Naples August 2024 Housing Market Update

I have been talking about the “historically normal” decline of inventory this past summer in the last couple of housing market updates I published. Just look at the visual below. The last peak of the blue/green line was March 2024. Looking back as far as the graph will provide us, each peak in February or March. It’s a season thing. Once the big swell of visitors starts to wear off, the inventory swell also begins to ease. Except for February 2022. While inventory of SFR’s and condos would normally start to decrease at that time, it started to rise. No doubt because of mortgage interest rates going through the roof during that time. I don’t think we have ever seen mortgage interest rates double over the course of 6 months like we saw in the first half of 2022. Even the summer of 2023 only saw a decrease of about 300 homes from the Active market while in previous years, including 2024, it is expected to see about 1500+- homes shed from the market.

Other, more specific, parts of town react a little differently than the collective “Overall Market”, but it’s fairly similar. You must take into context the graph below when reading the latest stats on current inventory. It sounds really bad when you see that inventory in the Overall Naples Market is up 39.1% from August 2023, but look at where inventory was in previous year (excluding Covid, always exclude Covid). We are still 1200 to 1300 properties short of the August numbers for 2016-2019 and even 300 properties short from the full blown “world is ending so lets buy as much real estate as possible” environment of August 2020. We are inline with 2015 Inventory right now.

Let’s take a look at the latest stats from our Fab Four:

There is much chatter right now about what the Federal Reserve is going to do at the September 18th meeting and again at their November 7th meeting. Here are some headlines:

The Fed is poised to cut key interest rates, and the impact should be wide-ranging – Pittsburgh Post-Gazette

A new era of easy money dawns as Fed nears first rate cut since 2020 – Yahoo Finance

Markets Firmly Expect The Fed To Cut Interest Rates On September 18 – Forbes

Fed seen poised for September rate cut as inflation cools – Reuters

I don’t know if William Randolf Hearst invented sensationalism in the news industry, but we all might agree that it is still alive and well today. I also don’t think we will see a parallel drop in mortgage interest rates the same day the Fed “Dawns the new Era” on us on September 18th. These lenders see this stuff coming and make adjustments ahead of time to earn as much of their competitors business as possible. Signals ahead in the distance typically yield smooth action leading up to the subject event.

I like how Tim Grant from the Pittsburgh Post-Gazette puts it:

Let’s see how buying activity in our market has been coming along as we look at Pending Sales for August 2024. Offers are certainly being accepted in ZIP 34102 & Golden Gate Estates! That reminds me… Have you seen my listing in Royal Harbor? Sure, it needs a little work, and with direct Gulf of Mexico access for you boaters, west facing rear lanai, pool, newer roof and pool surface & AC, this is a bloody sweet deal if you ask me. Come see it on Sunday’s 2-5. It really is one of the best deals within 3 minutes of 5th Ave and the very exciting Metropolitan Naples at the Davis triangle. Tell your friends.

The trophy for highest Total Sales in August 2024 goes to none other than ZIP 34102! Oh my gosh. Call it a comeback! In July, I wrote about the sagging Median Sales Price in 34102 falling below $1,000,000 for the first time in 3 or 4 years. Now we see a 158.5% price increase and a 55.6% increase in sales! You think everyone wants to be close to 5th Ave now? Wait until these projects downtown that Tim Aten talks about are completed. Metropolitan Naples is a big one. 1660 Sandpiper St is walking distance from that new and exciting development. So is Naples Bay Resort, Tin City, Bayfront… Royal Harbor has got to be my favorite neighborhood in 34102. But that’s just me. I like that it is close enough to all the action, but still quite enough to feel like Old Florida. It’s sort of a hidden gem. Out of the 28 sold properties in 34102, only 1 was in Royal Harbor, and it sold for over $4,000,000. Most of the solds came from new condo developments The Mark on 8th and Stella Naples.

Last but not least, is the ever important Median Days on Market (DOM). This stat shows how long properties were on the market before going pending. There is also Cumulative Days on Market (CDOM) that MLS’s clock so that agents can’t easily take the home off the market for 5 seconds and reset everything to zero, giving the appearance of a new listing. Those suits over there at MLS are always watching us as enterprising and entrepreneurial as we naturally are. The DOM is a good indicator of demand and a key component in absorption rate. I had to explain to a bitter competitor a couple of weeks ago that we need to use median numbers as opposed to average, or “mean”, as the mathematicians would call it. Since logic and patience didn’t work to ease this agent’s fussiness, I just blessed him and sent him on his way. Ireland’s Central Statistics Office puts it this way:

I don’t want to sound like I am always making a mole hill out of a mountain, but I do need to point out historical statistics to keep things in perspective. Naples Overall Market had a Median Days on Market of 59 days in August 2024. That is 68.6% higher than August 2023. But look at the blue/green line back between July 2016 to August 2020. The line starts at 52 days and ends at 52 days and peaks of 77 days in July 2019 and hits a low of 45 days in January of 2018.  In August of 2013, we were at 103 DOM. The transitory numbers look terrible when you just see these large percentage increases, but we should always look back at the history of the subject stat. I even argue that we are in a very strong market considering that we are seeing these fairly normal numbers considering the very high prices. That is the only stat that isn’t normal, and that has affordability in a pretty low state. Hopefully that gets better soon. But with mortgage rate drops comes stimulated buyer activity, and when buyers start buying at a faster clip, prices tend to rise. Hopefully inventory can keep up.