Will Supply Exceed Demand?

“The months’ supply of homes is up 50 percent compared to last year,” said Sherry Stein, CRB, Managing Broker, Berkshire Hathaway HomeServices. “This is good news for buyers looking to purchase a home before season starts as there are many more home choices available and interest rates may still creep downward.”

According to the National Association of REALTORS®, the “months’ supply” data refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Lower levels of months’ supply tend to push prices up, while higher months’ supply puts downward pressure on prices. For the Naples market, the months’ supply in September was 6.3 months. Nationally, a six months’ supply is associated with moderate price appreciation.

However, according to Cindy Carroll of Carroll & Carroll Appraisers & Consultants, LLC, “The Naples market is unique, and in my experience, a 12 months’ supply of homes has historically been where our market enjoys a balance.” A balanced housing market is when the supply of homes for sale is roughly equal to the demand from buyers. In a balanced market, neither buyers nor sellers command an advantage, and prices tend to remain stable.

While overall closed sales decreased 13.2 percent in September to 527 closed sales from 607 closed sales in September 2023, the rise in days on the market (from 59 in September 2023 to 83 in September 2024) means it is taking longer for homes to go from pending status to closed status. According to broker analysts, the monthly pending sales data is a significant contributing factor of the overall housing market health. They are currently optimistic that the recent increase in pending sales will continue to improve over the next six months, suggesting a positive outlook for the housing market.

What Challenges Lie Ahead?

“Two years ago, we were dealing with the five I’s,” said Mike Hughes, Vice President and General Manager for Downing-Frye Realty, Inc. “Hurricane Ian, rising insurance, inflation and interest rates, and low inventory. But today, only insurance seems to be our biggest challenge.”

Several brokers are concerned the upcoming election may be another factor that contributes to some buyers and sellers continuing to sit on the fence.

“Showings in September were down 11 percent,” said Dominic Pallini, Broker at Vanderbilt Realty, Inc.

Interestingly, data from the Department of Housing and Urban Development (HUD) and the National Association of REALTORS® (NAR) indicates that home sales increased following nine of the last 11 presidential elections.

Carroll remarked that, “Given the increase in inventory, I would expect to see more prices decreases. But I have not seen a loss in value yet.”

The lack of noticeable price drops could be due to several factors including: still high demand relative to supply, buyer hesitancy related to interest rates or the election, or sellers being reluctant to significantly lower prices.

Adam Vellano, Managing Director of South and Southwest Florida at Compass Florida, said, “If and when these sellers re-enter the market – which will likely be in the next few months – we are going to see a surge in inventory. Unless they adjust their pricing strategy to stay competitive, we’re going to continue to see lackluster closed sales. Sellers are encouraged to adopt pricing strategies that reflect today’s competitive market.”

The overall median closed price in September increased 2.4 percent to $588,560 from $575,000 in September 2023. Compared to previous market reports in 2024, September’s median closed price was the lowest reported so far. However, it is still far above the median closed price reported during September 2019, which was $325,000.

In the condominium market, the median closed price in September decreased 4.3 percent to $450,000 from $470,000 in September 2023. According to Jeff Jones, Broker at Keller Williams Naples, “Prices may experience downward pressure for condominiums three stories and higher that are 25 years or older because the costs of ownership may rise significantly due to flood disclosures and insurance costs, and the results of milestone structural inspections. If the results of the inspections find a potential structural problem that is determined to need repair, associations will be required to reserve funds to cover those costs.”

The NABOR® September 2024 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. NABOR® sales statistics are presented in chart format, including these overall (single-family and condominium) findings for 2024:

Are Storms Chasing Buyers Away?

“Word on the street is that some job seekers are less eager to move to Florida because they fear being in the path of a future storm,” said Mike Bone, Area Sales Manager, D.R. Horton.

Brokers reviewing the report are concerned that national news coverage makes it appear as if damage from the hurricanes was widespread, even though the most significant storm damage was concentrated in a relatively small area along the gulf coast. The Naples beachfront and inter-coastal areas experienced some storm surge and high winds, while inland regions saw much less to no damage. The misinformation being reported may contribute to slower market activity in the last quarter of 2024.

Budge Huskey, CEO, Premier Sotheby’s International Realty, responded by stating that the “vast majority of our market was unfazed by the recent hurricanes.”

Hughes added that storm fatigue and street flooding is convincing a few sellers to move off the water, but not necessarily out of the area. “What’s impressive is that our market did not falter in terms of performance due to the storms.”

Jones added that the “insurance market in Florida is becoming healthier and reinsurance rates have been stable. Ten new insurance carriers have also entered the market and renewal rates have not increased significantly.”