The Naples Housing Market Predictions And Investment Overview 2022

Record-low mortgage rates and extreme inventory shortages have been the main drives sustaining the high demand for housing experienced throughout the U.S. throughout the pandemic period. Despite the Naples housing market being exceptionally resilient during this period, affordability continues to be a big concern.

The low mortgage rates helped increase savings, strengthen job markets, and make homeownership more accessible. But with everything pointing towards a general return of normalcy, will the Naples housing market crash?

Let’s first take a step back and revisit some of the previous trends.

A Holistic Review of the U.S. Housing Market Trends

Just before the pandemic started, real estate markets throughout the U.S. recorded a significant increase in the number of home sales, setting a new record since 2007. The economy became uncertain as the pandemic set in, forcing buyers to readjust and strategize their approach to homeownership. The general preference for more space coupled with a drastic reduction in spending resulted in a brief but massive increase in homeownership throughout the nation.

The scorching hot housing market trends continued in 2021, with exceedingly high demand for housing in warmer regions like Southwest Florida. As of October, real estate experts now predict an annual sales record of 6+ million. According to the National Association of Realtors (N.A.R) archives, that will be the highest sales record since 2006.

The housing market continued to favour sellers more than buyers into the middle of the pandemic, as home prices historically increased by double-digits. Such increases often reflect an overall convergence of unprecedented demand and record low supplies, as mid-single digits price increases have been the norm for many years. For areas such as Naples, the wanton rise in home prices is pegged on the improving economy, population influx, and a sudden peak of home buying years of millennials.

These coupled with record-low mortgage rates were the main drivers of the recent residential housing boom seen in many areas across the country.

Home supply has been at another historically low level since the 70s, mainly due to the increase in the millennial homeownership rate. According to the latest seasonally adjusted quarterly report by the Census Bureau, homeownership for the third quarter of 2021 is 65.4%, which generally suggests that the 2021 housing market is robust.

A blend of low mortgage rates and a rise in work-from-home possibilities helped heighten the demand for housing, especially in the suburbs where the population density is low. Demand for detached single-family properties stood out mainly due to their bigger living spaces and the overall preference for standalone units.

Mortgage loan applications also increased in late November, indicating a strong demand for housing despite the fast-approaching holiday season. Housing markets traditionally starts to slow down during this time.

The Future of Naples Housing Market

The low mortgage and significant savings rates helped sustain home sales and appreciation in many local housing markets throughout Southwest Florida. The NAR ranks Naples as one of the most resilient and exceptionally performing real estate markets in the country, terming it a potential “hidden gem” for investment.

While home buying competition is currently slowing down in most parts of the country, the Naples housing market is in high gear to finish the year strong. Unlike many, realtors throughout Southwest Florida will not be expecting an overall pullback in market pricing or home sales at least until mid-2022.

They acknowledge that there might be a few fluctuations in offers or the number of days in the market but are adamant that home prices in this local market will not be going down any time soon.

So, Will the Naples Housing Market Crash in 2022?

While it is increasingly difficult to predict what might happen or not happen in future, let us look back at this market’s track record and possible expectations for 2022. On a relative note, home prices will possibly remain stagnant.

This is because Naples does not have a historical record of enormous home price increases in the passing years despite the pandemic. However, the only exponential price increase happened between 2012 and 2016, resulting in an average price increase of about $130,000. But this is not to say that things strictly have to remain this way.

With over 1,000 people moving to Florida per day, local experts predict that the migration might intensify into the New Year. This can also be due to the emergence of a new and highly infectious variant. However, future advancements and general uptake of vaccines should help fasten the return to “normalcy” and open up borders for more real estate investors from other countries.

Overall, Naples real estate currently bears no sign that actively points towards a market crash. If you think about it well, the cumulative growth in population, new constructions, and economy suggests a brighter future for Naples at the least. With more millennials preparing to join the hunt for homes, Fannie Mae now predicts an average of 6.8 million homes to sell before New Year’s Eve.

In other words, the Naples housing market is pretty strong. Many local homeowners have positive equity. The majority of the home sales are sold to cash buyers. Even with financers tightening their lending and underwriting guidelines, the increase in home equity should help deter any potential foreclosure storm in 2022.

As for inventory, there are insufficient homes available to satisfy the high demand in the Southwest Florida real estate market. But with the mortgage rates set to rise in 2022, it could help moderate demand and stabilize home prices later in the year.

The 2022 Naples Real Estate Investment Overview

Naples often stands out as one of the best real estate investment destinations. It is a small city located in Southwest Florida that boasts of a long track record of consistent generation of lucrative long-term returns in the U.S. for the past decade.

The Naples housing market has multiple investment opportunities throughout its 11 neighbourhoods. While affordability mainly relies on costs of living and quality of life, Sun Terrace and Port Royal list the most affordable and most expensive neighbourhoods to invest in Naples.

According to Realtor, the median listing price in the Naples housing market in November was $566,100, accounting for a year-over-year increase of more than 25%. The average number of days in the market for that month was 57 days, with an average listing getting at least three buying offers.

According to Best Places, Naples houses approximately 21,988 people and has a population growth rate of 4.3%. The majority of its workforce work in work-collar positions, and more Fortune 500 companies are reportedly relocating much of their operations to Naples. The city boasts of a considerably low crime rate, and Neighborhood Scout highlights that Naples is 36% safer than other cities in the U.S. This coastal destination enjoys an average unemployment rate of 4.0% and has a medium-income estimate of $80,571. The median home price in Naples is $399,000, and much of its real estate has a median age of 37 years but with an average appreciation rate is up by 18.1%.

If you are ready to jump into the Naples housing market, you should consider working with a qualified licensed local realtor. Doing this will help make your home buying process more efficient, as they know the market better and are professionally trained to help you make the most out of your preferred investment options. Do your due diligence and always make sure that you work with a professional realtor or company. A good agent will help you find the best options, offer credible advice, write compelling offers, and with negotiations.

Bottom Line: Make the Most Out of the Naples Housing Market in 2022

Real estate markets throughout the U.S. have transformed and changed since the pandemic started. Many are now characterized by acute inventory shortages and escalating demands, resulting in very high home prices. The likes of the Naples housing market have remained hot throughout these trying times, and many are eager to know whether they will crash in 2022.

Although we cannot accurately predict how such markets will perform in the coming year, no signs currently suggest that the market will necessarily crash in 2022. However, this does not mean that the Naples housing market will maintain its current trajectory. Instead, there is a glimpse of hope that demand will both demand, and home prices will come down later into the year. Otherwise, 2022 will still be a great time to invest in Naples real estate. Working with a qualified realtor will help you make the most out of your investment.

If you are ready to jump in, reach out to Woodruff Real estate and Property Management to work with knowledgeable agents based in Naples. Call us at (239) 920-8799 or email info@woodruffpropertymgmt.com now and kick start your real estate investment journey in Naples with a free quote.