The real estate market has been a whirlwind over the last couple of years. With record-low interest rates and an unprecedented demand for real estate, Florida’s real estate market has been quite competitive in recent years. Yet, as circumstances change, many prospective buyers and sellers are uncertain about the stability of Naples’ real estate market. Will there be a market crash similar to the 2008 housing crisis? Will the home values increase, decrease, or remain stable? Here is everything you need to know about the local real estate market for 2023 and beyond.
The market conditions of 2022
From 2021 to 2022, the majority of real estate markets nationwide experienced a major boom. Naples is no exception to that rule. While interest rates had been low in recent years, they achieved record lows in January 2021 when they dipped to 2.65%. Along with very low-interest rates, other factors contributed to increased real estate activity, including an upsurge of Millennials entering the housing market in search of real estate. Millennials are now the largest generation and made up 43% of homebuyers in 2022, which is an increase from 37% in 2021. These two factors, along with the massive influx of remote work, have given buyers more opportunities to live wherever they want and purchase real estate in markets they did not previously have access.
While real estate was at an all-time demand in 2022, housing inventory was at an all-time low. Supply chains all over the world were disrupted, which resulted in decreased labor and limited building supplies. With the increased price of buildings and a record-low housing inventory, housing prices skyrocketed across the nation, and buyers were in one of the most competitive real estate markets in recent history.
Naples’ median home prices were $745,000 in 2022, which is comparatively higher than the national average of $365,767.
How interest rates could affect the real estate market
Coming into 2023, there will be a lot of noticeable changes in the local real estate market. For example, there was a nationwide increase in interest rates, with rates reaching over 6.25% in the Fall of 2022. This measure was taken in hope of balancing the real estate market and curbing the sky-high demand for real estate. This, combined with 30-year-high inflation rates, will affect Naples’ real estate market in the coming months. For some sellers, this news is concerning. Will increased interest rates lead to another housing crash? Will property values decrease in 2023? This seems unlikely. The events that led to the 2007-2008 housing crash are very different from what we will likely see in 2023.
Supply chains are starting to catch up, which means there will be more building supplies available in the coming months. This, combined with an increased inventory of housing, will mean the local real estate market will likely stabilize, even with the increased interest rates. Yet, interest rates are not the only factor that can determine Naples’ market stability. Here are some of the other factors that will heavily influence the local real estate market in 2023.
Other factors that will affect Naples’ real estate
Along with housing inventory and interest rates, some of the biggest factors that determine a local real estate market’s stability are employment opportunities and demographics. Like many Florida cities, Naples has an incredibly strong local economy. Naples has an unemployment rate of 4.0%, which is much lower than the national average of 6.0%. Naples has employment opportunities in many sectors, including healthcare, tourism, hospitality, telecommunications, and retail. With a variety of different jobs in the area, Naples also has an excellent employment outlook, with a projected job growth of 39.3% over the next ten years, which is higher than the national average.
One of the many reasons Naples has such excellent job opportunities is due to demographics. Millennials and Baby Boomers make up two of the largest generations in the world, making up the majority of homeowners in the Naples area. As more and more Baby Boomers reach the age of retirement, there will be an increased demand for Park Shore condos and Pelican Bay single-family homes. There will also be an increased demand for able-bodied workers in the healthcare and hospitality sectors, which will draw in more Millennial buyers to the area.
What to expect for Naples in 2023
Taking many factors into consideration, local buyers and sellers are considering the same question: what does this mean for Naples’ local housing market? For those who are buying real estate, home prices are expected to remain stable or slightly increase in 2023. However, buyers will likely have more inventory to choose from, which means they are less likely to experience bidding wars for their dream homes. For sellers, there will still be a demand for high-quality real estate since more and more people will be relocating to the Naples area.
This is also good news for investors, who are more likely to find great deals on homes. Whether they are looking for a property to flip and sell or a vacation rental, there has never been a better time to invest in Naples properties.
Over the past couple of years, the local real estate market has been a crazy whirlwind of bidding wars and multiple offers on limited inventory. While this has been good for sellers, it has been a frustrating experience for buyers who were caught in multiple bidding wars and lost out on their dream homes. As the market stabilizes, more and more buyers will have better odds of finding their dream homes, even if it means they have to contend with increased interest rates. Even while things seem uncertain for now, there are many reasons to be optimistic about the local market for 2023.
Is now the right time to invest?
Are you considering buying or selling real estate in 2023? Trust John O’Neill and his team to help you find the home of your dreams, whether you’re searching for a condo, townhouse, or single-family home. Contact John today to get started on your property search.
