naples condos for sale

As prospective buyers run towards the purchase of less expensive condominiums in the Naples area – their attention has not been to the financial stability of the association. In other words they are running into condominium complexes that could be facing a financial distress situation. Warnings regarding the apartment to condominium complexes and their potential financial distress situations have taken place over several months, starting with the doubling of quarterly association fees of a North Naples condominium complex. Such a situation has come to light recently in an article found on the Marco Island News on December 7, 2009.

Liens by the homeowners association halted an auction for 55 condominiums at Granada Lakes Villas in eastern Collier County.

An auction advertised for Dec. 6 never happened and interested buyers have been put on hold. Some contracts were signed in the weeks leading up to the public event.

The liens were filed after the auction was heavily advertised.

“We had a lot of properties under contract. We were ready to start closing. This came up,” said Eric Chavarria, a Realtor with Real Estate Empire in Miami, which was handling the auction.

Granada Lakes Villas went from apartments to condos a few years ago but it was a late comer in the conversion craze that hit Southwest Florida back in 2004. Granada Lakes Villas has been plagued by foreclosure actions.

Analysis showed more than 100 default notices filed against owners in the community, which is the first step in foreclosure.

On the developer owned units, the average lien is about $10,000 for unpaid maintenance fees. It’s almost half a million dollars in past dues.

Source: Marco Island News

Listings:

The new listings for the month of August 2009 were 468 condos in the Naples real estate market. The number of condos listed in August 2008 was 513. The decline of new condo listings coming on the market condos was 9 percent. In August 2007, the new listings were 564, representing a drop of 96 condos or decline of 17 percent.

In July 2009 the new listings were 557.

Of the 468 condos listed approximately 20 percent were potential short sales, 12 percent were foreclosed (bank owned), and the remaining 68 percent were traditional listings.

Median list price for potential short sales was $129000, foreclosed properties were $86200, and traditional listings were $239500.

Closed Sales:

In the month of August 2009 the number of condos sold was 204. In August 2008 a total of 171 condos were sold. The year over year was 19 percent increase. In August 2007 a total of 122 condos were sold. The increase over 2007 was 82 condos or about a 67 percent.

Of the 204 condos sold, approximately 11 percent were approved short sales, 21 percent were foreclosures, and the traditional sales were 68 percent.

A graphic presentation for the composition of the closed sales is shown below.

Composition of sold condos in Naples for August 2009

The breakdowns of the median sold prices are discussed in the median sold price section below.

Pending Sales:

During August 2009 a total of 341 condos had an offer accepted by the seller. In August 2008, 184 condos had offers accepted. The increase from August 2009 represents an increase of 157 condos or about 85 percent.

In August 2007 a total of 110 condos were pending sale. The increase between August 2009 and August 2007 was 231 condos or about 210 percent.

The total number of condos pending sale in the Naples area as of the end of August 2009 was 4095. The graph below reflects the composition of these pending sales.

Composition of Total Pending Sales for Naples

Median Sold Price:

During the month of August 2009, the median sold price of a condo in Naples was $163500. The median price is the sold price represents the middle value of the all sold prices within a stated range. The median sold price can vary from area to area within a local real estate market.

In August 2008, the median sold price was $216000. In the year over year comparison median sold price declined $52500 or roughly 24 percent.

In August 2007 the median sold price was $285000. In comparing August 2007 to August 2008 the price declined $121500 or about 43 percent.

Median sold price for approved short sales was $123900, foreclosed properties were $63600, and traditional listings were $218900.

The difference between the list price and sold price for approved sales was about 81 percent, foreclosed properties 95 percent, and traditional listings 90 percent.

The Naples real estate market for condos is starting to show signs of strengthening in many aspects and prospective buyers should be aware of the positive changes. The statistics presented and discussed below are global in nature for the Naples area and do not represent the more important micro-market views which can vary greatly from the global view.

Listings:

During the month of May a total of 536 condos were listed for sale. In May 2008, the number of condos listed for sale in the Naples area was 599. In addition the 536 condos listed for sale was less than the 757 condos in May 2007. The downward trend of new listings is continuing. The volume of listings in January were 990, February with 745, March with 771, and April with 657. Other than October 2008, the listings for May was the lowest number over the past 4 years.

The listed condos in May 2009 was the lowest number of homes listed since October 2005. The noteworthy item about this fact, is that in October 2005, was the start of the real estate erosion even though the median sold price of homes peaked in January 2007 with January 2006 as the next highest median sold price month.

Pending Sales:

During the month of May 2009, a total of 375 condos had offers accepted by sellers (pending). The figure for pending condo sales in May represents a substantial increase over both May 2008 and May 2007 were the pending sales were 217 and 207, respectively. The increase represents 73 percentage upwards change over May 2008 and a 81 percentage increase. The increase in pending sales for May can largely be attributable to the lower median sold prices of condos.

Over the past 9 months the number of pending sales in the Naples area have showing an upward trend from 118 condos pended in September 2008. In addition, the past 3 months have had the highest volume of pended condominiums over the past four years.

Closed Sales:

There were a total of 287 closed (sold) in May 2009. In a year over year analysis, the 287 sales is higher than May 2008 and May 2007, where 223 and 218 sales respectively took place. The sales in May represents a 22 percent increase and 32 percent over May 2007 and May 2008, respectively.

The closed sales in May, represents the highest number of homes sold since September 2005.

Since January 2009, the number of condos sold has been on a strong upward trend. This is the continuous of an upward trend starting in January 2009. The immediate past three months of closed sales is highest since September 2005.

The increase is largely due to the lower median sold price of condos in the Naples area.

Median Sold Price:

The median sold price (the sold price at which half the condos sold and half below) for May 2009 was $167000. This figure may not be good news for existing homeowners or sellers, but it is good news for prospective buyers. However, prospective buyers need to be aware that since January 2009, the median sold price for a condo in Naples has been ranging from $178000 to $167000. Over the past 2 months the median sold price has been showing a slight upward trend.

The median sold price in May represents a 36 percent decline from May 2008 when the median sold price was $262500 and a 45 percent decline from May 2007 when the sold price was $301500.

The lower median sold price has a direct affect on the increased volumes for pending sales and sold condos. The lower volume of new listings could have an eventual impact on the median sold prices, as the volume of new listings coming on the market for condos declines. Can the current statistics represent a stabilization of the Naples condo real estate market or has the bottom of the real estate been realized? Only the national economy and time will tell.

On September 19, CNBC did a story on the “Finding Housing’s Market Basement” where Richard Dekaser, a senior vice president and chief economist at National City Corp., singled out Naples in talking about the “first rays of sunshine on a possible end to the housing crisis.”

“Three years ago, the poster child for excess valuation in America was Naples, Florida,” he said.

Not anymore. Through the second quarter of this year, prices have dropped 33 percent, he said, leading him to judge the market as “slightly undervalued.” That means home prices are actually lower than where they should be.

Although I have not agreed with Mr. Dekaser in the past regarding, due largely to the methodology used in evaluating Naples overvaluation, I do have to agree with him at this time – to a point. Where I differ with Mr. Dekaser is that the Naples real estate market has gone through significant valuation adjustments and just might be undervalued to such a point where prospective buyers might be missing some excellent purchase opportunities.

In order to better understand the Naples area real estate market it is best to break down the market into an overview of single family homes and condos with a view towards the historical price appreciation prior to 2003. In the very late part of 2002, loan or mortgage program underwriting criteria were lowered to a point where sub-prime borrowers, stated income, and no doc loans proliferated. The proliferation as we are all aware resulted in abnormal price appreciation due to increased demand, which ultimately has resulted in today’s economic issues. Price appreciation 2002 and prior could represent what can be determined a “normal appreciation.”

Naples Homes:

Below is a graph reflecting both the actual and projected median price for a Naples single family home, based upon the “normal appreciation” prior to 2002, showing 1998 to 2007 for actual annual median price with actual median price through September 30 for 2008.

Graph of Naples homes median prices actual versus projected

Under “normal appreciation” the median price to be paid for a home in Naples would be approximately $378524 for calendar year 2008. Through the nine months ending September 30, the actual median price paid is $335000.

In 2005 the median price paid was $474450 (the peak of the market), while under the “normal appreciation” a home should have been selling for $295060. The drop in median price from the peak of the market to the actual year to date through September equates to 29.4 percent.

The present actual year to date median price of $335000 is less than the actual median price paid in 2004 which was $345000.

This is an overview of the Naples area single family homes and there are differences to be found between various neighborhoods where the median price declines are greater and others with where the price declines are less severe.

Naples Condos:

Below is a graph showing the median price paid for Naples condos for the calendar years 1998 to 2007, with the actual median price paid for the 9 months ending September 30.

Graph of Naples condo median price paid and projected median price.

Under “normal appreciation” the median price to be paid for a condo in Naples would be approximately $270083 for calendar year 2008. Through the nine months ending September 30, the actual median price paid is $260000.

In 2005 the median price paid was $360000 (the peak of the market), while under the “normal appreciation” a home should have been selling for $211070. The drop in median price from the peak of the market to the actual year to date through September equates to 27.8 percent.

The present actual year to date median price of $260000 is almost the same actual median price paid in 2004 which was $241000.

This is an overview of the Naples area condos and there are differences to be found between various neighborhoods where the median price declines are greater and others with where the price declines are less severe.

Summary:

When looking at history there have always been recessions where property values declined and in the long run have increased. The Naples area and Florida is projected to substantially increase. The State of Florida projects the estimated population for the Naples area to increase about 6 percent by 2010 and 14.8 percent from 2010 and 2015. Barriers to affordability have been reduced in regards to the increase in homestead exemption from $25000 to $50000, capping of assessed valuations for non-homestead properties, portability of the homestead savings to other Florida properties, historically low interest rates, and restrictions on county government spending.

These changes are subtle and will assist to increase the demand for residential real estate.

With Naples real estate currently under-valued – should you be thinking about making your Naples Florida real estate purchase at this time? If so, please call at (239) 593-3581 or email me via the contact form to the left.

August Naples Condo Activity:

Listings:

During the month of August 458 Naples condominiums were listed for sale. For the same month in 2007, 560 condominiums were listed for sale; this represents a decrease of 18.2 percent. The decrease from 2006 was 32.7 percent from the 680 new listings.

In July 2008 there were a total of 499 condominiums listed for sale.

The available for sale Naples condominiums have dropped from 5582 in February 2008 to 4675 at the end of August. This represents a reduction of 907 or 16.3 percent.

The number of months of inventory or the absorption rate is presently 29 months down from February’s 37 months.

Additional detailed information will be posted to explain where the listings and identification of where distressed properties and non-distressed properties are located for a better understanding of the Naples condo real estate market for both buyers and sellers.

Closed Sales:

A total of 157 condominiums were sold during August 2008. Comparing the same month in 2007 there were a total of 122 condominiums sold, the higher volume of 35 condominiums represents an increase of 28.9 percent. In August 2006 a total of 121 condominiums were sold or an increase of 29.8 percent (or 36 more condominiums).

In July 2008 a total of 155 condominiums closed or 2 more condominiums.

Condominiums with a sales price of less than $100000 represented about 9.3 percent of the total 157 condominiums closed versus 1.6 percent in August 2007.

Condominiums with a sales price between $100000 and $200000 represented another 35.4 percent compared with 2007 where the percent was 16.4 percent.
Condos sold with sales price of between $200000 and $300000 represented 20.5 percent of the closings versus 34.4 percent in 2007.

Eight developments within the Naples area accounted for 31.7 percent of the August condo closings – Park Shore (11.8 percent), Pelican Bay (4.3 percent), Vanderbilt Beach (3.1 percent), Cypress Woods Golf and Country Club (2.5 percent), Falling Waters (2.5 percent), Fiddlers Creek (2.5 percent), Pelican Marsh (2.5 percent), and Stratford Place (2.5 percent).

Distressed properties (short sales, pre-foreclosure, and foreclosures) represented 17.9 percent with median price of $135000.

Pending Sales:

In August 2008 200 condominiums were placed under contract or pending for closing (pending sales are where a buyer and seller have agreed on the price and terms of a purchase and the condominium is no longer available for sale). The 200 condominiums is an increase over the 110 condominiums (81.8 percent) in 2007 and 131 condominiums (52.7 percent) in 2006.

August 2008 was higher than the 155 condominiums in July 2008 and greater than the 173 condominiums in June 2008.

Median Price Paid:

During the month of August the median price paid for a condo was $215000. In the previous year, 2007, the median price paid was $285000 or a reduction of 32.6 percent. In 2006 the median price was $319900 or reduction of 32.8 percent compared to August 2008.

Non-distressed condominium sold for median price of $231500, compared with a median sale price of $135000 for distressed (short sales, pre-foreclosure, and foreclosed) condos.

In July 2008 the median price paid was $250000 down 14.0 percent on a month to month basis.

Referring back to closed sales the areas comprising the largest percentage of closings in August shows the following:

• Park Shore – $1425000 an increase in value of 46.2 percent from the 2007 median price of $957500.

• Pelican Bay – $572500 a reduction in value of 40.2 percent from the 2007 median price of $957500.

• Vanderbilt Beach – $950000 an increase in value of 60.3 percent from the 2007 median price of $592500.

• Cypress Woods Golf and Country Club – $149500 a reduction in value of 19.2 percent from the 2007 median price of $185000.

• Falling Waters – $173,700 a reduction in value of 15.3 percent from the 2007 median price of $205000.

• Fiddlers Creek – $279999 a reduction in value of 41.7 percent from the 2007 median price of $480000.

• Pelican Marsh – $422500 an increase in value of 1.8 percent from the 2007 median price of $415000.

Short sale condos had a median price of $180000, while foreclosed condos sold for a median price of $133000.

The analysis of the median price paid shows sellers and buyers should not only be aware of national, state, or area (city or town), but also by development or neighborhood to make an informed decisions in the condo real estate market.

June Activity:

Listings:

During the month of June 490 Naples condos were listed for sale. For the same month in 2007, 654 condos were listed for sale; this represents a decrease of 25.1 percent. The decrease from 2006 was 38.4 percent from the 795 new listings. In May 2008 there were a total of 556 condos listed for sale. The lower number of new listings has an impact on the reduction of the number of month’s supply of available condos in the Naples, along with the activity of closed sales and pending sales.

Closed Sales:

A total of 173 condos were sold during June 2008. Comparing the same month in 2007 there were a total of 204 condos sold, the reduction of 31 condos represents a decrease of 15.2 percent. In June 2006 a total of 191 condos were sold or decrease of 9.4 percent (or 18 fewer condos). In May 2008 a total of 216 condos closed or 43 fewer condos. During June in the state of Florida a total of 3,628 condos sold compared to the previous year’s total of 3851 condos or reduction of about 5.8 percent. Therefore, the Naples condo market might be slower than the overall state’s condo market, without considering the median price paid for condos.

Condos priced below $300,000 represents about 56.2 percent of the total 173 condos closed in the month of June.

Pending Sales:

In June 2008 171 condos were placed under contract or pending for closing, pending sales are where a buyer and seller have agreed on the price and terms of a purchase and the condominium is no longer available for sale. The 171 condos is an increase over both the 123 condos in 2007 and 153 condos in 2006. June 2008 was below the 230 condos in May 2008 and 258 condos in April 2008.

Median Price Paid:

During the month of June the median price paid for a condominium was $285,000. In the previous year, 2007, the median price paid was $310,500 or a reduction of 8.2 percent. In 2006 the median price was $369,900 or reduction of 22.3 percent compared to June 2008. The national median sales price in June was $224,200, which is down 2.2 percent from a year ago. The Florida median sales price was $183,700 down approximately 13.5 percent from last year’s $212,400.

The median sales price paid for a condominium has declined less than the overall state’s median price meaning that condominiums are holding their value better than other parts of the State of Florida.

Quarterly Analysis:

Listings:

During the second quarter of 2008 a total of 1727 condos were listed for sale.
During the second quarter of 2007 2147 condos were listed. A reduction of 420 units or about 19.6 percent and a reduction of 758 condos listed from the 2485 units in the same quarter of 2006 – about 30.5 percent reduction.

Closed Sales:

The volume of sold condos for the second quarter of calendar 2008 was 638 condos. Compared on a quarterly basis for the previous year, where 673 condos closed which represents a reduction of about 5.2 percent. However, when looking at the second quarter in 2006, 622 units were closed for an increase of about 2.6%.

Pending Sales:

For the past three months a total of 657 condos have been placed in a pending sale status. Under normal situations (fewer possible short sales) the average time frame for closing after a condominium is a pending sale – 30 to 60 days later, many of the pending sales would already closed and had a positive impact on closed sales in June. Possible short sale transactions are extending the time frame for closings due to the backlog of contracts without any action by the lenders for about 45 to 75 days from the day the short sale package is received by the lenders.

During the second quarter in 2007 a total of 517 condos were placed under contract or pended. The increase in pending sales for 2008 was 140 condos or an increase in 2008 of roughly 27.1 percent. In 2006 pending sales totaled 594 condos or increased 10.6 percent in 2008.

Median Sold Price:

The median sold price for a condominium in Naples during the second quarter of 2008 was $260,000 versus $320,000 in 2006 or price reduction of about 18.8 percent. The median price paid for a condominium in June 2006 was $380,000. Compared to 2008 the price reduction from 2006 is about 31.6 percent. For informational purposes calendar year 2005 had the highest median sold price of $360,000.

Summary:

The number of new listings for condominiums is showing a reduction in the volume from the previous two years. Closed sales are running slightly behind 2007 and 2006 – could be due to the timeframe needed for lender(s) approval of the sales price for a short sale. Pending sales are up substantially over both 2007 and 2006. The median sold price is down from the previous two years.

For someone looking to sell their condominium attention needs to be paid to its condition and establishing a price as close to its market value to facilitate its sale.