Despite the high cost of living in Naples, real estate agents can enjoy a healthy, competitive market for homes in the area. Housing is in high demand, but affordability continues to be a challenge – a trend that both aggravates and pleases homeowners who see their equity rising as costs continue to go up.
According to the first quarter report from the DC based trade group National Association of Realtors, the Naples metro area ranks ninth in the nation when it comes to the amount of income needed to afford an existing single-family home (the report breaks this down with an example: with a 20 percent down payment, an income of $80,483 would be needed by the buyer to qualify for a loan to buy a house at the median price of $439,900.)
Up and down supply and demand, home prices that outpaced wage growth during the past three years, and a striking reduction in the number of underwater homes have fueled the trend. Ten years ago, Naples was ranked by IHS Global Insight economists as the most overvalued housing market in the nation, after prices surged 140% from 2001. South Florida ranked second worst when it came to underwater properties. Now, however, the trend has changed, and an ever rising number of homeowners have 20% or more equity in their homes.
Naples is still far from the top cities in terms of prices and affordability problems; the most expensive market in the country is still San Jose, where it requires a median income of $179,505 to afford the median-priced single family home at a cost of $970,000. Nonetheless, single-family existing home prices remain on the upswing in both Collier and Lee counties over the year:
- Collier County homes jumped 16.3 percent, to $465,000 from $400,000, with the biggest increases in North and East Naples, the latter being the only area with an increase in town-house and condo prices in the county.
- Lee County homes increased 4.7 percent, to $235,000 from $224,512, and town house and condo prices in Lee County handily beat the statewide growth of 4.4 percent, to $160,000 from $153,245.
- All neighborhoods saw price increases except Sanibel, Captiva, and Fort Myers Beach (the latter also the only area not to see a distinct drop in closed sales of properties.)
It appears that much of the increase in median prices throughout Florida cities can be attributed squarely to the rising prices of affordable distressed homes. Even Habitat for Humanity has been affected by the affordability issue in Naples; the non-profit groups has stopped trying to find distressed homes to rehab due to the high prices, and is now seeking cheap land instead, planning a 100 home build by the end of the year resulting in a projected 2,000 interviews eager would-be homeowners.
Throughout Southwest Florida, inventory levels for all types of homes is growing dramatically, but prices seem unlikely to soften anytime soon. Naples real estate agents can point to high equity possibilities as a selling point for the pricey properties, with the market holding strong and no sign of devaluing in the near future.