Published: Feb 18, 2013 9:49 PM EST
Updated: Feb 19, 2013 12:13 AM EST

COLLIER COUNTY, Fla - The housing market in Southwest Florida continues to strengthen into 2013. Home prices in the Naples area have seen a 16 percent increase over the last year, good news for sellers.

More people are also buying and that is trickling down to the construction industry and companies like Robb and Stucky.

"We're definitely tied hand in hand with what is going on with the real estate market," says Stan Witters, General Manage of Robb & Stucky in Naples.

Europeans, Canadians and snow birds buying second homes are coming right into stores like Robb & Stucky looking to furnish every room in their new house.

"Today I bet you there were ten different customers in there with floor plans, which says they just bought a house," says Witters.

David Gallus, owner and broker for Premiere Plus Realty says there are obvious upsides to home prices going up, but he says there's also a downside. "The appraisal prices are not keeping up with market prices," says Gallus.

In the last year, home prices are up 16 percent with some segments of the market as high as 35 percent, something we haven't seen in years.

"That's not healthy neither for the buyer or the seller because the market can't sustain that and we don't want to end up where we did before," says Gallus. He says appraiser are coming in from out of town and because they don't know the market, appraisals are coming in 10 to 15 percent lower than the purchase price leaving sellers to wait it out.

"Most of them know where the market is heading and very few are saying we'll lower our price," says Gallus. "So, we're going back to what we have before in 2005 and 2006. Supply and demand and the supply is less everyday."

Gallus says about 75 percent of their deals are paid for in cash, but the rest applying for a loan are getting turned down because of the appraisal.