From the Brown family to yours, we hope that you have enjoyed your Christmas season as much as we have. We have so many reasons to be grateful and we have been blessed beyond all expectation. With the New Year just days away, The Brown Realty Group is expecting 2015 to be a banner year in both our personal and professional lives.
Speaking of banner years, 2014 was nearly as strong as the “bubble” year of 2004 relative to the SW Florida real estate market. While tight supply crimped sales, home prices have soared at the beginning of prime sales season. Comparing November’s statistics to a year earlier, the Naples Area Board of Realtors reported the overall median closed price for a re-sale property jumped 15.7% in November, to $272,000.
Downing-Frye Realty Principle and NABOR President, Mike Hughes attributed the strong showing to a sense of urgency that has developed as local buyers compete with out of state buyers who have just arrived for season. “Prices have been rising so rapidly all year, there is a rush to buy before they go even higher.” Hughes said.
The luxury market continues to dominate. For single family homes in the $2 Mil and above category, prices grew 50% last month from November of 2013. The median closed home price for this category reached $3.9 Million. Rick Brown, with The Brown Realty Group, said, “The unusually strong showing was partly because of wealthy people deciding to diversify their portfolios by buying vacation homes. They’ve made big profits in the stock market over the past two years and some of these folks have decided to cash out part of their portfolios.”
Median prices of properties ranging from $300k to $2Mil have been fairly static. A growing supply of homes in this price range contributed to this sector’s softness during this past month. It’s Brenda Brown’s opinion that, “Competition from new homes, which are being built in the greatest numbers in this sector, had the largest impact on this price range.” Properties costing less than $300k saw prices jump 8.8%. There is likely increasing competition among first time buyers, retirees and investors for this dwindling supply of the lowest price homes. The supply of homes in the “under $300k” category fell 28% to 1,372 units vs. overall supply, which dropped only 9.7% to 4,146 units since the same time last year. That’s a dramatic difference from the area’s inventory “high-water mark” of 11,116 total available homes in November 2008.
Speaking of new construction, many equity rich home buyers in the Estero to Marco corridor are looking for something that, until recently, has been a scarce commodity in the region…a brand new home. Builders needed a few years to ramp-up production after the market stalled during the recession, but they’re now in full swing, trying to meet that pent-up demand, particularly in the higher price ranges. Brenda Brown says, “New construction in so many areas is evidence of continued strength in the regions’ housing market. There are now over 69 new home communities which extend from Daniels Parkway in S Fort Myers to Fiddlers’ Creek, which is just N of Marco Island.”
Research firm Metrostudy’s 3rd quarter survey of the housing market in Naples and Fort Myers showed the annual rate of new home construction “starts” jumped 25% to 3,952 from the same quarter a year earlier. Collier County’s pace was the fastest with a 28% increase and Lee County saw a 23% rise. Overall, the housing starts’ pace has been growing for 13 consecutive quarters, Metrostudy said.
More new home construction means more competition for sellers who are trying to unload their existing homes. But increased supply also has had a positive effect on the re-sale market. Because the prices of new homes typically set the standard for re-sales, as their prices rise, they pull up prices of existing homes. More new home inventory also is helping to un-freeze what had been a market constrained by a tight supply. “People always feel better when they have choices,” said Rick Brown, The Brown Realty Group, who estimates that between 20% and 30% of the area’s sales currently come from new construction.
Despite a break-neck pace of construction over the past year, supply is still tight, said David Cobb, Southwest Regional Director of Metrostudy. “Because demand still outweighs supply, builders are able to keep pushing prices to levels they reached in 2004. That’s just below bubble-level,” said Cobb.
If you’re considering new construction, it is imperative that you contact your Realtor for professional advice. With over 69 possible new construction communities, each one is different, has various amenities, association fees and may have different re-sale ramifications in the future. If you are considering the sale of your home in a community where you face competition from new construction, enlisting the support of a Realtor with superior marketing skills is crucial in an effort to compete with the new home builder within your community.
Rick and Brenda Brown and The Brown Realty Group have knowledge of most of the new home communities and we utilize a world-class marketing program to assist our seller-clients.