Naples FL News | Market Report

Published on March 17, 2015

BEST FLORIDA BEACH TOWNS

Could the Naples real estate market be showing the first signs of an overinflated bubble? To us, housing prices on the west coast of Florida are on steroids with no end in sight. At the top of the bubble in 2006, the average Naples home prices hovered around $898k. According to Zillow, prices are currently hovering around $716k. The low in 2012 was $533k. Heaven forbid we’re experiencing irrational confidence again. Granted people living in more expensive states like New Jersey, New York and California are used to high home price tags but folks, don't get caught overpaying because of ignorance. We see a bubble in Naples and it's not in the pool.

One of the hottest segments of the Naples real estate market is spacious, luxury high-rise condominiums with views of the Gulf of Mexico and beachfront condos. We toured Aqua at Pelican Isle during the Parade of Homes last week. It’s an impressive hidden gem and boating community with quick access to Wiggins Pass, the gateway to the Gulf of Mexico.

More than 100 condominiums sold for more than $2 million in the Naples area last year. New Naples condominiums on the drawing board include Kalea Bay, Seaglass and Altaira. Condos in downtown Naples on 5th Avenue such as Naples Square are also in demand because Baby Boomers love the idea of walking to restaurants, shopping and the beach. Overall, the average price of condominiums in Naples is more than double the national average. If you’re looking for a bargain in one of the best Florida beach towns, don’t expect to find it in Naples.

The luxury home market is also on fire. In 2014, more than 40 homes sold in Naples for over $5 million. The majority of homes we toured during the Parade of Homes were priced well over $1 million. It seems like a million dollar home has become the 'new norm' in Naples. Despite the U.S. dollar’s strength against foreign currencies, approximately 20% of the home buyers spending millions in Naples are foreigners.

Here’s more observations about Naples:

Buyers are choosing new over re-sales
With limited inventory, buyers are building
The median home price increased 17% in 2012, 18% in 2013 and 13% in 2014. That’s almost 50% in three years! According to the luxury home builders we met, January & February 2015 were the busiest selling months ever. If the 2015 median home price increases by 20%, Naples homes will be at the same price point as when the market collapsed in 2007.

What’s drawing folks to Naples verses popular sun drenched cities on the east coast like Vero Beach where buyers can find or build the same home for half the price or less? It’s hard to say but what we can tell you is the traffic on the ‘Gulf’ side during the winter months is horrendous and there’s no solution. We believe this is why smart luxury home builders are building ‘resort-style homes', a home one would never want to leave. Homes with amplified outdoor living space and exotic swimming pools, entertainment fire pits, outdoor dining rooms and functional courtyards. Venture out only for food shopping, entertainment and the beach. If you're not retired with all the time in the world, commuting in Naples every day would be stressful.

Locals call the west coast the ‘Cultural Coast’ because of the rich art and entertainment venues. Florida has more golf courses than anywhere in the country. The Naples area has more golf holes per capita than anywhere else. Maybe golf is the #1 ‘driving’ reason and golf is not cheap in Naples. Initiation fees can easily be $50,000 plus with annual dues over $12,000 to live on just one golf course. Beautiful beaches and dazzling sunsets add to the beauty of Naples.

Naples is no doubt one of the wealthiest cities in the United States. The good news is financing is tough keeping things in check although many of today’s buyers are paying cash. On March 2, 2009, the Dow Jones average was 6,626. Today, it’s trading over 18,000. Unfortunately, the bullish trend won’t last forever. Everyone knows history repeats itself. This time, it doesn’t look like the subprime crisis will cause the bubble collapse, but something will. Be it an oil spill, severe hurricanes, the looming college crisis or maybe currency issues. These things shouldn't be a surprise. Most Americans know our U.S. dollar is worthless without enough gold backing it. Experts warn that soon there will be an oversupply of colleges when the youngest Baby Boomer's child graduates college causing real estate havoc in big college towns. Fortunately, Naples is not one of them but let's not be short sighted.

Our advice about finding real estate in one of the best Florida beach towns is simple. If you’re buying a home in Naples to live in forever, you should be fine because you won’t have to worry about selling tomorrow at today’s prices. Be sure to have a 'seasoned' Buyer's Agent on your side who knows what's overinflated in Naples.

If you'd like some help, ask us to introduce you to our trusted colleague in Naples Florida.