I recently have joined a Web-2  blogging and networking web site called Active Rain. On Active Rain many Realtors post their Blogs. When looking at the number of hits that the leading  Bogs get and the blogs that are most commented on; I noticed that  blogs with "LISTS" like the "Top Ten of Anything" get the most hits;  Hence the inspiration for one part of the title of this week's e-letter. 

My e-letter has now been distributed for four years and now goes out to over 7000 people.  Invariably I run into someone in my daily "face to face" networking that asks me what the future will hold for our local market.   So here you have the inspiration for today's subject.  

What follows, is, in no particular order, and at risk of future accountability;  my predictions:

•1.      General Recovery will not be noticed until 2009/2010.  We are in the final emotional stages of recovery now.   The good news is that we have already gone through DENIAL ("This is just a blip and will not last long") to ANGER ("How could this happen to ME!") to DEPRESSION and ISOLATIONISM, ( "Let me hide from all this bad news") and now to ACCEPTANCE and ACTION.  Some of us are still on the acceptance stage while the more progressive are on the action step. The ACTION step involves belt tightening, lowering prices, changing life styles; altering expectations and moving forward.   The sheer volume of our inventory tells me that absorption will not begin to have an effect on construction for over a year.   

•2.      Interest Rates will remain Stable. I often refer to the Mortgage Bankers Site. Here is their forecast . Lending criteria remain tougher and will get tougher, but interest rates show no sign of increasing.

•3.      Growth in population will continue to increase in South West Florida . The Naples Daily News (article here) shed some light on this growth slowdown. (Also see recent Article in Florida Trend). But I look to super high oil heat prices to bring us more and more buyers as the realty and permanency of heating cost to sink in at the fountain head of our growth - the North East. According to the National Energy Assistance Directors' Association, the average cost to heat a home with oil this winter will be $2,593 up from $1,962 last year. (Heating Oil Article here).     Florida remains a prime destination for workers seeking new jobs and for the growing wave of baby boomers," said economist Hank Fishkind, president of Fishkind & Associates in Orlando. "However, a slower national economy means that 2008 growth will be somewhat below the levels seen during the recent boom years." Fishkind's analysis of demographic data indicates Florida enjoyed a net population growth of 350,000 each year from 2000 to 2006. That includes about 203,000 people who moved to Florida from other states, about 107,000 migrants from foreign countries and about 47,000 from natural increase (total births minus total deaths).  "It's important to note that this is net growth," added Fishkind. "The actual number of people who move to Florida each year is far greater."  On the domestic side, the strongest "sending" states are New York, New Jersey, Illinois, Ohio, Pennsylvania, Georgia, Michigan and California. Among top foreign countries are Venezuela, Puerto Rico, the United Kingdom and Canada.      I am quick to point out that Florida will recover so much sooner than our feeder states that are LOSING population.

•4.      Housing prices, in general, will stabilize by the end of this year.  We are already seeing the bottom priced homes being purchased by end users.  I have mentioned this before:  I came here in 1991, when we were in another recession. I started buying property and did very well  You will see other Northerners from  our feeder states mentioned above coming to do the same.

•5.      Commercial Vacancies will remain high through 2009. My friend and commercial associate Gary Tasman has a very thorough article in today's News Press About the commercial market. (Click here to Read). It's a rather grim look at the market. In it Gary talks a great deal about percentages of vacancies:    According to Gary, "The highest vacancy rate is in Cape Coral, where a staggering 49.5 percent of the city's 251,877 square feet of Class A space is unoccupied and the overall vacancy rate is 17.2 percent (294,147 square feet out of an inventory of just over 1.7 million ). That's a sharp contrast to a year or so ago, when vacant Class A space was virtually non-existent." First of all this should be no surprise. The market over reacted to the shortage of space and it reacted quickly.  Second of all, we have to put the total square footage into perspective. In  Lee County there are over twelve million square feet of Class A office space. Cape Coral represents only  three percent of the available space. To just talk percentages of vacancies sometime will hide the facts.   Total space available , based on the total population is still low.

•6.      Business will move to Florida.  The availability of space will drive the prices down, the lower prices COUPLED WITH THE  CURRENT AVAILABLITY OF AFFORDABLE HOUSING AND LOW COST LABOR,  will bring us more industry and office demand. Very simply the people will come for the lifestyle and the low housing prices, the businesses will follow.  Add to this the higher transportation costs and you will see that business will want to be where the houses are. 

•7.      The recession will have a lasting effect.  Buying habits and lifestyle changes made during this recession will have a long term effect  that the market will react to.  Smaller cars, living close to work, less opulence and more. The market reaction will spell opportunity to the entrepreneurs.  Smaller houses, more multi-use complexes, doing less with more, etc.

•8.      Condo Communities will remain a bargain through 2011. There are still many communities that have large vacancies held by the developer of the bank. I do not see these vacancies filled in the 2009/10 season. They will take longer. There is just too much volume and competition from single family homes and better positioned properties.  The prices, however  will remain stable after some further adjustments at the end of the Summer ( now) or just before season as banks unload the properties and investors, eager to lock in profits will stabilize the prices when demand gets in balance with supply.

•9.      The Foreign Money will have a greater effect. You know I believe this or I would not have put my eggs in the Engel and Voelkers basket.  But don't just  believe me, just look at the new Belgium Company - Anheuser Busch!   At E and V we are just starting to see higher end buyers from Europe coming in.  In the past they mostly purchased entry level homes in Cape Coral and Lehigh.  But recently  Engel and Voelkers just sold a home in Gulf Harbour for over $3,000 000 to a cash buyer from Germany, and we have two more buyers flying in over the next few weeks.  I have a hotel for sale in Banner Elk, North Carolina, I sent ten packages out on the property in the last week and four of them were to foreign investors.   Florida is ON SALE folks, and the foreigners have the money and the motivation.

•10.   Foreclosures will continue to plaque our industry though the beginning of next year, when they will being to decline.  A large portion of the recent home sales have been corporate (bank owned) sales. These foreclosure and REO sales have had a major influence on the price reductions. There is no emotion from the corporate seller, just dollars and cents.  They drop the price until the house sells. No holding out. No irrational, "But I need this price to recover my losses."

Gregg

Gregg@ma-realty.com

800.439.1580 Extension 1