Republished with permission from the Naples Area Board of Realtors
Buyers are Back: Homes Under Contract Soar 24% in October
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Republished with permission from the Naples Area Board of Realtors
Buyers are Back: Homes Under Contract Soar 24% in October
This past month was not without its challenges. In the middle of the month a monster Hurricane off the east Coast flirted with visiting Florida. It was not until the week before the impending arrival did our area know that it was moving away from us and would not be a threat. This did not remove the lack of business during the week plus timeframe. The "Good" in September was in the area of closed sales, up by 12% for Single Family homes. The "Bad" was the days on market going up by 10%. The "Ugly" is the large decrease in overall inventory. Although this may in the future influence the days on market in a positive way, pending sales and closed sales will be negatively affected until more inventory can be added to the market. The market price dropped too, but should turn northward in the future as a result of lower inventories. If you are thinking of listing your property, now may be a great time. Scarcity of product almost always help prices rise.
Since it was determined earlier this year that Collier County Government does not have the right to place a prohibition on short term rentals for frequency and duration, Collier County Government has been in discussions with stakeholders groups including Naples Area Board of Realtors to find solutions to problems that sparked the initial conversation about a prohibition. Noise, parking, trash, etc. were the main issues presented to the Commission last spring. The Realtors were in full agreement that these issues need to be addressed but also contended this was an enforcement issue and banning short term rentals would damage private property rights for those who wanted or needed to rent their property on a short-term basis.
So, does anyone in Collier County have the right to regulate the frequency and duration of rental properties? Yes, the City of Naples has its own ordinance that was grandfathered in before the State Legislature passed a bill prohibiting municipalities and local governments from banning short term rentals. Additionally, properties located within HOA’s and Condominiums have the right to regulate and make rules limiting short-term rentals, but the County cannot not. The difference is when you buy in an HOA or Condominium project you are also agreeing to abide by their rules. When you close on one of these properties there is a document from the Condo Association and/or HOA that you sign.
Back to the stakeholder’s group, soon they will be coming forth with an ordinance requiring short term rental properties to register. This is good. Short term rentals are required to pay tourist development tax and sales tax. This helps pay for infrastructure and services needed to provide our out of area guests a great experience in Collier County. It is not fair for some to pay the tax and others do not.
They also are discussing requiring a local contact for the property. Realtors think this is a good idea so should a problem arise, there is someone here to help correct it quickly. This makes sense.
However, like all pieces of legislation, there are those who want more added to the ordinance. Realtors are not favoring adding additional requirements. One idea being proposed was requiring inspections. This seemed to be obtrusive and an overreach by government to generate more fees with little return to the property owner.
The County Commission directed staff to enforce local code ordinances. I cannot tell you how that is going, but this is the direction staff should go. If the renters are loud and violating our sound ordinance, then there are remedies in the code. It there is a trash issue, again there are remedies in the code. Illegal parking is easy to cure. Again, there are fines and property owners will not want to pay them.
Bottom line we have plenty of rules already that if County officials just enforce, we should not see many problems associated with short term rentals. Collier County should keep the ordinance simple and easy to administer. Collect the proper amount of taxes and have a contact person for each property should be the goal. Anything more is government overreach.
Some will tell you its always the time to sell, but most smart investors try to adhere to the adage “Buy low, Sell High.” Today's economy is showing signs of struggling to maintain its historic economic growth record. For the last 11+ years our economy has grown. The previous record was 10 years. That alone troubles economists. Add the current discussion on impeachment, this week’s losses in the stock market, some international economies in decline, and the effect of the Chinese tariff on our agriculture industry and retail industries, it makes you wonder if we are already there. I read a lot, listen to the so-called experts, and look at local sales to identify trends, but I still don’t know when the downturn is coming. Neither do the economists. Most are suggesting 2020-2021 for a market adjustment. Hearing news like this does make us uneasy and that’s when we need to use our minds and not our emotions. If you have a property that you have made good gains since you purchased it, you might consider selling now. This will put you ahead of any market adjustment coming. If you have not, then sit on it unless you get an offer you cannot refuse or sell if don't think you will get more gain from it. It is always a good time to get rid of poor performing properties in you portfolio.
If you are investing and you found the perfect location, buy it. Good locations are getting harder to find. We are no longer making land. Our downturns in the economy are usually no longer than a couple years. Property values generally bounce back quickly and unless you plan to sell or refinance soon, most adjustments in value are on paper, not from your pocketbook. So, getting the right location now still makes sense. Finally, in fluctuating markets, the savvy buyer and seller can make a lot of money. They just need to be smart and not let emotion cloud their judgement. It is also the time you need a Realtor who knows the market.
No we did not have a spaghetti western in June. Clint Eastwood did not appear, at least I don't think so. However, the results of June were mixed. Total number of sales were down compared to last year at this time, but 843 closed sales is still pretty good. Inventory fell by 13%. This will help some market as the cheaper priced properties were gobbled up by buyers. You can see the this conclusion with the 1% gain in Median closed prices. There is still plenty of product on the market for buyer to choose, plus none of these numbers reflect the new home market. My ugly is the increase in days on market. We can sort of justify it by saying summer is typically slower, thus you would normally see more activity the rest of the year. Regardless, it's inching towards being over 4 months and sellers do not like that.
Under $500,000 leads market for May
The May Sales Report reflects more moderate buyers jumping in the market. High end home sales declined while homes and condos under $500,000 rose in percentage of total sales volume. Inventory in the under $300 market took a dip reflecting the hot market. The overall total market inventory was reduced by 13%. This is not surprising since it is the end of our sales season and the closings reflect sales contracts executed 30 to 60 days before the property closed. A lot of the lower end market activity were in the Golden Gate Estates and Ave Maria markets. Prices overall for the Greater Naples residential real estate market slipped a little over last year at this time, but still are considered strong prices as compared to other parts of Florida. Commercial properties due in large part to a shortage of product and lack of new commercial developments are retaining their values.
This morning I was asked by a Realtor about a recent Supreme Court ruling and how it affects the average Realtor.
The headline from NAR read "Supreme Court Ruling Stands to Strengthen Private Property Rights". The case was
Knick vs Township of Scott. What the court ruled was in cases of taking of property by a government entity, property owners can now sue through the Federal Courts at the same time as State Courts. No longer do they have to wait or go through an arduous process to get to Federal Courts. For property owners this helps level out the playing field. Lawsuits are very expensive and local Governments seem to have an endless revenue stream available where most property owners have limited resources. Instead of forcing property owners to sue in lower courts first and then take it to the Federal Courts mounting exorbitant fees to defend their interest in their property, property owners now can plot a legal path that works within their means. Back to the original question, most Realtors and their customers will never be affected by this ruling, but for the Realtors and their customers/clients that are forced to fight for fairness and settlement equity, this is a welcome site. There are valid reasons for governments to take properties, but there should be no valid reason to treat those properties owners who are affected by the taking in an unfair or unjust manner. The Supreme Court apparently agrees and for property owners this is a good thing.
When you review the info stats below provided by MLS of Naples you will see some things went up and somethings went down. Look at inventory. Look at median price. Look at closings. It's mixed results. So what does it mean?
Remember back in December and January when the market was incredibly slow. Many blame the government shutdown. Whether it was the reason or not, it created a pent up demand with for buyer who wanted to buy but decided to hold up until Washington was behaving better. Now we are seeing some of the buyers who waited until February and March to make purchases close on their properties. Inventory also showed a decrease but is that really something new. Typically we see the inventory decline as the season heads toward its final weeks. Finally a 6% decrease in median closed price reflects the country's confidence at the time of the purchase. Remember in February and March we were just getting away from our national leadership's misbehaving in the name of federal immigration. I don't care which side of the issue you were on back in December and January, those involved on both sides did nothing to ensure the people of this country that everything was going to be ok. As both sides dug their heals in deeper each day, the real estate economy felt it. In February seller were lowering prices and adding incentives to move their product. As the season went on, on less sellers reduced their prices. I suspect in May or June we will see the median price inch up. Most economists look at our market being close to stable. They anticipate prices rising slightly, homes selling at a normal pace, and inventories shrinking slowly. More homes will be added to our inventory as Sellers get more confidence in the local market which will keep from having dramatically less inventory. From a Realtors point of view, this is a good thing. It keeps us working,
June 6, 2019 HR2157 Better know as the "Disaster Relief Act 2019 was signed into law today by President Trump. Included in this much needed bill was an extension through September 30, 2019 for Federal Flood Insurance. On Monday in a huge bi-partisan vote, the House of Representatives sent the bill to the President with a 354 to 58 vote in favor of the bill. Previously the Senate had passed it with a vote of 84 to 9. It is good to know that when the presidential politics are not surrounding an issue, Congress has the capacity to work together for the better good of the Country. Now much needed aid will be spread around the country to help those ravaged by fire in California and Florida's panhandle which felt the brunt of Hurricane Michael.
Tomorrow at the Collier County Commission, members of the Naples Area Board of Realtors will challenge the Commission's recent decision to enforce a No Six Month or Less Rental policy that affects the unincorporated areas of Collier County. Realtors understand some renters violate their privilege to rent homes and condos, but penalizing all those property owners that follow the rules only further exacerbates the problems associated with the Commission's decision. There are about 14,000 rental units that lease in Collier County according to Jack Wert of Collier County Tourist Development Council. The rentals account for over $9,000,000 in revenues from rentals less than six months. It would be terribly irresponsible for the Commission to just give away that money without trying to find a common sense resolution to the problem. With all 14,000 rentals last year, the County received 66 code enforcement complaints. A great number of the 66 complaints were simply about the rental period was less than 6 months.
There are some legitimate complaints against renters. The neighboring properties need resolution to them also. Can we not just take away those who break the rules and not violate the property rights of the non offenders? The Board of Realtors is suggesting we create a stakeholders group and work to find middle ground. That makes sense.
What does not make sense is how the County can advocate for a rule that they have yet to produce. The County Attorney states the ban on 6 month or less rentals is in the Land Development Code. I looked and I can't find it. Others have looked too. It's not there. Therefore without the ban being in an ordinance, there is nothing to inforce. Yet even knowing this, the Realtors want to find common ground because every property owner has property rights. Equity needs to prevail. Hopefully the Commission will listen and make a good decision that is fair to all.