Naples and the Collier County area has consistently been sited as one of the top growth areas in the United States and in Florida. The semitropical weather and availability of numerous upscale services, makes Naples a very desirable second home and retirement destination. Most of working residents are employed servicing the second home market, whether it is construction, development, maintenance, hospitality or the many services sought by the second home owner group.

The economy is based on a industry driven by seasonal residents or visitors who normally reside outside the area. As long as the Naples area is considered a desirable escape by those living in northern climates, the economy will continue to thrive. Collier County officials forecast significant population growth for the Naples area.

Baby Boomers Expect to Contribute to High Growth Rates

Those born in 1946, the first year of the baby boom generation reach 60 years of age in 2006. In the next 10 years over 35 million baby boomers will be reaching the 60 year threshold. According to the The Urban Institute of Tabulations of Dynasm, this group will have on average, over $1 million in wealth and annual earnings available of $79,000 at age 67. This is 20% higher than the generation that proceeded them.

Births in the United States

If just 1/10 of 1% of the boomer reaching 60 over the next 10 years decide on Naples, FL for a second home, the area would be pretty well built out.

Naples Area Expansion

All of western Collier county is referred to as "Naples." The city of Naples represents only a small part of the population and geographic area. The majority of the Naples population lives within planned urban developments - PUDs. These are large tracks of land where developers built the roads, sewers, boulevards, housing, golf courses, community amenities, etc.

Large tracks of land in western Naples no longer exist, only a few smaller tracks suitable for small communities. On the eastern edge of Naples is Golden Gate estates. This is a very large area consisting of residential lots of an acre or more. This area is carved out of former swamp land, drained through a series of cannels. Single family homes and lots can be purchased, but no developments. As such large tracks of land that could accommodate a golf course community for example, only exist in the far northeast and southeast reaches of Naples.

As residential growth continues, new housing trends will head further east and south within the Naples area.

Naples Home Prices

Many different features, property attributes and community amenities impact the price of housing. And each can greatly affect the price of the property. For example, I often get requests from buyers wanting to be in a very nice community with low fees. But fees pay for nice things, and pretty flowers, and gates and sometimes lawn care, etc. So it comes down to you get what you pay for when it comes to features.

Feature	More Expensive	Less Expensive
Location	Closer to the Beach Closer to Olde Naples	Long drive to beach. Further from Olde Naples
View	Views of ponds, bay, ocean, golf courses and preservation areas.	Views of fences, parking lots and walls.
Security	Manned gates and security patrols.	No security.
Community Amenities	Community amenities such as palm tree lined boulevards, elegant landscaping, golf course, clubhouse and recreation centers.	Not in a community, or a community with very limited amenities.
Size	More square feet and more bedrooms, the higher the price.	Small
Height	For condos, usually the higher the floor the more expensive.	First floor units.
Noise	Away from busy streets, commercial or retail centers.	Hear Interstate or nearby highway traffic noise.
Lot Size	Large	Small
Year Built	Newer	Older
	ò The more of these attributes a property has the more expensive.	ò The more of these attributes a property has the least expensive.
	Example	Example
	New 8,000 sq.ft. home on the Naples Bay, with dock, pool and killer view. $10,900,000	Older 750 sq.ft. condo, near traffic noise, no security, no view, no amenities. $160,000

Naples Real Estate Background Recap

Investor buying fever in 2004 and early 2005 drove home prices up 50% or more in the Naples FL area during that time, mostly in the lower price ranges, but higher priced properties also had healthy appreciation. Real estate prices peaked in the fall of 2005 for many property types when investors pretty much dropped out of the market.

Why So Many Homes for Sale in Naples?

Naples currently has over 12,000 homes listed for sale. This is a number almost 3 times higher than in a balanced market. Some communities have over 20% of their total homes listed for sale, or 1 out of 5.

Reason 1: Investors Trying to Cash In

In 2003 through 2005, buying activity was almost double historical trends in the Naples area. This buying acceleration was not driven by growth in year-round residents or second home buyers, but by investors. This buying demand drove home prices up significantly. When prices became unaffordable, investors switched from wanting to buy, to wanting to sell. Although investors bought over a 3 year period, many are now trying to sell at the same time.

Buying Activity
Number of Homes Sold as a % of Total Homes in the Area
Resells

As can be seen by the above chart, the buying activity in 2006 tracks pretty well with historical Trends.

Time line

Investors were cashing in, changed to

Investors trying to cash in, changed to

Investors trying to breakeven, to

Investors trying to minimize their lost, to ?

?Investors deciding to hold for a recovery?

Reason 2: Seller's High Asking Prices

The majority of homes listed for sale do not have a snowballs chance in Naples of selling. Most communities have homes available for sale, with asking prices 20% to 30% higher than similar or better value comparables within the same community.

From my observation of asking prices, 60% of homes won't sell at the asking price, 30% in the ballpark, and 10% in the aggressively priced category.

Naples has a 3 year supply of homes listed for sale, but that is an average. Clearly the better priced homes will be sold in the coming months, and year and the worst priced homes will be selling 3 or more years out, at their current prices.

What I am suggesting is that there are only 4,000 or so listings in the area that are truly for sale. The rest appear to be just taking up listing space.

Naples Real Estate Price Trends

Generally homes prices in the Naples area that have sold, are 20% or more off of peak pricing. The more unique, rare or specialized a house or condo is, the lower the drop. The more the community or property was investor driven, the greater the drop.

The following charts tracks the price per square foot of a particular niche within the Naples real estate market. It tracks the average square foot selling price by quarter, of similar size and type condos in the area sold since January 2001 and compares that trend to various growth rates.