NAPLES, Fla. - Naples area home prices soared 25 percent year-over-year in January, beating last January’s eye-popping increase of 20 percent.
Overall median closed home prices in the Naples metropolitan statistical area, excluding Marco Island, hit $322,000 in January, up year-over-year from $258,000 in January 2014 and $215,000 in January 2013, according to a Naples Area Board of Realtors report released Friday. That’s a more than $100,000 jump in two years.
“It’s phenomenal,” said Naples broker Pat Pitocchi, immediate past president of NABOR.
The dramatic increase is being fueled by a number of factors, including punishing winter weather in the Northeast that has been breaking temperature records, a highflying stock market, historically low interest rates and an influx of international buyers, she said.
NABOR’s report followed other recent studies of Southwest Florida’s housing market that revealed that the number of cash sales is dropping, as are the number of new homes being built in the under-$250,000 price range.
Prices last January were driven by the upper end of the market. That wasn’t true at the start of this season.
Median home prices in the $1 million to $2 million range were essentially flat year-over-year in January 2015, while those in the $2 million-and-up category dropped 4.5 percent to $2.292 million.
“After such skyrocketing prices in this price segment, I’m not surprised there’s a slowdown,” Pitocchi said. “It was not sustainable.”
Instead, the bump up was fed by a 26 percent jump in condominium prices, to $265,000.
Condos are sought after by seasonal and older buyers, said NABOR President Mike Hughes, as well as those who have been pushed out of the single-family market by rapidly rising prices.
Single-family home prices hit $375,000 in January from a year earlier, a 15 percent increase.
Short supply, but easing
While supply is still shrinking — inventory levels fell 5 percent, to 4,515 year-over-year, NABOR’s report said — Hughes said that it has been “hovering between 4,000 and 4,500 for quite some time.” That’s a good sign that short supply, which has been constraining sales, is easing, he said.
Closed sales dropped 16 percent for the period, to 607, and pending sales remained flat, NABOR reported.
Low inventory is also the main reason prices are rising and closed sales are falling on Marco Island, according to Susan Ackerson, president of the Marco Island Area Association of Realtors. The trade group said Monday that overall closed sales on Marco fell 8 percent, to 88, in January from the prior year. Median sale prices rose 8.5 percent to $410,000.
Buyers from abroad
International visitors are flocking to buy homes in Southwest Florida, but their impact has been mixed, said Naples broker Glenn Ginsburg,
For instance, the strong dollar compared to the Canadian loonie has eroded the purchasing power of Canadians, traditionally the biggest segment of foreign buyers, he said.
On the other hand, political tensions in the Middle East and elsewhere have caused some of their citizens to look for new safe havens for their money, including real estate in Southwest Florida.
“People are looking to invest in a stable economy,” he said.
Pockets full of cash
Meanwhile, the influence of institutional investors is waning in Naples-Marco Island, and that’s affecting cash sales, according to a report released Friday by RealtyTrac.
Institutional investors, who usually pay cash, bought 9.2 percent of all single-family homes in the metro area in the first quarter of 2013, and that helped push up prices during the ensuing years, said Daren Blomquist, senior vice president of the research firm.
But as single-family prices rose above the “sweet spot” of $200,000, those investors “effectively priced themselves out of the market,” Blomquist said.
In the fourth quarter of 2014, such investors only made up 1.4 percent of the market, which in turn brought down the number of cash sales. In the last quarter of 2014, cash sales fell 57 percent, to 7,764, from 67 percent, or 8,362, a year earlier RealtyTrac reported.
Nevertheless, other buyers who use cash, including equity-rich buyers from the North, continue to stream into the market. That’s made Naples-Marco Island second only to Miami in terms of cash sales nationally, Blomquist said.
New home boom
New homes continue to ease the inventory shortage in the region — though only for those with fat wallets.
A report released Thursday by Metrostudy showed that the annual new home starts rate in the combined Naples-Fort Myers market has grown for 14 consecutive quarters.
The report includes detached and single-family homes, but not condominiums.
The annual starts rate grew to 4,083 in the fourth quarter of 2014, up 25 percent from the same quarter a year earlier, Metrostudy said.
But while upper-end housing is booming, not much is being built in price ranges under $250,000, according to David Cobb, director of Metrostudy’s Naples-Fort Myers region.
Only 571 homes that cost less than $250,000 were built in the fourth quarter last year, down 53 percent from a year earlier, while new homes under $150,000 are practically nonexistent, Cobb explained.
“The price of land and labor has been increasing for the past three years, and that makes it difficult to deliver product under $250,000 in the newer master-planned communities,” he said.