With the affluent lifestyle of Naples, Florida, you would think the real estate market in this part of the Sunshine City will be somewhat dull. But guess what? Yahoo! Money reports Naples-Immokalee-Marco Island, FL as the second hottest real estate market in 2021, growing by 32% and hitting a median sales price of $640,000 in the third quarter.
Undoubtedly, Naples helped the Florida real estate market flourish in 2021. Will it perform well in 2022 as it did in the previous year? Find out more from our Naples real estate market forecast 2022.
But before we move forward, let’s look at the numbers from the Naples real estate trends in 2021:
- Median listing home price: $590,000 (up 31% YOY)
- Median listing home price per square foot: $319
- Median home sold price: $545,000
- Sale-to-list price ratio: 100, which means that on average, houses were sold at prices almost equal to the asking price
- Median days on the market: 57 days
This article will provide insights into the numbers above, as it explores the following:
- Reasons for the booming housing market in Naples
- Naples real estate trends, including prices, supply, and demand
- Factors expected to shape the housing market in Naples
- The rental situation in the city
- Understanding the city’s investment potential
Naples, FL Real Estate Key Drivers in 2021
Naples is one of the most desirable places in the United States, ranking No. 7 in the U.S. News Best Places study of 150 metro areas. The city also topped the Best Places to Live in Florida. It also ranked favorably in other categories, including:
- Best Places to Retire: No. 2
- Safest Places to Live: No. 2
- Best Places to Live for Quality of Life: No. 3
- Fastest-Growing Places: No. 4
- Most Expensive Places to Live: No. 14
The city’s excellent rankings are reasons enough to make Naples a preferred location. But what contributed to its impressive rankings, and what makes people want to move to Naples?
Flourishing Job Market
The job market growth in Naples brought down its unemployment to 2.9% in November 2021, an improvement from 3.7% in the previous year. Employment in the private sector increased by 7.6%, translating into 10,400 new jobs. In the same period, the city’s labor force saw an increase of 8.9%, which meant an additional 15,716 workers.
The leisure and hospitality sector registered the highest jobs growth at 4,000. Other sectors that posted gains are healthcare and business. The companies with high hiring figures are NCH Healthcare System, ASG Technologies, and Marriott International. The average household income in Naples is $217,838, with a poverty rate of 7.8%.
Relaxed Tax Regulations
Since there is no state income tax in Florida, people from other states with high income tax rates and who are looking to increase their disposable income find transferring to Naples appealing.
Opportunities for Education
The city is not all fun and relaxation. It also gives a premium to education, manifested by its exceptional school system. The Collier County School System is at the core of the city’s public schools, including Pelican March Elementary Schools, North Naples Middle School, Naples High Schools, and Pine Ridge Middle School.
The increased focus on education makes Naples a perfect choice for families with school-aged children. Individuals who want to pursue higher education can choose either Hodges University or the Ave Maria University of Law. Other options are available in neighboring cities.
Quality of Life
Whether you are a retiree, a middle-ager, a millennial, or a Gen Zer, Naples allows you to nurture a positive well-being.
Many people, especially those from the north, find Naples’s almost year-long warm and sunny weather both appealing and relaxing. Aside from its wonderful beaches, the city offers many amenities perfect for those who love the outdoors, including golf courses (Bonita Bay, Cedar Hammock Golf and Country Club, Heritage Bay Golf and Country Club, among others) and parks (Big Cypress National Preserve, Collier County Parks and Recreation, Naples Botanical Garden, etc.)
In addition, the many events organized by the local community offer varied opportunities for relaxation, making new friends, and learning about various cultures. There is at least one event for everyone. Patrons can choose among The Naples Craft Beer Festival, The Naples National Arts Festival, and many more.
How will these key drivers play out in the Naples real estate market forecast 2022?
Related: How to Choose the Right Location for Rental Properties
Outdoor Amenities are One of the Key Drivers of the Naples Real Estate Market
Naples Real Estate Market Statistics and Trends in 2021
It is important to review last year’s performance as they influence the Naples real estate market forecast 2022.
Gulfshore Business recently published its 2021 year-end statistics, comparing metrics versus 2020 year-end numbers.
- The year 2021 ended with the median closed price at $445,000, up by 20% YOY.
- Overall closed sales registered a 26% increase, bringing it to 15,523.
- Overall pending sales closed at 18,664, increasing by 15% from 2020 year-end figures.
- Total inventory went down by 77%, with only 1,042 units.
- Days on the market suffered a 52% decline to 44.
- Overall closed sales rose to 15,523 or a 26% growth.
- New listings went down by 6% to 14,756.
Naples Rental Properties Trends in 2021
The demand for rental properties in Southwest Florida is also rising. However, the Florida housing market saw investors selling houses that used to be rental properties, causing inventory to drop. The lack of rental property supply pushed up rental rates significantly. Units with a monthly rental of $1,400 were being rented at $1,700, while units that used to go for $1,500 were rented out for $1,900.
The trend is predicted to continue for the next six months to one year, and when the inventory can’t catch up with the demand, rental prices are expected to increase further. When that happens, renters might look for other places where rates are not exorbitant, and that’s bad news for those who prefer rentals as a real estate investment strategy.
Below is a rundown of the rental market according to point2homes.
- Rentals take up about 22% of Naples’s real estate.
- As of October 2021, the average apartment rate is $2,302, a 41.2% increase from October 2020.
- Apartments priced above $2,000 per month dominate Naples rentals, while those in the range of $700 to $1,000 take up the smallest market share at 1.23%.
- The median number of rooms rented is 3.7, with two-bedroom units getting the biggest slice of the pie at 44%. The share of units with five or more bedrooms is the lowest at 1%.
Naples Real Estate Market Forecast for 2022
The Washington Post paints a brighter picture for the 2022 US housing market – existing-home sales are anticipated to move up by 6.6%. It will remain a seller’s market, but buyers will most likely have an easier time finding homes. Affordability will remain a challenge because of the continued increase in prices and interest rates. The price of existing homes is expected to go up by 2.9%. Housing inventory will slightly rise 0.3%, with single-family homes improving by 5%.
Will these predictions manifest in the Naples real estate market forecast 2022?
Based on real estate trends and statistics, the following will shape Naples’s 2022 real estate market.
High Demand
The demand for homes may taper off in 2022, but the demand will remain high to keep realtors busy. The demand will result from increased migration, the emergence of the Great Resignation, the continued shift to remote work, the aging population, and the benefit of the “no state income tax policy.”
Migration
The year 2021 saw people from the Midwest moving to Florida. About 1,000 people move daily to the Sunshine State, and experts see the trend to continue. In 2022, the Midwesterners will be joined by people from California, New York, New Jersey, and many more. People moving to Naples are no longer simply interested in fleeing the cold weather from their state of origin. They are setting up a permanent place in Naples to relish in the warm climate, enjoy its laidback environment, experience work-life balance, and take advantage of available educational and job opportunities.
Aging Population
The aging population seeks an alternative to retirement homes, joining the younger generation in flocking to the city. The baby boomers want a place to enjoy mobility, avail of modern amenities, and belong to a community with similar interests.
Housing Shortage
With demand for housing remaining strong for most of 2022, the shortage in housing inventory is also expected to continue. However, with home financing rates designed to campaign for a buyer’s market, inventories are expected to scale up sometime within the year.
In its August 2021 report, Zillow posits that the real estate market will recover from an all-time low inventory. The claim is supported by the new constructions in the Southwest Florida region. About 1,000 new housing units were being approved for construction in October, giving buyers more options in 2022.
High Prices
The middle of 2022 is a period to watch out for. While some real estate insiders expect prices to increase more around this period, some foresee the same period when prices will start to decline. It is one aspect of the Naples real estate market forecast 2022 that every investor, buyer, and realtor looks forward to – to see real estate prices finally stabilizing by year-end.
Related: 2022 Real Estate Market Forecast: Top 10 Predictions
Should You Invest in the Naples, FL Real Estate Market in 2022?
Yes. Despite Naples having one of the highest property prices, a lot is going for this city.
- Naples remains a popular vacation spot and tourist destination, making rental properties great investment options.
- The city is a haven for retirees. With the country’s aging population and the Great Resignation, you can expect more retirees to settle down in Naples. This emerging trend will help grow your real estate portfolio.
Overall, the Naples real estate market forecast for 2022 points to another good year.
Top 5 Neighborhoods for Traditional Rental Investment in 2022
Although the following neighborhoods ranked favorably in cash on cash returns, Moorings and Bears Paw registered low traditional rental listings. They are expected to recover when inventories begin to stabilize, as predicted in the Naples real estate market forecast 2022.
1. Bears Paw
- Median Property Price: $430,817
- Price per Square Foot: $313
- Average Traditional Monthly Income: $1,837
- Average Traditional Cash on Cash Return: 3.03%
2. Estuary at Grey Oaks
- Median Property Price: $632,985
- Price per Square Foot: $334
- Average Traditional Monthly Income: $2,550
- Average Traditional Cash on Cash Return: 3.01%
3. Moorings
- Median Property Price: $1,211,588
- Price per Square Foot: $791
- Average Traditional Monthly Income: $3,613
- Average Traditional Cash on Cash Return: 1.76%
4. Park Shore
- Median Property Price: $1,540,504
- Price per Square Foot: $794
- Average Traditional Monthly Income: $3,021
- Average Traditional Cash on Cash Return: 1.29%
5. Royal Harbor
- Median Property Price: $730,020
- Price per Square Foot: $410
- Average Traditional Monthly Income: $1,672
- Average Traditional Cash on Cash Return: 1.18%
Top 5 Neighborhoods for Airbnb Investment in 2022
Except for Naples Park, all other neighborhoods listed here registered low listings. However, they all logged favorable cash on cash return. If the Naples real estate market forecast 2022 comes to fruition, these are the neighborhoods to watch out for:
1. Sun Terrace
- Median Property Price: $524,857
- Price per Square Foot: $398
- Average Monthly Airbnb Rental Income: $4,421
- Average Airbnb Cash on Cash Return: 5.90%
- Average Airbnb Occupancy Rate: 48%
2. Naples Park
- Median Property Price: $1,208,739
- Price per Square Foot: $516
- Average Monthly Airbnb Rental Income: $6,814
- Average Airbnb Cash on Cash Return: 4.40%
- Average Airbnb Occupancy Rate: 71%
3. Royal Harbor
- Median Property Price: $730,020
- Price per Square Foot: $410
- Average Monthly Airbnb Rental Income: $3,455
- Average Airbnb Cash on Cash Return: 3.80%
- Average Airbnb Occupancy Rate: 52%
4. Airport
- Median Property Price: $543,968
- Price per Square Foot: $319
- Average Monthly Airbnb Rental Income: $2,918
- Average Airbnb Cash on Cash Return: 2.60%
- Average Airbnb Occupancy Rate: 50%
5. Lake Park
- Median Property Price: $2,533,500
- Price per Square Foot: $1001
- Average Monthly Airbnb Rental Income: $5,137
- Average Airbnb Cash on Cash Return: 1.50%
- Average Airbnb Occupancy Rate: 47%
Related: The 10 Best Rental Markets in Florida
Conclusion
If you are looking to make money in real estate and expecting a quick return on investment, it may not be a good time to buy a property in Naples during the first half of the year. Aside from the high prices, there isn’t much inventory to work with.
The Naples real estate market forecast 2022 gives us a positive outlook for the current year, as it foresees price stabilization and an increase in supply towards the end of the year.
Acquiring rental properties is a good real estate investment strategy, but only if you choose the right location and the right property. Invest wisely, and do it with the help of Mashvisor.
Finding the right property in the right location is not a walk in the park. You need the right analytical tools to succeed at it. Mashvisor offers a wide range of tools for your investing needs, so take advantage of their market analysis.