2012 Economic Summit
The New Future, A View from the Top
The Naples Area Board of Realtors presented The 2012 Economic Summit last Friday April 13th. The keynote speakers included Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors; John Tucillo, Chief Economist of the Florida Association of Realtors and head of the Industry Data and Analysis Department; Shelton Weeks, Department Chair of Economics & Finance and Lucas Professor of Real Estate Development at Florida Gulf Coast University; Doug Duncan, Vice President and Chief Economist of Fannie Mae and former Senior Vice President of the Mortgage Bankers Association; and Cindy Carroll, Vice President and Manager of the residential division for Carroll & Carroll Real Estate Appraisers and Consultants in Naples Florida. It was great to have such an outstanding program and exceptional panel to share information which is both pertinent and optimistic. Each speaker hit on several highlights which I would like to bullet point here:
Lawrence Yun~ The National Economy:
Florida is the 3rd fastest job creating state in the Nation.
90% of ‘stated’ income loans are in default.
Only 20% of the new homes in the USA are built by large builders such as Lennar or Stock Development. 80% of newly constructed homes are built by small builders who average 5-10 homes per year and they are having difficulty getting financing. Currently new housing starts in America are at a 50 year low.
Boosting real estate activity boosts the overall economy. Real Estate sales is the most pro-consumer industry in America.
There has been a record # of sales in both the Las Vegas and Miami markets [two of the hardest hit areas] in the 1st quarter of 2012.
“Shadow” inventory has been trending down since the 3rd quarter of 2009.
Home sales have increased approximately 10% across the board since July 2010 the ‘natural way’ [post tax credit].
Feels that Naples ‘over-corrected’ and will see a 10% increase in values by the end of 2012.
John Tucillo~The New Reality:
“Perceptions and Expectations”…most people outside the state of Florida still think we are in the “dumper”…we’re NOT!
We ARE in a “mini” recovery due to: sales and pendings up, inventory is down, and ‘lender-related’ properties have stabilized.
We are seeing multiple offer situations.
Wealth is being restored which benefits Florida.
Several things which are driving the current market include: Employment is up, discounted prices, and lenders have gone through the learning curve of short sales and can usually expedite the process in more frequently.
“If you are looking for an investment with a 5+ year time frame, buy Florida real estate!” The ‘Pros’ are back [investors], and it might even be too late for the ‘novices’.
FloridaRealtors.org is putting together a concise pricing index tracking historical data back to 1995 which will be much more accurate than the Case-Shiller studies which are very limited in scope.
Shelton Weeks~ Regional Economic Overview:
Spoke about the “behavioral and psychological mindset: When the housing is depressed it influences how the world ‘sees’ most everything”…
There has been a ‘gradual’ decline in unemployment in the region.
Inflation is up due to rising fuel costs.
Predicts Fed Funds will remain low through the end of 2014 which should benefit our area.
Collier County tourist tax revenues are up.
Single family Permits Issued in Collier County are up 118% from April 2011 through March 2012 from the low in April 2010 through March 2011.
Generally optimistic about all real estate categories [residential, multi-family, commercial].
Doug Duncan~ 2012 The Year of the Political Economy:
Those countries that make up 50% of the world’s Gross Domestic Product (GDP) face a national election or leadership change in the next 12 months! [this was one of the most interesting facts that I took away from the day’s summit].
He stressed the difference between “Private Sector jobs vs. Public Sector jobs”.
Talked about the potential ramifications, costs and economic pitfalls of 1.) expiring tax breaks and credits, 2.) revisiting the debt ceiling, 3.) the Supreme Court weighing in on healthcare.
Spoke about the ‘shift’ underway between renting vs. owning, and stated the 1-4 unit rental properties sales are increasing substantially-Up 54%
Homeownership in the USA peaked at 69%. [65% is ‘normal’].
The top reasons why people used to buy homes was for appreciation and mortgage tax deductions. Today the #1 reason why people buy homes is the “ability to control their environment“…They want to put that nail in their own wall, built a rock garden in their own backyard, paint the shutters whatever color they choose…”
Cindy Carroll~Naples Remarkable Statistics:
Understanding economic cycles: 1988-1989 a downturn in Naples. 1992-1996 a ‘flatline’ in our local market. 2004-2005 the peak, and in September 2005 we were at the Top!
In 2007-2009 some markets in Collier County lost 50% value.
A lot of the problems occurred, not just because of the people who bought during the frenzy, but also those who refinanced and literally ‘bought their homes back and spent their equity‘ for swimming pools, new cars and vacations.
2009-2011 will be known as the ‘recovery’ years.
Supply vs. Demand is becoming a big part of the evaluation process: 1st quarter stats in Naples are remarkable such as: housing priced between $500,000-$1 million up 29% this year over last year. $1 million- $2 million up 14%. Overall median closed sale prices up 29% this year over last year. Inventory down 13% over the past 12 months.
Today in many neighborhoods there is a shortage of inventory. Any community with less than a 12 month absorption rate is considered a “shortage”.
I am hopeful this program will become an annual event at The Naples Area Board of Realtors. I was told that we were filled to capacity and may even have to find a larger venue for next year as so many local agents were turned away. Many thanks to the task force that created such a wonderful event with such note worthy speakers.
For more details about what is going on locally in The Naples Real Estate market, please contact a member of The Harris Peppe Team today. We are dedicated to educating the consumer in order that they may make more informed decisions when investing in homes or condos in Southwest Florida. 239.370.0574
Thank you, and make it a great day,
The Naples Real Estate Blogger
*statements and are intended to be accurate, and at times have been paraphrased for the purpose of writing this post.