Contrary to wishful thinking of buyers who believe that they can wait out the escalating real estate market prices, our local market is not experiencing a “bubble”. Continue to read this blog article only if you want the truth. Otherwise, if you are a buyer who does not have a timeline to purchase then you can jump to another article or topic that fits your own narrative. Good for you if you can wait to purchase but know that you will be paying more for the same property.
The true bubble years of real estate in 2004 an 2005 were fueled by investors and others taking advantage of low documentation loans at very favorable rates. If you had a pulse back then, you would get financing simply by scratching an “X” on the signature line. It was not healthy and it was not sustainable. What occurred back then was the definition of a bubble…….it popped and there was nothing left but air.
What we are experiencing now is natural, organic Supply and Demand. Are low interest rates a factor in driving demand? Yes, but more than 75% of the real estate transactions in Naples are cash deals. No matter the price range. Also, those deals that do have a mortgage are buyers that have been put through a rigorous process to qualify for a loan. Quite a different scenario from the gasoline that was being thrown on the fire of 2004 and 2005.
What are the factors that are driving the demand and the shortage of inventory? While you absorb each thing noted below, realize that these factors are not going to change next week or next month or anytime soon.
- The Naples and Bonita Springs area has every type of buyer pursuing property – very often the same properties in which you have an interest. Full time residents, part time residents, second home buyers, weekend retreats, people buying to use themselves for vacation but renting other times to cover their carrying costs, pure investors looking for annual rent or seasonal rental income, international buyers, classic snowbirds and more.
- Many people work remotely now. For many reasons, people would rather be in Naples if all they need is a computer, a phone and perhaps a nearby airport.
- Florida has no state income tax.
- We have buyers coming to Southwest Florida from areas up north that typically frequent other places. There is an exodus from New York, New Jersey, Connecticut and California. Think about it…….you live in a small space on the 18th floor of a high rise in Manhattan, you are forced to work from home because your office says so, your kids cannot attend school in person, all of the reasons that you enjoyed in Manhattan like restaurants, cafes, museums, theater are closed, maybe some of your family members are fearful of urban violence, taxes are high and getting higher, then there is this thing called “winter”.
- Rents are increasing for both annual and seasonal rental properties. This makes it even more attractive for investors.
- The virus has driven many people from parts up north wanting to escape suffocating restrictions and policies. As just one example, it’s a big problem for a family of two working parents when their kids cannot attend school in person. Believe in masking and social distancing or not, it’s a factor in the demand. No opinion offered, just the facts.
- Sellers are able to sell at higher prices but their first question when considering listing their property for sale is, “Where do I go?” As a result, we don’t have as many owners eager to sell.
These are some of the reasons behind our current market conditions. Huge demand. Historically low supply. Not a “bubble”.
Serious buyer? We listen well and will find your own “Piece of Paradise” at the best negotiated price and terms. We are full-time professional Realtors who depend on your referrals and take pride in our work. We have lived and worked through all real estate cycles. Take advantage of our skill and strategy to make you a successful buyer in a challenging market.
Serious seller? We will give you honest advice about current market conditions and pricing. We will aggressively market your home to local, national and international buyers for the best results and a smooth transaction. Our experience in handling multiple offers will result in the best terms for your own situation.
Tim Cranch at 239-272-4848 or Ellie Penaranda at 239-776-5077