End Of Year Reflections for 2023
2023 is quickly coming to a close, and it is the perfect time to reflect on the Naples investment market in response to our predictions from the beginning of the year, and take a look into what the future of what 2024 may hold.
To reintroduce you, “Drew Josephson, real estate agent and founder of Naples Relocation Experts, has spent his career monitoring and forecasting the local housing market. Drew is a born-and-raised Floridian with several of his own investment properties under his belt. Alongside his team, he has built a network of clients, investors, and contractors to successfully navigate the Naples, Florida market. In short, pun intended, he is the perfect man for the job.”
At the beginning of the year we gained valuable insight and predictions from Drew about the 2023 Naples investment market. Now as the year wraps up he reflects on his predictions while looking forward to what the new year could hold.
Reflections On 2023
2023 Prediction #1: Mortgage Rates Are Going to Improve
And I was very wrong. At the beginning of the year, we noted that mortgage rates were sitting at around 6.43% for a 30-year fixed loan. At the time of this post, the national average for a 30-year fixed loan sits even higher at 8.08%.
2023 Prediction #2: Housing Prices Are Going to Go Up
And up they went! Housing prices in the Naples area are up 11.4% year-over-year as of September 2023. The area’s high desirability, combined with low market inventory, has kept housing prices at a steady incline for the year.
2023 Prediction #3: Naples Will Continue to Be A Safer Investment Than Other Areas
Naples does indeed continue to be a haven for safe investment opportunities in comparison with other areas. “The local Market is stable because of the type of people that live and thrive in Naples. It is an insulated area, but there is a lot of money here that allows the area to almost be self-sustainable,” Josephson says. The outside markets have little effect on the area. Even reflecting on market issues during the recession of 07-08, many areas of the country had housing markets down upwards of 70%. Still, Naples and the surrounding areas were affected by a fraction of that. “Naples is simply a different market than other places,” he continued, noting some of his own investments made confidently in Naples neighborhoods such as Park Shore and Moorings.
2023 Predictions #4 Bigger Developers Will Be Coming To Naples And Collier County
Sure enough, developers have made their way to Naples/Collier County and, in the aftermath of Hurricane Ian, have started new projects ranging from businesses to condos and luxury apartments and homes.
Inventory in a post-Covid Market
In pre-COVID times, we used to have an average between 5500-6000 homes on the market at any given moment. Inventory continues to be scarce, and the area currently has nearly 3000 homes in the area’s average inventory. Sales times have significantly decreased, with pre-covid homes lasting an average of 95 days on the market, where now the average is down to just 53 days.
Experts are Essential
Not only can an expert help you find the right property, but they will strive to help you find one with a price that makes sense in a community that is the right fit. (Link to Networking Blog)
With such short sales windows, it helps to have someone who is living in and interacting with the community on the day-to-day to know when unique property and investment opportunities come up. These connections are invaluable for opportunities to find properties before or just as they hit the market.
Challenges & Opportunities of New Construction
New Construction properties come at higher costs and longer timelines. These areas also invite more competition as the demand for new construction properties in the area continues to grow. For example, before the rate jump, a property in a neighborhood where construction costs might have a budget of around $700,000. After the rate hike with calculated interest the same project could have a final cost of $1.6 Million.Increased costs and labor time can be a deal killer.
An Early Look At What 2024 Might Look Like For Investors
2024 Prediction #1 Rates Will Continue to Be High
High rates don’t look like they will be going anywhere anytime soon, though the residential market may feel it less than the commercial market.
2024 Prediction #2 Inventory Will Continue to Grow
New constructions in the wake of Hurricane Ian and a growing demand for housing and investment properties will keep development moving strong and open more inventory in the real estate market.
2024 Prediction #3: Buyers Will Gain More Leverage in the Market
Housing is set to be even more accessible over the coming year as lending rates stay high. Luxury Homes over the million-dollar mark are set to remain stable in the market. Even now, however, homes under the million-dollar mark have come down. In some communities, this looks like a 3-5% decrease, while others have seen a drop as much as 10-15%. Low rates equal higher buying power, and with less beings spent on property alone, more capital is available to be spent on goods, services, and amenities within the community to bolster the local economy.
Emerging Neighborhoods to Keep an Eye On in the New Year
Naples Park is a polarizing community, you either love it or you hate it. However, if you are new to the area, it is one of the most affordable communities west of I-41, where new constructions are available. Waterfront homes and luxury shopping at the Mercato are just a few highlights of this neighborhood.
This beautiful luxury neighborhood is just five minutes from 5th Ave. Lake Park is close to parks, dining, and more. Lake Park is a perfect neighborhood for families and professionals alike.
Sun Terrace is a community that is just east of I-41, with a great location that is close to everything. This family-oriented neighborhood is perfect for someone looking for a quiet life in a friendly, established community.
For investors, these neighborhoods are sure-fire hits with both a prime locations and amenities galore.
Other Thoughts for 2024
Looking at the current market, we would not be surprised if we see more people in the commercial market bowing out. The residential market won’t see quite the decline as it has not felt the impact in the same way. A good product at the right price will sell.
The previous few years, if a party was on the fence about buying a property, most of the time people were buying. Not necessarily because of a need, but because it was what people were doing and it has been a sound investment. As market influences policy I think that as we go into 2024, more people are buying out of actual need. Even with the uncertainty that goes along with an election year, we are sure that the Naples area, with its insulated and stable local market, will continue to be a sound and rewarding investment for years to come.