Enthusiastic buyers, shrinking inventory and rising home prices make you ask, “Is it happening again?” The short answer is “No.” The two so-called ‘bubble’ years of 2004 and 2005 were fueled by loose lending practices and a mob mentality. Our environment is different now.
Then – Contributing factors to the prior market rapidly rising and then subsequently falling like a rock were loans that required no documentation ( if you had a pulse and could sign an “X”, the lender would happily qualify you for the loan), adjustable rate mortgages, very low down payments, interest only loans, easy access to home equity lines of credit as well as investors and “flippers” jumping in on the action while money was so readily available. Competing offers and escalation clauses were the norm.
Now – The lending industry is more tightly regulated and safeguards have been put in place that restricts access to credit. Rules relating to appraisals were modified, too. Because lending is more rational and distressed properties have been absorbed, the market is functioning in a stable and normal manner. Although a large percentage of real estate transactions in the Naples area are cash transactions, the driving force behind rising prices is simply supply and demand. How much are prices rising? That depends on the neighborhood and the type of housing.
The buyers in our Naples market include second home buyers, vacation home buyers, investors, renovators & remodelers, speculative new home builders, relocation, first time buyers, foreigners, baby boomers, retirees, move up buyers and people making purchases for full time Florida residency. Our real estate market also offers quite a variety of housing in a surprisingly large price range from single family homes, condos, coach homes and villas located in golf, boating, gated, resort, planned and freestanding communities. All of these buyers share enthusiasm for the Naples lifestyle and making a sound financial investment but, the fundamental common ingredient is rational thinking. The frenzy we experienced in the past cannot and will not repeat itself. Both sellers and buyers should feel confidence to enter the real estate market knowing that things are healthy and trending in a balanced positive direction.
As always, consult a professional full time Realtor with local knowledge and experience for matters of pricing, strategy and negotiation.
Ellie Penaranda at (239) 776-5077 Tim Cranch at (239) 272-4848