Overall, Florida’s housing market has undergone significant shifts in the last few months, with notable decreases in sales activity as a result of rising interest rates and economic uncertainty.
In some aspects, Naples has followed these general trends, but the local Naples housing market had some unique factors come into play that will be important to keep in mind if you plan to purchase property here or make big moves for your portfolio in 2023.
Read on for more information about the Naples housing market and Vaster’s 2023 price and market predictions.
How the Naples Housing Market Evolved in 2022
As 2022 progressed, the Naples housing market saw prices peak in the Spring, and decreased slightly as we approached the Winter holiday season. However, the decrease was not as significant as we've seen in other Florida markets.
Let's start off by examining how the Naples real estate market performed as a whole:
While overall home prices in Naples haven't moved as much as other South Florida markets, changes reported in November for inventory levels, closing speeds, and sales activity are more aligned with the trends we've seen statewide.
For example, we saw a year over year increase of 96% for overall home inventory in November 2022. Compared to the busy Spring season, inventory also increased 21%, from 2,046 to 2,478.
Taking a look at year over year growth, Naples inventory has more than doubled, from having 1 months supply to now 2.8 months supply of inventory. Still, home inventory in Naples is still considered low as a balanced market is characterized as having at least 6 months supply of inventory.
Deals were also moving much slower towards the end of the year. On average, homes in Naples sat on the market almost 3 times longer than they did in May 2022 when we saw prices peak, from 16 days to 46 days.
Overall total sales also took a hit with a 55% decrease in sales from May to November, as well as a year over year decrease of 41%.
All of this indicates a few key insights:
Recent rate hikes have moved us away from the intense seller's market that Naples experienced the last two years
Lingering impacts of Hurricane Ian have impacted new inventory from being added to the market
Single-Family Home Sales
The single family home market in Naples actually saw an increase in median sales price of less than 1% from May to November, and saw a 32% increase when compared to November of the previous year.
Closed sales for the single family home market in Naples saw a 30% year over year decrease, from 7,510 to 5,194 closed sales. The Spring of 2022 is when several Florida markets saw prices peaking, and since then, Naples closed sales have decreased 20%.
Similar to overall trends, single family homes are sitting on the market almost 2-times longer than the year prior (from 26 to 50 days) and allowing for inventory to grow almost 3-times what it was the year prior (from 1.3 months of supply to 3.6 months of supply).
The opportunity for buyers to negotiate is also coming in to play, with 3.4% less single family home sellers receiving their original asking price in November 2022 than the same time last year.
When looking at the different price ranges, the market for homes priced $300k and below saw the biggest drop in year over year closed sales of 60%, from 639 to 254 closed sales. On the other hand, the market for homes priced between $1 million to $2 million saw the smallest decrease out of all prices ranges, with only a 9.8% decrease of closed sales year over year (from 990 closed sales to 893).
This could be due to a few reasons:
Buyers in the $500k and below price point are more rate sensitive and will be the first ones to step out of the market when rates rise
Delayed or cancelled closings as Naples residents prepared for the category 4 hurricane towards the end of September
The Naples condo market saw a decrease in median sales price of about 7% from May to November, but a 19.5% increase year over year. We are also seeing a little more room made for condo buyers to negotiate.
Condo sellers frequently received offers above list price in November 2021. Fast forward to November 2022, we're seeing condo sellers on average receive 3.3% less than they were a year ago.
Year over year, we see condo inventory increase from having 0.6 months worth of inventory to now at 2 months worth of inventory. However, the Naples condo market still has some catching up to do, considering the single family home market already has 3.6 months worth of supply as of November 2022.
NABOR’s data further breaks down Naples condo trends at different price points:
Similar to the single family home market, condos priced below $300,000 saw the largest drop in sales at 74%, from 3,706 to 957 closed sales for the month of November.
However, not all price ranges experienced a drop in sales year over year. Condos priced between $500,000 - $1 million saw a 12% increase in closed sales and condos priced above $2 million saw a 3% increased in closed sales.
Current State of the Naples Housing Market
The most recently captured and analyzed data for the Naples housing market is from November 2022. According to NABOR, contrasted with data collected from November 2021, the Naples housing market is starting to see sales activity slow down and begin to build more inventory, particularly in the single family home market.
Inventory overall has increased significantly, but Naples is still a seller's market with only 2.8 months supply of inventory. However, many homes are sitting on the market 2x-3x as long as last year. This is likely attributed to interests rates hindering the buying power of many prospective homebuyers, and sellers continuing to use aspirational pricing instead of pricing closer to market value.
Did Hurricane Ian Affect the Naples Housing Market?
The immediate impact that Hurricane Ian had on the Naples market in September to November was the decrease in business days to schedule closings.
September already loses one business day in observance of Labor Day, and in November we lose several more working days due to nationally observed holidays like Veterans Days and Thanksgiving. Add to that, the last week of September where many businesses and banks were closed in preparation for the Hurricane.
This resulted in delayed or cancelled closings during the time of year where the real estate market tends to slow down, and mortgage rates were actively climbing to 7%
After the Hurricane, many sellers had to take their home off the market to address damage incurred by the hurricane. While sellers of older homes faced new challenges as insurance premiums increased after the hurricane, and made it costly for buyers to insure an older home. This restricted new inventory from growing and increased demand for newer homes that are easier to insure.
How Might the Naples Housing Market Evolve in 2023?
Given the above information, both home buyers and investors must consider how the market may evolve in 2023:
Factors like rising inflation and increasing mortgage rates may cause several buyers to pause their home buying process, specifically buyers in the $500,00 and below price point.
Demand for newer homes may increase as their ability to obtain insurance will become a key selling point in 2023.
Demand for luxury homes remains strong in Naples and we'll likely see more buyers scooping up vacant land to build on as opposed to paying a premium for a completed asset.
Across all price points, sellers are still pricing high, despite slower sales activity. As a result, many homes are sitting on the market twice as long as last year. That said, there is an opportunity for sellers to capitalize on Today's current market conditions and close faster by partnering with a realtor who can help them price right from the start.
Partner with Naples Real Estate Experts
Whether you're looking to Naples for a vacation home or to start generating rental income, Vaster has you covered. Our team has years of experience in the South Florida luxury market in lending, sales, and development.
Financing is available for Naples single family homes, condos, and vacant residential land. Cash-out loan solutions are also available for existing Naples property owners that want to tap into their equity.
Contact us today to learn more about how we can help you with your home buying and portfolio goals.