At Cobia Holdings we serve all of Southwest Florida, predominantly Lee & Collier County. As such we pay close attention to what’s happening in Collier County – which is notable as the “Paradise Coast” or the jewel of Southwest Florida. Many who are familiar with Florida know of the more well-known expensive properties and locations along the East Coast – including Miami, Star-Island, Boca and more, but few know that some of the country’s most expensive property is actually nestled in the tiny city of Naples – where there are a number of $50 million+ properties. To-date the most expensive residential property ever sold in Florida was $173 for a property in Palm Beach:
The Florida record for a residential property is $173 million for an estate near Palm Beach in 2022, according to the Palm Beach Daily News.
However, a new property recently went on the market in Naples that absolutely eclipses the Palm Beach mansion. This 9-acre virtually private island at the South end of Gordon Drive (known for the most expensive properties in the area) is listed at a whopping $295 million – and unprecedented amount!
Ironically both owners of Cobia were consulted by one of the agents and brokers that was competing to list this property.
Naples’ expensive prices for real estate aside – one thing that helps us (kind of) stay in the know on real estate in Collier County & Naples – are the monthly reports put out by NABOR (the Naples Area Board of Realtors).
NABOR April 2024 Market Report Deep Analysis
This month we decided to take a deeper dive into their latest report – the April 2024 market report – and provide some insight an analysis for people actually on the ground.
One problem I personally have with the local media and with NABOR specifically – is that the information is always presented in a positive light, with a positive spin – no matter how devastating the numbers may be, or what the larger market picture truly is. Obviously this makes sense as so many livelihoods are at stake – but money is no substitute for reality or the truth.
Let’s get into the analysis:
Inventory Surges & Boosted Home Sales
The Naples Area Board of Realtors (NABOR) recently released its April 2024 market report, revealing a significant increase in home sales driven by a notable rise in inventory. This, at first glance seems like a good thing. A lack of inventory has plagued Florida (South Florida & SWFL in particular), but unfortunately, despite the surge in inventory (and modest growth) – a darker picture lies underneath the numbers and flowery language.
One of the most significant things communicated in the report are the substantial increases in inventory. This surge in homes has (theoretically) provided buyers with more options and contributed to a (tiny) uptick in sales activity.
- Inventory Levels: The report indicates a year-over-year increase in inventory by 25%, with the total number of active listings reaching 6,500 in April 2024. This increase is attributed to both new construction projects and a rise in existing homeowners listing their properties.
COBIA’S TAKE: This increase in inventory, although massive – belies a more important point – people WANT to sell (in many cases, they’re selling extra homes), but because a) many believe that they should be entitled to the massive boom prices from Covid that basically ended in 2022, many homes are NOT selling – b) Many single, small families are also incredibly burdened by the current high-interest rates, and the large price of homes – which are up nearly 100% since pre-covid (increase in home prices + massive increases in interest rates means most younger people without vast wealth are completely priced out of the SWFL market). The ONLY PEOPLE purchasing homes in Collier County/Naples are the extremely wealthy many of which are being purchased for cash, or through New Home Construction – which can play with rates.
Case-in-point, through a sister company, we know of multiple clients in the area with 2 or 3 homes, that have had them listed for over a year (at prices that would have been fire-sales in 2022), however even after reductions of 30%+, they’re simply not selling (including along the beach). Why? They’re not in the “hot” $1.5 Million+ luxury market (ironically, they’re just below that threshold). Homes in the luxury market $1.5 million+ are still selling. It’s neither a buyer nor a sellers market right now – virtually no conventional transactions are happening at the small (< 2500 SQFT) single family market right now. Additionally, condo prices throughout the region have completely cratered.
Sales Growth
The increase in inventory has positively impacted home sales, which saw a considerable rise compared to the previous year.
- Sales Volume: Home sales in April 2024 were up by 18% compared to April 2023, with a total of 1,200 transactions. This growth reflects strong demand in the market, supported by the increased availability of homes.
COBIA’s TAKE: Again, year-over-year this looks positive from NABOR’s reporting, but there’s a number of darker points to draw from this. In the above graphic, it’s clear there’s roughly 70% increase in the number of homes on the market. If we had an actual, balanced market (which we clearly don’t because days on market is up 66 days – or 25%) AND we ONLY have a tiny increase in closes. This is because people are listing their homes for prices that don’t make sense (something we’ve been seeing since the middle of last year). We’re in for a harsh reality in the coming years in our opinion – IE not only will prices HAVE to fall to get these homes in other hands – this MUST be accompanied by lowered rates.
Take this home in Island Walk for example: https://www.zillow.com/homedetails/3915-Valentia-Way-Naples-FL-34119/55538588_zpid/ This home in 2019 in Naples was roughly $350,000 (or $1400/month). Now, that same. home is going for (even after a market slide – and reductions in price) $650,000. At today’s rates that’s $4,589 an increase of more than 3x! Have any local residents received a 3x increase in pay? No.
In fact, at current rates – if one were to want a similar payment, the price rang would have to be around $200,000. In other words, because of rates purchasing power has decreased by roughly 50% due to carrying costs (the vast majority of home purchases nationwide). Now, if the markets remain high, the upper-middle class remains deluded in thinking the “economy is good” (because the stock market is high) – and this area remains a major tourist and second home destination – perhaps this can be floated for sometime. But we think the musical chairs is going to be up sooner than later.
Pricing Trends
Despite the rise in inventory, home prices have remained stable, indicating a balanced market where demand is keeping pace with supply.
- Median Home Prices: The median home price in Naples for April 2024 was $450,000, showing a slight increase of 2% from the previous year. This stability in pricing suggests that the market is not experiencing the volatility seen in other regions.
This is probably the most insane part of the report – DESPITE AN INCREASE IN 70% IN INVENTORY – PRICES ARE STABLE? HUH? They should be going down massively – but because these are second homes – people are holding on to their homes until they feel massive pain. The old saying…
How do you grow broke? First slowly, and then all at once…
Comes to mind.
Detailed Analysis
Factors Contributing to Inventory Increase
Several factors have contributed to the rise in housing inventory in Naples. These include:
- New Construction: The completion of several new residential projects has added a significant number of homes to the market. These projects cater to various segments, including luxury homes, affordable housing, and rental properties.
- Seller Confidence: Improved economic conditions and stable home prices have encouraged more homeowners to list their properties. The report indicates that many sellers are motivated by favorable market conditions and the opportunity to capitalize on their investments.
Buyer Behavior and Demand
The increased inventory has attracted a diverse group of buyers, including first-time homebuyers, retirees, and investors.
- First-Time Buyers: The availability of more affordable homes has enabled many first-time buyers to enter the market. Low mortgage rates have also played a crucial role in making homeownership more accessible.
- Retirees: Naples remains a popular destination for retirees, who are drawn to the area’s pleasant climate, amenities, and lifestyle. The increase in inventory has provided more options for this demographic.
- Investors: Real estate investors have shown a keen interest in the Naples market, attracted by the potential for rental income and long-term appreciation.
COBIA’s Take: This is all nonsense (especially on the first time buyer side). Yes, some buyers are buying, but most are priced out.
Economic Impacts
The rise in home sales and stable pricing have broader economic implications for the Naples area.
Employment and Local Economy
The real estate sector’s growth has positively impacted the local economy, particularly in terms of employment and business activity.
- Construction Jobs: The surge in new construction projects has created numerous job opportunities in the construction industry, benefiting local workers and contractors.
- Real Estate Services: Increased sales activity has driven demand for related services, including real estate agents, mortgage brokers, and home inspectors.
Community Development
The expansion of the housing market contributes to the overall development of the community, enhancing infrastructure and amenities.
- Infrastructure Improvements: The growth in residential areas necessitates improvements in infrastructure, such as roads, utilities, and public services, leading to better
