This is the second day of a series of stories in a Daily News 8-day Special Report: "In Recovery?" looking at whether the economy is rebounding in Southwest Florida.
NAPLES — New normal. Reset button. Return of common sense.
Talk to real estate insiders and experts about the market in Southwest Florida and these terms are bound to come up.
"The downturn we saw ... it was unprecedented," said Bill Poteet, president of the Naples Area Board of Realtors. "Up until then, Naples had been pretty much bulletproof through most recessions."
Everyone knows what happened instead. The rapid descent of Southwest Florida's housing industry into chaos has been well-documented, as has the flood of short sales and distressed properties that defined the market in 2009 and 2010.
After a promising 2011-12 tourist season turned out even better than expected, local market-watchers are saying the real estate market in Collier County is officially back on the mend — save a couple of caveats. With a presidential election approaching, and uncertainty in gas prices and income tax rates — particularly among upper-income brackets — there remain factors that could slow the recovery of the real estate market.
"It's a mini-recovery," John Tucillo, chief economist for Florida Realtors, said during an April 13 economic summit at NABOR. "And we have a long way to go."
On a whole, however, Realtors in Southwest Florida sound decidedly more upbeat — and less reserved in their enthusiasm — this spring than in recent memory.
"Yes, we feel very optimistic," said Phil Wood, president and CEO of John R. Wood Realtors. "The fact that unemployment is improving gradually all over the country, the fact that Naples and Southwest Florida usually lead the country out of the recession because it is such a desirable area — that all gives us reason for optimism."
Michael Timmerman, a senior associate at the Naples arm of market research firm Fishkind & Associates, said median home prices are gradually ticking upward in Naples, after a seemingly endless couple of years scraping the bottom. Meanwhile, the volume of home sales is increasing, and, though standards are stricter now than five or six years ago, lenders are becoming more willing to grant loans.
Data released by NABOR in mid-April showed that median closing prices for single-family homes increased 17 percent from the first quarter of 2011 to the first quarter of 2012. Meanwhile, inventory was down 13 percent.
It all seems to point to this: the local market is on the upswing.
"I think 2011 is best described as a strong year of recovery in the Naples real estate market," said Cindy Carroll, a principal at Carroll & Carroll, a Naples real estate appraisal and consulting firm. "It's the first year that we've seen stabilizing trends continuing through the whole year. When we got to the end of the year, we finally felt like we had a strong, improving trend under way."
However, increased sales numbers have been somewhat uneven in some segments of the market, particularly among lower-end and distressed properties, and homes in the $500,000-and-up range.
In the first quarter, home sales in the Naples market increased 29 percent, according to the Naples Area Board of Realtors. The median home price in the quarter increased by more than 14 percent to $190,000. The median is the price at which half the homes sell for more and half for less.
The first-quarter 2012 numbers released by NABOR indicate this trend may be evening out.
Sales of homes in the $500,000 to $1 million range increased 55 percent from February 2011 to February 2012. Overall, from the first quarter of 2011 to the same period in 2012, the increase was a more modest 29 percent.
Tucillo said the upper end of the market has been more active than normal, but, he added, normal is pretty slow.
"We're looking at a snail that had a five-hour energy drink," he said. "We've got a lot of way to go to get back to normal. It's going to be a slog."
Sales of homes in the $300,000 to $500,000 price range increased 14 percent from the first quarter of 2011 to the first quarter of 2012. Sales of homes in the $1 million to $2 million range also increased by 14 percent during that time period, according to NABOR.
In Lee County, pending sales – or new contracts written – for single-family homes increased 24.5 percent in the first quarter, compared to a year ago, according to a report by Florida Realtors. In the quarter, new listings dropped by 4.5 percent and the median sales price grew 8 percent to $135,000.
Meanwhile, speculators and flippers no longer seem to dominate the marketplace. That's a near-reversal from 2009 and 2010, said Brenda Fioretti, managing broker of Prudential Florida Realty in Naples and a NABOR director.
"Sixty-five to 67 percent of our transactions at one point were short sales or foreclosures – in 2009," Fioretti said. "Now, we're down to under 40 percent. The distressed transactions are going away quickly."
It means inventory has dropped to roughly the same levels seen in 2004, just prior to the rapid increases that preceded the burst of the real estate bubble in Southwest Florida. Figures released in mid-April by NABOR show there were 7,596 single-family homes on the market in the first quarter of this year, compared to 8,762 homes listed for sale at the same time last year. That's a 13 percent drop.
Carroll said entry-level markets – in which most people buy their first home – are tightening.
"Some of those areas have only a few months of supply," she said. "In our market, stability is classified as when you see one year of supply."
While the falling inventory drives up prices, it could produce possible ill-effects.
"As demand keeps increasing and inventory keeps falling, my concern on some of those is the developers that are jumping back into the market now may build some products that capture the existing market," Wood said.
It's not necessarily bad on its face, Wood said, but "those other properties will be hard to sell."
At the other end of the spectrum is concern that if inventory falls faster than new construction can keep up, prices will increase too rapidly.
"If we have pricing increases of 1 (percent) to 2 percent a year, that's good," Timmerman said. "If we start increasing pricing at a rate of 10 percent a year, that's an indication that our market is imbalanced and we have less supply than we need to."
This is part of an 8-day Daily News series, "In Recovery?" about whether Southwest Florida's economy is rebounding. Tomorrow: Construction.