Southwest Florida Update: Rising Inventory Brings Patience

February’s price decreases demonstrate that REALTORS® are counseling sellers about realistic market pricing. Although some sellers are still struggling to accept the fact that the pandemic buying frenzy years with climbing price increases are over. As more new sellers enter the market (up 24.6 percent to 1,668 new listings from 1,336 new listings in February 2023), those sellers with overpriced properties risk missing an opportunity to attract and sell to eager buyers.

According to the report, in February 2019 the median closed price was $335,000. Cindy Carroll of Carroll & Carroll Appraisers & Consultants, LLC., and broker analysts like Budge Huskey, CEO, Premier Sotheby’s International Realty, agree that “in the face of far more inventory and opportunity, home values are holding steady in Naples today. People are being highly selective and will wait until they find the right property.”

“There are currently two types of sellers: those who need to sell, and those that are aspirational,” said Adam Vellano, Managing Director of South and Southwest Florida at Compass Florida. “If sellers were to get aggressive, then we might begin to see some price compression.”

Jillian Young, President, Premiere Plus Realty, added that “listing agreements that limit terms to three or even six months and reflect aspirational home prices are impeding sales. A deep dive into NABOR®’s market stats show us that these properties remain unsold longer and, in some cases, take two or three agent cycles to finally convince the seller that the home is overpriced for today’s market. This factor is also causing our days on market [DOM] to increase.”

Insurance vs. Interest Rates

The February Market Report showed a 103.4 percent increase in inventory for properties under $300,000. Mike Hughes, Vice President and General Manager for Downing-Frye Realty, Inc., said that this might be because “investors are offloading rental property units to capitalize on the winter selling season. Also, the carrying costs on some of these properties have climbed in recent years. This increase in inventory, for buyers looking in this price range, is encouraging as their selection was quite limited a year ago.”

Vellano believes “property insurance rates are influencing home buying decisions as much as interest rates.”

As many Naples residents are discovering, when home values increase, the replacement cost to insure them also increases. Insurance rates and association fees could increase for condominium owners by the end of 2024 as mandatory milestone inspections must be completed by year end. Inventory for condominiums increased 104.2 percent in February to 2,614 condominiums from 1,280 condominiums in February 2023.

Dominic Pallini, Broker at Vanderbilt Realty, Inc., said the shock of rising interest rates has subsided and regardless of Federal Reserve promises to drop the rate later this year “new homeowners are showing acceptance of 6.5 or 7 percent interest rates.”