Whether you’re a realtor or a prospective home seller/buyer, one thing you need to keep tabs on is the prevailing market condition of the real estate industry.
This post will examine the major challenges COVID-19 brought upon the Naples Florida Real Estate business.
Impact of COVID-19 and the real estate industry in Naples, Florida
Covid-19 brought the world on its knees in ways we’ve never seen before. Health concerns and stay-at-home measures forced many to adjust their lifestyles. Many industries suffered due to this, including the real estate markets.
Although real estate stakeholders in Naples, FL have since attempted to get the market in the area back on its feet, some of the consequences of the pandemic still linger.
Common challenges being faced in the Naples, Florida real estate market
Spike in the number of days it’s taking to close real estate deals
Today, health concerns have made home sellers reluctant to open their doors to strangers. In a similar vein, stay-at-home measures have also led to fewer buyers looking for homes.
This has led to a delay in the average number of days it’s taking to close housing deals in Naples, Florida. As you can see in the figure below, in the years before the pandemic – 2019 to be precise – it took approximately 50 days or less to complete a property sale. Fast-forward a year later, that number jumped to a median-day range of 109 days by March 2020 – around the time the pandemic was running its course at full speed.
That’s about 118% increment in the median days homes spend on the market in Naples, FL. Although the market healed after the first wave of the virus by returning to its average median rate of 57 days, the recent discovery of the omicron variant has started to affect the market again.
Recently reported in the news, COVID cases rose by 948% in Florida as Omicron ran a huge wave across the country. With information like that riding the radio waves, you can bet that more home sellers will be reluctant to open their doors to strangers for home inspections, let alone close deals.
A drop in median home sale price
The joy of every realtor, property agent or home seller is to find a buyer who’s willing to pay exactly the asking (listing) price.
Unfortunately, in a world impacted by COVID-19, such desires are nothing but mere fantasies.
The COVID-19 crisis significantly impacted the economic status of many, creating unfavorable situations such as job losses and price uncertainty.
The impact of this is a fluctuation in the median prices homes are sold for. Traditionally in Naples, FL, homes are sold for approximately the asking price.
As of June 2020, when COVID was at its worst, the median home sale price in Naples, FL fell to as low as $337,950. When you consider the home listing price for this period was $425,000, you can understand the magnitude of the slippage. For sellers and realtors alike in this period, that’s a median loss of around $87,050.
Difficulty securing mortgages
As with every state’s real estate market, mortgage is at the heart of Naples, Florida’s housing market.
And as you can imagine, COVID-19 affected this aspect of the industry, too. Because of the pandemic, many aspiring homeowners could no longer continue with their mortgage applications, thus making it impossible to buy homes.
In most cases, the economic instability, health issues, and unemployment situations meant it was just impossible to continue with the terms of mortgage applications.
Dramatic turnaround in the post-pandemic world
The beautiful end to the COVID story is the dramatic turnaround that Naples, FL real estate market has enjoyed in the wake of the pandemic.
Safe for recently when a new variant of the virus – Omicron – entered the picture, the market in Naples, FL was recovering so well.
For instance, in the immediate period that followed the worst spell of COVID, we had the median home listing price jumping up as high as $675k in 2021. The median days on market – how long it took to sell homes – slid back to 57 days or less. And then the sale-to-list ratio skyrocketing back to an ATH (All-time high) of around 103.4% at a YoY (Year-over-year) rate of +8.2%.
Story by Uday Tank
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Chris Graham
