On September 10, 1960 Hurricane Donna brutally bombarded Naples, then a sleepy fishing community with less than 5,000 city residents, leaving utter devastation and heartbreak in her wake. But what could have been the town’s ultimate demise into the dark ages instead became a catalyst for a great renaissance. A surge of insurance money and influx of property developers led to a much-needed whirlwind of activity in a previously stagnant economy; in the ensuing decade Downtown Naples was reconfigured, Marco modernized, Park Shore plotted and Pelican Bay conceived. Thus, out of a swampy, inhospitable tree-strewn disaster-site, modern day Naples was borne.
How cruel and uncanny that exactly fifty-seven years later, Hurricane Irma mercilessly assaulted the city with 142mph record-breaking winds and ominously threatened catastrophic storm surge. However, it soon became clear that large parts of Naples had withstood nature’s wrath and owners of properties in Park Shore, Moorings, Coquina Sands, Olde Naples, Aqualane Shores and Port Royal returned home to find the damage largely limited to landscaping. In the ten days that have followed, residents in these neighborhoods have witnessed the rapid clearing of Irma’s arboreal carnage, restoration of electricity and return to normalcy. By Season, much of the debris, drama and wind-whipped weathermen will be a distant memory for all those within our subject communities, but will there be any lasting damage to the real estate market, a lifeblood of the local economy and important source of investments?
Historically, Naples has recovered quite well from the few modern hurricanes that have directly impacted the area. The most relevant and recent comparison is Hurricane Wilma which struck the city on October 24, 2005. The statistics in this month’s newsletter focus on the activity of closed sales of $1m+ properties in Park Shore, Moorings, Coquina Sands, Olde Naples, Aqualane and Port Royal from October 2004 to October 2007, providing a helpful model of how the local market reacts to natural disasters and what we might expect in upcoming months. Although Hurricane Wilma hit in late October 2005, due to the 30 to 60 day time-lag between going under contract and closing on a property, its effects were first seen in closed sales around December. As the graph demonstrates, there was a measurable slow-down in the number of transactions at that time. Despite this dip, the sold price and sold price per sqft metrics held up well, with a steady upward trend in their respective 12 month moving averages. It is important to recognise that much has changed in the twelve years since Wilma: the building codes have been revised, many high-rise condos have been renovated and there has been a dramatic increase in new construction homes, particularly in the Park Shore, Moorings, Olde Naples and Aqualane areas. These improvements explain, in part, why markedly less structural damage was caused by Irma and should help prevent a reduction in the number of transactions that were witnessed in the aftermath of Wilma.
Of course, it is yet to be seen how the market will interpret events, although there should be cause for great optimism. For example, there is the possibility of an injection of velocity into the somewhat saturated new construction market, as these structures have demonstrated their strength and significance. If there is any wavering due to panic, this should be easily overcome in the midterm and will present opportunities for savvy buyers. Fortunately for all, the composition of the market is not likely to change – there will not be an overwhelming increase in the supply of vacant land or a redefinition of waterfront properties in central Naples. In fact, Naples’ ability to successfully withstand the brunt of Irma better than other cities, its rapid recovery and perseverance may be the city’s greatest advertisements. This is, after all, a town that has risen from ultimate destruction to become a bastion of luxury. Modern technology, imagination and mankind’s ingenuity have allowed its residents to create a paradise that is made to last.