Inventory Up and Prices Hold Steady in February

The gap in sales activity year over year continues to close thanks to continued confidence in the Naples real estate market. Overall pending sales in February decreased 16.8% to 1,241 pending sales from 1,480 pending sales in February 2022. Overall closed sales during February decreased 17.2% to 682 closed sales from 824 closed sales in February 2022. And showings decreased 15% in February to 36,574 showings from 43,032 showings in February 2022.

“February’s report revealed to us that there are still a considerable number of sellers who listed their property prematurely instead of fixing storm-related issues because they didn’t want to ‘miss out’ on winter buying season,” said Adam Vellano. “This decision is backfiring because buyers today are less willing to accept and pay full price for a home in Naples with major defects.”

Wes Kunkle responded to Vellano’s remarks by adding, “We’re not seeing ‘as is’ contracts anymore like we did last year. Contract cancellation rates went up in February which tells me that sellers need to either fix the problems found during inspections or become more agreeable to negotiate on the price.”

As days on market for February increased 129.2% to 55 days from 24 days, the report’s pending sales data startled broker analysts initially because it reflected several sales contracts that were cancelled numerous times during the month. This behavior led the brokers to discuss possible causes and, in addition to the reasons outlined above by Vellano and Kunkle, a consensus was reached that, as described by Budge Huskey, “people are sitting tight because there is a degree of uncertainty surrounding interest rates, banking stability, and heightened concern that we may still encounter a recession.”

“A lot of people are watching the news with concern about our banking system,” said Sherry Stein. “Though in this current climate, a real estate purchase can be viewed as a viable investment alternative.”

Although unlike most of America, the majority of home sales in Naples are cash sales [62.1% in February] so the financial market’s uncertainty may benefit our housing market if high-net worth families turn to real estate as a more secure place to invest their wealth.