Bonita Springs – Estero – Naples 1st Qtr Results – Shows signs of a Balanced Market

As printed in the News-Press May 1, 2010

First Quarter 2010 Shows Signs of a Balanced Market

The sales numbers just came in for the first quarter of 2010, and as a result we can get a good picture of how the real estate market is looking in Naples, Bonita, and Estero. I am pleased to say that the area is already showing a lot of promise for the year: The number of closed sales for first quarter 2010 is the highest it’s been since 2005, and inventory has dropped about a third since it hit its peak in 2008. Additionally, prices are stabilizing, helped along by the decreasing inventory.

My point is, things are looking pretty good for Southwest Florida’s real estate market. The first time homebuyer tax credit is doing its job and encouraging more home sales, which eats up inventory. Combined with the decrease in new listings over the last few years, the current market now has about a year’s worth of available properties, which in general is considered to be a balanced market: not too many listings, but not so few that prices skyrocket, either. The average sales price is about the same as last year, which shows stabilization and supports the idea of a balanced market.

By all accounts, we have had a stellar first quarter. In the past 11 years of recordkeeping, first quarter 2010 ranks second highest, with 2,470 closed units. (The highest was 2005, with 2,966 closed units.) In comparison, we had only 1,722 closed units in the first quarter of 2009, and even fewer – 1,363 – in 2008. These numbers show a strong upward trend that is

Although prices remain highly competitive – many homes close in the $250,000 and under category, and volume is only half of what it was in 2005 – they do show signs of stabilizing. In fact, I predict that they will only get better as time goes on. The pricier homes are showing a significant boost in sales: Closed sales of homes over $1 million are up 43 percent over last year’s first quarter. Furthermore, the next category down – homes that close for between $750,000 and $1 million – showed the most improvement over last year, with a whopping 74 percent more closings than first quarter 2009!

Pended sales have also shown a significant increase over last year. For instance, homes closing at $1 million or more have 65 percent more pended sales than first quarter 2009. What does this mean? Basically, there are a lot of homes in this category that will be closing in the second quarter of this year, dramatically increasing volume and average price. It also means that more buyers are shopping in this category. Prices may still be competitive, but such an improved interest in higher-priced properties shows promise for the local real estate market.

Naturally, with such a substantial increase in closed and pended sales, inventory in the area is also dropping. At the end of March, we had 10,355 available properties in the Naples, Bonita, and Estero market areas. That is a decrease of 33 percent in the past two years! Inventory in the area hit its high point in the first quarter of 2008, with 15,395 listed properties, but it has been dropping steadily ever since. Homes priced between $250,000 and $500,000 have dropped the most since first quarter of 2009, from 4,268 down to 2,964 – perhaps indicating a coming increase in prices, since up until now the category of homes priced under $250,000 always had the strongest showing.

Declining inventory is also partly due to a drop in the number of new listings. Back in 2006, there were 9,507 new listings in the first quarter, but that number has decreased every year. In 2009, there were only 6,588 new listings. With fewer homes being listed, and dramatic increases in the numbers of closed and pending sales, our inventory has fallen to about a one-year supply. Since that is considered to be a balanced market – not a surplus of properties, but also not a shortage – I predict that prices will continue to stabilize, and perhaps even increase, in 2010. For more detailed market data, please visit my website and click on market reports. www.CoconutPointRealEstate.com

As you can see, the year is showing a lot of promise so far. With the deadline for the homebuyer tax credit falling on June 30th, the second quarter is sure to make an even better showing. To discuss what this means for selling or buying a home in Southwest Florida, please feel free to contact me. My door is always open!

Contributed by D. Michael Burke, P.A. Keller Williams Elite Realty
Michael@CoconutPointRealEstate.com / www.CoconutPointRealEstate.com

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