Naples Real Estate News

A bright light is emerging in the doldrums of the bleak Naples real estate market. Pending sales were up in February ‘08 compared to February ‘07. Sure, some of that increase came from discounted prices, but some of those houses were originally on the market for prices that were well inflated over market value. It’s not so much a price collapse as it is a price correction. Either way, people are buying real estate in Naples, which can only mean good things for the future of the market.

It’s no secret that the real estate market in Naples, Florida has faced some rather rocky times in the past couple years. You know a market is going to be volatile when legendary investor Warren Buffett starts telling everyone that it’s an obvious bubble.

The Naples market has not collapsed by most standards. Upscale housing condominiums and luxury family homes have seen stable and sometimes even increasing prices. The market that has been hit hardest by the real estate bubble is the lower end homes, those mostly bought by middle class seniors and young adults who aren’t working as hedge fund managers yet. There have been some great deals out there for those looking for lower end housing in the Naples area. Foreclosures have increased in Collier County, which means good news for buyers and bad news for sellers who are trying to unload properties in a similar price range.

Many deposits have been abandoned in some builders hands, leaving them to find someone to sell a building originally contracted by someone else. That leads to discounted prices. With community builders, that means some people are buying houses for far less than similar or even lower end houses in their neighborhood. This has obviously made some people unhappy, and at least one community builder could be facing a class action lawsuit from the homeowners.

If you are trying to sell a home in this area, expect to be waiting a long time if you aren’t flexible on price. There are just too many homes on the market right now to not be competitive with pricing. The nations economy could also have an effect here, as a recession would lead to even lower demand.

NaplesRealEstate » Blog Archive » The State Of The Greater Naples Market….

Technorati Tags: naples, real, estate, housing

Real estate prices have sagged in the past couple of years, but new data may indicate the worst is yet to come. Construction of new homes is way down as buyers are drying up and more owners are trying to sell.

The lending practices of many banks, including those serving the Naples market, make this slowdown even worse. Like never before, the real estate markets are tied directly into the rest of the economy. If people who have pricey mortgages try to sell their home, they may find that the price will not cover their mortgage cost, which will leave them paying a bill for something they don’t even own anymore. That means less consumer spending, which hurts retail sales. You can see how this ripple effect works.

If the above events happen, the Fed will likely lower interest rates to induce more consumer spending and cheaper lending, making money flow easier. This leads to a higher inflation rate, making our money worth less and foreign goods (which are most of our goods) relatively more expensive. The Feds efforts may work in the long run, but in the short run it can be a tough pill to swallow.

What can you do about this now? Not much. If you are buying a home, beware of mortgage deals that could leave you in financial ruins. Other than that, don’t panic, ride it out, always look for wise investments. There are lots of them out there every time the markets drop.

Technorati Tags: naples, real, estate, market

Charts of housing inflation using a base year of 1890 show that the boom of the past 10 years is truly unprecedented. Using a base price of 100 adjusted for US dollar inflation, the current housing price is 200. That means houses are twice as expensive as they were 117 years ago.

So what’s causing this? Well, several theories can explain the reason housing prices go up faster than prices of other goods. The “standard” house has improved dramatically over time. Indoor plumbing and electricity are no longer considered a luxury except in certain parts of the deep south.

Another factor - and one that I’m sure many Naples residents are aware of - is regulations set by local authories and even individual neighborhoods. If you own a 10,000 square foot house in a town that has just passed a regulation that only allows new houses to be as large as 5,000 square feet, the price of your house should go up, because supply has been locked. These regulations have expanded over the past few decades, which could explain why we saw an unimpeded run-up on housing prices in places like Naples from a 110 in 1997 to a 200 or higher in 2005.

Technorati Tags: housing, inflation, economics, economy

Technorati Tags: housing, inflation, economics, economy

The New York Times is running an interesting piece about misleading housing numbers. While many surveys have shown prices stable or slightly below last year, an auction in Naples last week showed that they are actually down 20-25%.

The problem with most of those housing surveys is that they only look at houses that have sold. Many houses will stay on the market for months and never sell. Only then will the owners lower the price. So it’s not just the price that shows the health of the housing market, but also the time it takes to sell a house at that price.

It’s no secret that Naples was one of the greatest benefactors of the housing boom. Real estate prices exploded, in many cases 2-3 times higher than prices for the same piece of real estate just 10 to 15 years ago. That meant great returns for people looking to move out of the area, and a lot less money for all those retirees moving into the area.

Naples is clearly no longer a good buy, especially for speculators who have no intention to move into the area. Flipping houses in Naples right now is going to be about as profitable as selling soap in New Jersey.

Technorati Tags: naples, florida, real+estate

Cost of living is an important issue when deciding to move to a new area. Although we tend to think that people do not get to choose where they want to move, they just move where their job takes them, a very high number of buyers are actually free to pick and choose a location.

It’s not news to anyone from Naples that cost of living expenses are much higher than most of the country. Sperling’s Best Places, a popular real estate site, has a cost of living index that is based on a US average of 100. Their rating for Naples, Florida is 201.6. That means costs in Naples are double that of the national average.

You may not see these cost differences when looking for a house. Gas prices might be the same or lower than prices you see elsewhere. A dozen eggs at the supermarket may cost the same as they do in Cleveland. The real difference comes from the prices you don’t see until you actually live there. Insurance is higher across the board than the rest of the nation. Homeowner’s insurance is particularly high, often as much as 5-10% of a family’s income. Each bad hurricane season will increase those prices, sometimes even doubling them in a span of one year.

Homeowner’s association costs are another thing to consider. If the house you’re buying is in a neighborhood that requires you to join their homeowner’s association, you can expect to pay thousands of dollars a year.

Where can the high real estate prices be seen by the interesting buyer or tourist? Well, take note of the staff in restaurants and retail stores. You’ll probably notice that there are not as many staffers as you might expect. That’s because the owners of those businesses have to cut costs to afford the rent.

There are many things that need to be considered before buying a house in a high-priced area such as Naples. Real estate speculators should also remember these things because it might affect the timing of their sales if they want to avoid some very hefty costs.

Technorati Tags: naples, florida, real+estate

You may have read the report today about home prices plunging by the greatest percentage in 35 years. It’s true, the national real estate market has hit a cold period.

In the Naples, Florida area, which was among the hottest markets in the United States, the market has softened, but it’s hardly a burst bubble. The major changes from today’s report came from the Northeast, where prices plunged 34.5%, and the Northwest, where they were down 6.3%. The South saw a 6.9% gain. Expect prices to remain somewhat stagnant in Naples, but I would not be expecting a huge dip any time soon, or ever. Prices may adjust slightly, but this area just has too much going for it to drop back down to price levels from 10 years ago. Demand is as strong or stronger than ever, and there can only be so much housing supply.

Technorati Tags: real estate, home prices

With the housing bubble in full reverse mode, a lot of people are learning the hard way how exotic mortgages will land them in the poor house.

When housing prices were skyrocketing, particularly in hot areas like Naples, Florida, people were looking at all options to get them a deed to one of those homes that was “guaranteed” to appreciate in value as they lived in it. They got interest only mortgages, where the principle is never paid off at all, or adjustable rate mortgages, which have rates that can go up and down with interest rates. They figured there was nothing to worry about because their house would appreciate in value, so they when they sold it for a big profit they could more than pay off the mortgage.

Now many houses, including those in Naples, have stopped increasing in price. Many have even started to decline by huge amounts, often as much as 20%, which can mean $100,000 on a half million dollar house. The mortgage does not go down with the value of the home, so people who bought that small-but-comfortable home in a swanky Naples neighborhood a couple years ago with a $500,000 interest only mortgage are now paying the interest on a home worth $100,000 more than they one they’re living in. Even if they sell the house today, they’re a cool $100,000 in the hole, and all they have to show for it is a couple years of living in Naples. And none of that is including the other costs of owning an expensive home, like a fat property tax bill.

I know this kind of article is a downer to the real estate gurus out there, or just those with that great American dream, but I’m just trying to make a very important point: only buy a house you can afford (have a logical plan for paying off the mortgage), and don’t invest in real estate unless you really know what you’re doing. If you’ve read Real Estate Wheelin’ and Dealin’ for Dummies, you are NOWHERE NEAR READY for investing in real estate. Try taking some classes at the local business school. Take a couple years off to become a licensed realtor so you can learn the ins and outs of home buying. Yes, it does take that kind of dedication. Real estate “hobbyists” do sometimes get lucky, but they also sometimes lose the shirt of their back.

Technorati Tags: real estate, mortgage, debt

It will come as no surprise to anyone living in Naples that the housing market there is overpriced. What may surprise some is the fact that Naples, Florida is now rated the most overpriced housing market in the entire country.

According to a study by National City Corp and Global Insight, the average home in Naples is around $380,000. That value is overpriced, according to the study, because it does not fit with interest rates and the area’s employment rates and population density.

Some Naples officials have disagreed with the conclusions made by the study because Naples has a high number of retirees who skew the employment numbers. Of course, the huge increase in prices over the past few years has nothing to do with Naples being considered overpriced. No, that couldn’t be it.

Technorati Tags: naples, housing, real estate

For the past year, experts have been warning us that the real estate bubble was on the verge of bursting. Perhaps due to those warnings, the burst was not as bad as many expected, more of a gentle deflation of the bubble.

Naples was one of the most mentioned real estate hot spots during the housing bubble, and rightfully so. Prices soared to levels as much as 100% above those of just 5 years earlier. Even maverick investor Warren Buffett brought up Naples when warning people who were considering using real estate as an investment.

So where is the Naples real estate now, and where is it headed in the future? Well, you’ll just have to come back later to find that out. I’ll be dishing out all the details, and also showing you some great free online tools that you can use to help in buying or selling a home, or just assessing a housing market.

Technorati Tags: naples, florida, real estate, housing, market