Naples is renowned for its luxurious homes, seaside real estate, and opulent condos. The city is the perfect location for anyone wishing to invest in a holiday home or rental property. It provides a distinctive combination of stunning scenery, a fantastic climate, and top-notch amenities.
The city's housing market has been expanding consistently over the last few years, and prices have been rising as a result of the high demand and low supply. It is located in Southwest Florida and continues to attract both domestic and international buyers.
Naples has 10 neighborhoods and is often described as a somewhat competitive market, with houses being taken off the market on an average of 37 days.
If you are hoping to invest in a property in this vast city or make a sale, it's important to understand how the market is performing and whether this would be a wise move.
In this post, we'll explore the housing market in greater detail to ensure you make an informed decision.
What Is a Real Estate Market?
If you're new to real estate, you might be wondering what a real estate or housing market is. It's important to understand this fundamental term before delving into the specifics.
A housing market is a collection or network of buyers and sellers in a particular area, city, or state. Before you buy or sell a home, you ought to research the market to see if this would be a smart decision.
Moreover, the housing market is influenced by a number of variables, such as economic conditions, interest rates, governmental laws, housing availability, and more, which we will examine later in this article.
Naples Housing Market Trends
The value of homes in Florida has grown significantly over the past five years, and Naples has followed this trend.
- Median listing home price. Naples home prices increased 12.1 percent over the previous year, as of March 2023, with a median sale price of $740K. This indicates an upward trend that’s higher than the statewide median price increase of 3.2 percent.
- Naples vs. national home sales prices. At $393, the typical asking price per square foot is significantly greater than the $161 national average.
- Number of days on the market. Naples homes typically sell after approximately 40 days on the market as opposed to 11 days the year before. In March of this year, fewer properties were sold than in March of last year.
- Time taken for houses to go pending. Typically, properties go pending within 37 days and sell for about four percent less than the list price. Hot houses can go pending in about nine days and sell for around the listing price.
- Naples houses sold. 314 homes were sold over the past year, down 18 percent year-over-year.
Factors Affecting the Naples Housing Market
From mortgage rates to the strength and stability of the economy, there are several factors that contribute to Naples’ housing market.
In the section below, we'll take a closer look at them to ensure that you truly understand the market and are better equipped to make an informed decision about buying or selling in the area.
Buyers' borrowing costs may change as a result of shifts in mortgage rates, which are determined by central banks. Lower interest rates often promote borrowing and may increase the demand for houses.
Naples' current interest rates are as follows:
- 6.31 percent for a five-year ARM
- 6.15 percent for a 15-year fixed loan
- 6.91 percent for a 30-year fixed mortgage
Arguably one of the most prominent factors that contribute to the real estate market of any city is its economy. That's because a strong economy has more job opportunities, which attracts buyers and ensures that they have enough money to spend on housing. Overall, Naples has a thriving, stable economy, which contributes positively to its real estate market.
To determine the state of an economy, experts recommend looking at the following key indicators:
- Employment or unemployment rates
- GDP growth
Did you know that the climate also influences the housing market? That's because potential buyers will not be interested in areas that are prone to storms, flooding, earthquakes, and more. A moderate climate will undoubtedly attract more home buyers, improving the real estate market.
While Naples offers a moderate subtropical climate, most homes in Naples are at risk of flooding, which requires additional insurance coverage that costs between $225 and $2,500 per month. Let's look at some of the other potential risk factors:
- Drought - Moderate risk
- Storm - Low risk
- Fire - Very low risk
A real estate market's activities can also be influenced by consumer confidence and buyer sentiment. In times of economic uncertainty, prospective homeowners can decide to delay or stop their home-buying plans, which can cause a drop in the housing market. Fortunately, this is not a concern currently in Naples.
Another factor that influences the health of a market is the number of properties that are on sale. The fundamental laws of demand and supply indicate that when there are fewer properties available, the cost of housing will increase.
Put simply, the demand for houses that are currently on the market increases in a real estate market with low inventory. Because customers have fewer options to choose from, sellers can then increase their listing prices.
The demand for homes can be influenced by migration, population growth, household formation rates, and more. As a result of demographics, such as an aging population or changes in family patterns, the types of properties that are in demand may change.
In addition, the housing market can be significantly impacted by government regulations, including tax incentives for home ownership, mortgage rules, zoning restrictions, and building permits. Affordability, supply, and demand may all be impacted by changes to these policies.
Will the Naples Real Estate Market Crash?
Although we cannot truly predict what the future holds, we can use historical data to help us understand how the housing market has performed in the past so that we can predict whether a market crash is likely to occur.
There is no current indication in Naples real estate that a market crash is imminent. If you give it some careful thought, Naples' overall increase in terms of the number of people, new buildings, and the economy points to a more promising future.
The property market in Naples is fairly healthy. Numerous local homeowners have equity, and cash purchasers make up the vast majority of home sales. This increase in home equity should help fend off any potential wave of foreclosures, even if lenders tighten their underwriting and lending requirements.
That's good news for you if you were hoping to invest in a vacation home or rental property in Naples or are currently a homeowner in the area!
Should You Sell Your Home in FL?
Sell your home in Naples now if you want to take advantage of the favorable market. More and more buyers are looking for luxury homes in the area, which is why a seller’s market exists. This means that you can get a good price for your property in Naples, and given the low supply of homes in the area, you will likely get an offer that’s close to your asking price.
Housing Market Predictions
It's important to understand how the market will perform in the coming months and years if you intend to make an investment in real estate in Naples. In the section below, we'll explore a few expert predictions for this hot market.
From 2023 to 2024, the real estate market in the Naples Metro Area will likely keep growing, but more slowly. Zillow predicts that home values will rise by 3.1 percent over the course of the following year, which is a slower rate of growth than the 12.7 percent growth experienced during the previous year.
The area's great weather, sandy beaches, and high standard of living will probably keep Naples in high demand for houses. However, restricted supply and higher interest rates can slow down the market's expansion.
Buying a Property in FL
Naples' current housing market status leaves buyers with stiff competition for available properties. Working with a reliable Realtor is crucial because they can guide you through the market and assist you in finding a good home.
When buying a property in Florida markets, experts also advise having pre-approval for a mortgage to improve your chances of securing the property you're after, whether searching for single-family homes, condos, or apartments.
Those hoping to sell their homes in Naples, on the other hand, have the upper hand, as Naples is presently a seller's market. There is no indication that this will change in the near future. However, it's important to remember that no one can truly predict the future with absolute certainty.
Experts advise sellers to price their properties accurately. Moreover, conducting minor repairs and presenting your home well can also do a lot to draw prospective buyers.
Overall, Naples' housing market is expected to continue growing, which makes it a favorable city for those hoping to invest in real estate and anyone interested in selling their home in Naples.
The Bottom Line
The truth is that buying or selling real estate is an important decision, so it's essential not to do anything in haste without dedicating enough time to research. If you're interested in Naples as a potential city to invest in real estate, then you'll be happy to know that the housing market is going strong.
With an upward trend that's expected to continue, you can rest assured that you'll receive a good return on your investment.
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Frequently Asked Questions
1. What are the best neighborhoods in Naples?
According to Realtor.com, the following neighborhoods are considered the most popular:
- Park Shore
- Old Naples
2. Is Naples a buyer's or seller's market?
Considering the attractions and allures of this city and the rising home prices, Naples is indeed a seller's market. If you are hoping to sell your home, now is the perfect time to do just that.
3. Is it a good idea to buy a home in Naples?
Absolutely! There are a number of reasons why investing in real estate in Naples, FL, is a wise choice. Let's look at some of them.
- The city's population is growing.
- It has a strong economy.
- Naples offers a high quality of life and several amenities.
- Property owners can take advantage of a strong rental market.
- The city's real estate market is stable.