Two Reasons to Buy a Naples Home Now

I was half tempted to name this blog post “The Best Reason to Buy a Home in Naples,” and use just three words: “the amazing sunsets.” Ah, but that would be cheating. The sunsets, the miles of exquisite beaches, shopping, dining and cultural activities are all reason enough for me to live in Naples, but this blog is for you.

If you’ve decided to buy a home in Naples but just can’t figure out the best time to jump into the market, read on to learn the three biggest reasons to take the leap now.

Interest Rates

Even though mortgage rates inched up a bit earlier this week, increasing borrowing costs slightly, the 30-year rate sits at a historically low 3.41 percent. Compared to last year’s average of 4.1 percent, the current mortgage interest rate opens up the American Dream for millions of additional homeowners.

 Remember, for each point that the interest rate rises, there’s a corresponding rise in your house payment. So, the longer you wait to jump into the housing market, the more you risk having a higher interest rate and higher monthly payments. Let’s take a look at a scenario that illustrates this point:

Suppose you purchase a $400,000 home in Naples with a 20 percent down payment and borrow the rest at a 3.41 percent interest rate. Your monthly PITI (principle, interest, taxes and insurance) is about $1,421. Should you wait, and interest rates rise to 4 percent, your payment jumps to $1,528 – an additional $100 plus change, per month. At 5 percent interest, your payment goes up almost $300, to $1,718.

The bottom line is: when interest rates are low, you can buy more house for the money.

Inventory

When you’re in the market to buy a home, the ideal situation is to have lots of homes from which to choose. That situation is known as a “Buyer’s Market.” Unfortunately, with interest rates as low as they are, homebuyers are swarming the Naples real estate market, snatching up homes as soon as they hit the Naples Multiple Listing Service.

The number of available homes (known as “the inventory” in real estate-ese) has dropped 12 percent for the third quarter of this year, compared to the third quarter of last year. What this means for you, the homebuyer, is that you have 874 fewer homes to choose from this year. And we don’t foresee this situation getting any better as long as interest rates remain low.

Another problem you’ll find when inventories shrink is that prices typically rise. It’s that old “supply and demand” economic model at work: when demand outstrips supply, prices rise.

So, if you’re considering the purchase of a Naples home, the best time to get into the Naples housing market is right now, before inventory shrinks further and prices rise.

Contact me if you’re interested in house hunting -- I am happy to show you any Naples property that is currently on the market.