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The year 2020 was tough, but 2021 looks way more promising. As the Naples Area Board of REALTORS® (NABOR®) reports, the Naples housing market is seeing impressive activity. The sales are increasing, with the average asking price being higher than appraised value. In other words, the demand for houses in the Naples area is high! Let’s dive deeper into Naples real estate market trends to figure out what 2021 holds for us.

Naples Housing Market Trends

The Naples real estate market is dynamic! Homes for sale are taken fast, and realtors have their hands full. According to the NABOR® report, there were 36% more house showings at the beginning of this year than in 2020. How amazing is that! Buyer interest is dictating the market’s movement, and Naples Fl is blooming. Currently, apartments are the most common types of properties in Naples. Other housing types include single-family homes, duplexes, row houses, and luxurious villas.

Since supply is limited and demand high, the listing price of certain homes keeps going up. Buyers are eager to get their desired property, so they’re ready to put more money into transactions. Sometimes even the highest offers are topped!

Interestingly enough, a buyer that’s keen on a certain property will often use unique buying tactics. A homebuyer’s letter to a seller, for example, is often used to stand out from other people competing for the same house. In Naples these letters need to be carefully crafted because buyer competition is way more fierce. People realized how valuable properties are in Collier County, and Naples, naturally, makes a perfect choice because it’s one of the leading cities in the area. In a nutshell, Naples real estate market has so much to offer, and home listings are quite versatile.

Real estate market conditions in Naples, Florida, might lead to other interesting trends. Some realtors argue that we might see more home listings with limited offers. These “window” offers last for a limited time period (usually up to a week). You have a very small window to submit your offer to the seller before the home price changes. This trend isn’t uncommon in dynamic housing markets since sellers have the upper hand. Homeowners can, with the help of an experienced realtor, get a lot more out of their properties with the right strategy.

The demand is affecting not only home values but also the construction industry. Older communities in Naples are being revitalized, and new houses are being built each day. Spencer Haynes, vice president of business development and broker with John R. Wood properties, is estimating that a lot of older homes will get a complete remodel. They might even be torn down to secure space for new houses. A lot of homeowners in these older parts of Naples will benefit from the changes because the value of their properties and the home price will increase.

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Home Prices in Naples, Florida

As mentioned, the average sale price here is higher than it was in previous years. The median closed price in January 2021 was $395,000, which is an increase of 14.7% when compared to January 2020. For comparison, the median home price in the USA this year is currently around $340 000. Home values naturally depend on location, housing type, etc. Luxury homes, for example, are usually estimated at 5 to 20 million dollars based on Zillow.

Although more expensive, luxury properties are in higher demand than regular single-family homes. High-end properties measured a 65.1 percent increase in closed sales in the January report. This can give us a good indicator of where the prices can go in the coming months. Naples’s most expensive can go above 30 million if they sit directly on the Gulf of Mexico and have a lot of acres of land.

As said, location affects the home prices. There are eleven neighborhoods in Naples, with Port Royal being the most expensive one and Sun Terrace the most affordable. When differentiating between the communities, it’s wise to additionally consult with a local realtor who has more in-depth knowledge than national real estate professions.

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Why Is the Naples Real Estate Market Making a Return?

We should note that the real estate market is always changing. It somewhat runs in cycles with periods of rapid real estate appreciation and predictable price ratio to periods of shifts between escalation and decline. Hence, real estate investments are very dynamic, although they aren’t as volatile as stocks. That being said, some factors shift the market in one direction or another, from government policies to socio-economic factors and technology.

The most important effects on the market and the real estate transactions last year happened due to the global pandemic. A lot of people lost their jobs, and the economy was going down. One could say that there was a “pause” in real estate activities in the beginning and during the pandemic, although the prices were steady. There were also a lot of virtual showings happening, with only the most interested buyers visiting the property.

The discovery and approval of COVID-19 vaccines allowed economic growth. With the vaccination expected throughout Southwest Florida, it’s not a surprise to see the Naples real estate market recovering. We should note that the Naples market has been quite resilient to the impact of the COVID-19 pandemic when compared to the other housing markets in America. The demand was high in the entirety of 2020 because of the limited properties available.

The financial industry also has a huge effect on the housing market. Mortgage interest rates push buyers to purchase a house during a crisis. Buyers have a larger purchasing power but more competition, too. Sellers seem to be in a better position since they aren’t in a hurry. However, both parties need to carefully plan their strategy so they can profit from these transactions. You can’t allow yourself to experience a loss when the market offers this many opportunities.

Also, many experts are predicting demand from buyers who delayed purchasing houses because of the pandemic last year. Some need larger spaces and look for single-family houses to avoid the virus. When it comes to a beach city like Naples, FL, the housing market experiences the demand for additional reasons. Namely, people would want to acquire secluded vacation homes in smaller communities. The Naples area surely fits the description. 

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Will Real Estate Prices Go Down in 2021?

Although the individual list price of a house is going up, the mortgage rate is currently low. This means that houses are affordable to the buyers.  Will the prices go down doesn’t matter if you can’t get a mortgage to cover your costs at a favorable rate.

Currently, a lack of houses on the market and low mortgage rates are causing a steady increase in prices, and it doesn’t seem that this will change in 2021. Mortgage rates will start to become higher, so you better catch the train early. Since the housing market will be stronger in 2021, many homeowners and investors aim to generate wealth through real estate. Renting, flipping, home sales, syndication, and other methods can all be utilized to secure financial freedom.  But that can only happen when investing in the right deals.

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Is Naples Real Estate a Good Investment?

Naples, FL, has a lot of real estate properties, but not all of them are equally profitable. So, how can you determine whether a particular property is a good investment? For starters, know that location and house condition are two crucial factors. In the Naples housing market, it’s especially important to choose the most optimal location. Waterfront homes and houses with easy access to various golf courses are most wanted.

Naturally, when investing in real estate, you want to consult your accountant. As a real estate investor, you can also do the math by yourself to see whether you can turn a profit on a particular property. It’s worth noting that your individual finances have a huge influence on the end result. For example, if you can provide a bigger down payment, you’ll be able to get a more favorable mortgage rate and secure better housing units. While the individual sales price matters a lot, your credit score and financial options will also help you figure out if a particular real estate investment is good for you.

You should also take into account the appreciation rates when scouting through investment options. The Naples appreciation rate in the past ten years was 6.45%, which puts this city in the top 10% nationally. The rent prices are also on the rise (Florida has no rent control laws). Also, note that a lot of properties are owned by part-time residents. Many people choose to only live in Florida for some portion of the year, so if you plan to do the same, consider choosing low-maintenance properties.

Florida also has a low tax rate (no personal income tax and modest property tax rate). In Florida, the property tax bill should be around $2,000. This naturally depends on the exact location and home value. The average property tax in Naples was $2,399 per year for a home worth $357,400.

All these factors affect your ROI (return on investment), so it’s worth researching everything in detail. Consulting with experienced realtors and getting first-hand information will surely help you make an informed decision. Buyers don’t have to pay commissions, so it’s much better to get professional assistance.

In fact, you want to learn everything you can about the housing market in a particular area to catch good deals. Concierge realtors will get you access to showings of the properties that aren’t available to everyone, and they’ll be by your side for every step of your investment journey. So, if you don’t know where to start, you could surely use a helping hand.

Florida Naples Coastline with yacht in front

Final Thoughts

As you can see, a lot is going on in the Naples market. One thing is certain: It’s everyone’s fair game. We won’t see Naples turning into a buyer’s market only since the home value is overall high and the supply is limited, but buyers still have a lot of options. Sellers don’t necessarily have it easy, either. Although less competition indeed helps the property to stand out, one can make the mistake of overpricing it and letting the price drop by the passage of time.

That’s why it’s very important to set your priorities prior to entering the housing market, whether in Naples or anywhere else. You have the option to get your dream house with a favorable interest rate, acquire properties to turn into rentals, or sell for a higher listing price. But you need to be wise when making these decisions. Whether you’re a home buyer, an investor, or a seller, take a few moments to carefully examine your options and set goals you want to achieve. Surely, you don’t have a lot of time, but rushing into transactions won’t do you any good.

Plan carefully, reconsider your options, and always consult with experts. Most importantly, imagine your future! Do you see yourself at the beach or a golf course in Naples? Or do you want to sell your home in Naples for a greater profit to invest in something you’ve always wished for? Then, make your dreams come true! We’ll cover all your needs. If you can see yourself in Naples, take a look at our relocation guide, which will answer all of your questions.

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