Naples-Marco Island area sees surge in cash home purchases

According to U.S. Census data, nearly 28% of American home buyers purchased their homes with cash. Here in the Naples-Marco Island Metropolitan Statistical Area, the report shows 56.1% of homes were bought with cash. That ranks Naples as the region with the sixth-highest number of homes purchased with cash.  

Nadia Evangelou is the senior economist and director of forecasting at the National Association of Realtors. Her focus is on regional and local market trends affecting housing activity, as well as the effects of federal policy on the housing market. 

Explaining this most recent NAR report, Evangelou cited demographics and migration patterns that help forecast what’s to come. “We see certain buyers who have accumulated significant equity from the sale of their house. They are sitting on this accessible wealth and can proceed easily with their Florida purchase,” she said. Thus, cash buyers avoid competition and are not affected by changing mortgage rates.  

The markets are still reflecting post-pandemic restructuring. In the years leading up to the COVID pandemic, nationwide cash purchases sat at just over 20%. Soon after the Coronavirus began influencing movement patterns, we saw a wave of relocators here in Southwest Florida. Cash buying rose as people looked to leave other states and sought the sunshine and outdoor freedom of life in Florida.   

“There was a strong appeal,” Evangelou said. “There was a big demand here in Naples. It attracted movers.”  For professionals suddenly working from home, Collier County suited the new lifestyle they chose for themselves and their children.  

“But now we see there is still a broad appeal for people to relocate here.” 

Evangelou, who holds a master’s degree in applied economics from Johns Hopkins University, as well as advanced degrees in international economics, is confident in the long-term forecast of the Naples market. She works alongside communications coordinator Alexa McCormick and other real estate professionals at NAR headquarters in Washington, D.C.  

“It makes sense,” she said. “People that have equity from the sale of their prior home — they have all this built-up equity and now want to make Naples their permanent residence. The town continues to have a strong migration. It is high in population growth.” 

Looking at those who make up that 56.1% of cash buyers in Naples and Marco Island, Evangelou provided data. “The average price of these cash sales is around $460,000,” she said. “Price still matters, even to those people who can afford to lay down cash to buy a house.” 

While the average age of regular home buyers in our region is around 63 years old, cash buyers average 68 years of age, confirming what Evangelou said about the long-term benefit of accumulating equity.  

Mention of these cash buys, of course, brings to mind those on the other end of the spectrum. Evangelou said that even as the region with the sixth highest percentage of cash buyers, there still remains a disparity in homeownership as many remain priced out of the market in Collier County. According to Evangelou, “Affordability is still an issue. Data shows that many workers earn 40% less income than is necessary to afford a home.” This obstacle only helps cash continue to dominate. 

Continuous declines in mortgage rates will result in more people being financially able to enter the market. These buyers using traditional mortgage loan procedures could shift the share of cash vs. mortgage purchases, but until that happens, a cash advantage remains.  

All of these fluctuations can make the home buying experience intimidating for some buyers.  

“This is why we encourage people to use Realtors,” Evangelou said. “There is a lot to understand. Even with cash buyers, 90% still use a Realtor to wade through all the information. It can still be very competitive.” 

Evangelou and McCormick agreed that the appeal of a Florida lifestyle, as well as tax considerations, show a sunny forecast ahead.   

“It’s looking good in long-term and outperforming nationally,” Evangelou said. “I like to think that Naples is in its own orbit.” 

McCormick provided the below chart illustrating the distribution of cash purchases by price range for Naples.

Cash Purchases by Price Range in Naples