Buyers are nervous over the economy and impending war, which is putting a lid on the quickly climbing real estate market in Naples, Florida, report local Realtors.

"Prices are not climbing as fast as they did last year...people are afraid of the economy and the war," says Realtor Ginny Lee. "If history holds true prices always go up and the economy gets really good after the war, so now is the time to buy. Interest rates are at a record low and prices are better than ever."

"Although previously-owned home sales went down a little," explains Lee, "they were still higher than anticipated by industry analysts. Consumer spending in general slowed down, but people are still buying houses at the fourth highest pace on record -- probably because of the low interest rates and high cost of renting. Seasonally adjusted sales were at an annual pace to sell 5.75 million homes nationally.Nationwide, the average house increased 6.6 percent in value over the last year."

She advises, "The latest figures show the current inventory of homes for sale is 4.5 months. This is down slightly from last month's inventory of 4.8 months, showing that there is still no real slackening in the demand vs. supply relationship for housing. Sales have really been great in Naples Florida with an average appreciation of 20 percent last year and 40 percent on the beach."

Says Realtor Phil Gieseke, "Midway through the peak season (January-April), sales of upscale vacation and retirement homes have definitely slowed. The same rule from 2002 still applies: the higher the price point, the slower the sales. We have weathered the dot.com crash, but many people hesitate to make a major decision with uneasiness about international affairs and thoughts of war."

Suggests Gieseke, "Those who recognize this trough as a buying opportunity are looking for bargains. But given that most of our second home and retirement property is held debt-free, there have been few financially motivated sellers. Those not offered their price are waiting. However, as the peak season comes to an end, we expect some sellers to reduce their price rather than wait another year. On the other hand, there are scores of developers with ready inventory, and they are less willing to wait for the next season, as cash flow is a developer's lifeblood. We are already seeing cash and upgrade incentives being offered to new home buyers."

"This is a buyer's market," he says. "The selection is great and prices are, at the least, less than they will be when the economy strengthens."

As far as a long term outlook goes, Gieseke says, "The oldest Baby Boomers are in their late fifties. Some of them have fueled Southwest Florida expansion by buying second homes. While they start thinking retirement, we expect younger boomers (late thirties to early fifties) to start thinking second home. This second/retirement home cycle should continue for decades as the boomers continue to move through their forties, fifties, and sixties. Southwest Florida is attracting more than Baby Boomer vacationers and retirees. Developers now locate next to schools and advertise family amenities. We anticipate a mix of young and old, vacationers and residents over the next 20 years as this area grows into a self-sustaining commercial and residential community. As developers move outward to less expensive land, they offer either the same home value for less money or the same home with more surrounding green and water areas. Buyers are embracing both options. Upscale golfing communities are now selling east of I-75 as far north as Ft Myers and south on 951 towards Marco Island. Lee County has approved the Simon Group's plan for the Coconut Point Mall, including 1.8 million SqFt of retail space plus 1,000 multi-family units and 300,000 Sq Ft of office space. It will be located on the east side of US 41 in Estero."

"Note that some of the established developments have already experienced rapid appreciation and are adjusting to the average area rate. This is because today's buyer is more value conscious, but still shuns the older 'dated' properties that will require more maintenance. However, newer areas are experiencing increased pressure on property values as shopping and services appear and mature. In all cases, while acknowledging the current eastward development, we still sense that the closer to the Gulf, the more valuable the property -- the weather, the shopping, and the services are superior. If you can see the Gulf or feel its breezes, that's a plus. An unobstructed view where you can walk out the door and put your feet in the sand is still in highest demand --and is least available."

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Published: March 13, 2003

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