It was a headline that attempted to shut a residential real estate market down. "Naples, Florida most over-valued housing market in U.S." Talk about manipulating a market coming out of one of its largest sales volume years in history, one based on home buyers perceptions of a fairly valued market. And, if readers didn’t look past the headline, it disabled them from making a housing decision in this Southwest Florida community. Naples is known internationally for it’s seasonal residents wealth, miles of pristine beaches, and uninterrupted glorious weather.

Though I am based in Chicago, I have spent several weeks each January for the past five years in Naples. I saw home prices increase methodically up the appreciation ladder until the headline imposed plateau. The price climb mirrored many other real markets around the country. Here’s an overview of what I heard from Naples real estate agents, concerning the post-headline year, 2006.

The common thread was fear among buyers, sellers, appraisers, and developers. One agent said that after the headline broke, real estate appraisers started to question their own opinion of value on recent sales they were currently appraising. In hindsight, many believed they learned the power of headline, and if media proclamations were made in the future, they would know how to assimilate them.

Charlie, Katrina and Wilma also coupled with the headline, placed pensive-prone buyers in neutral and seasonal owners in sell mode. Increased building improvement, insurance, repair and maintenance costs and expenses from hurricane damage, played havoc with fixed income household budgets.

The first round of transplanted retirees from the 1970’s and 80’s began in 2006 to liquidate second homes in Naples because of declining health and mobility. Many popular condominiums that had for years had long waiting lists for units, now had multiple ones available. Plus, developers had begun a large surge of new construction that ventured to the western edge of the Everglades. The timing of these two unrelated events converged to substantially increase inventory levels.

The average age for Collier County residents decreased to the mid-forties from the mid-sixities during the headline period. Thus beginning a huge shift in demographics, for a market historically seen as one devoted to seasonal or second home ownership. The new younger resident’s are: full-time residents, a majority are graduate school educated, relocated retail or service managers, and have chosen Naples specifically as their destination. Baby boomers not quite retired still contribute to a smaller sales segment in the market, and are actively pursuing second home or rental investments.

The upper-bracket segment of the market continues to be strong. Demand for multi-million dollar properties in the Port Royal area south of Old Naples is especially popular.

Buyers are out in the market, drafting purchase contracts and not just "kicking curtains." Low-ball offers are common, but sellers who have priced their home correctly are not entertaining them. Limited investors have returned to the Naples market. One agent told me that there were many deals to be had, but savvy investors haven’t seen firsthand the post-headline reality. Motivated sellers comprise 80-85 percent of the current inventory, unlike the common notion that sellers are willing to sit on a property for several years.