Sluggish summer...now what?
With summer winding down and as we approach Labor Day weekend, it is time to both reflect back and take a look forward at our real estate market.
The transaction volumes and new housing starts have slowed this summer and are off the frantic volumes that we experienced in the summer of 2004. The record home price increases have not yet showed signs of slowing at the lower end of the market, but have stalled at the at the high-end of the market.
It seems that everyone in the region is flush with cash from a recent windfall that they are looking to re-invest in the next great deal. While the region can play one big game of Monopoly with each other, we are very dependent and truly need the winter snowbirds to visit and decide that they too need a piece of Florida sunshine. Yes, the Lee County real estate market truly needs the 20,000 new residents that have been arriving each and every year.
The escalating fuel prices are a serious issue for tourism in the region if they continue moving upward. People are not going to use discretionary funds to travel if they are worried about heating their home for the winter. If the airlines raise ticket prices too high, tourism will also be impacted. The challenge locally is that the real estate market depends on a certain number of tourists deciding to buy each winter season. If they don't come, they won't buy.
While there is cause for concern, there is also a sense of optimism throughout the region. The new airport opening next week will provide for a significantly increased capacity of domestic and international visitors to the area.
The July unemployment rate for Lee County of 3.2% was the lowest in Florida and reflects the optimistic attitude of business growth pervasive throughout the region. The commercial real estate sector reflects this boom as vacancy rates in the region are in the single digits.
In a presentation in St. Petersburg yesterday, National Association of Realtors chief economist David Lereah said "This is a healthy marketplace, when I look at Florida, you know what I see? I see California 100 years ago." Lereah says the state's population will double by 2040 as people continue to migrate to Sunbelt states from the Northeast and the Midwest.
While, the optimism of the NAR's big dog is to be expected, I am cautiously optimistic about the future of this market. As long as the boomers, retirees and snowbirds continue to come down here, I think we will be just fine.
Get giddy, economist tells Realtors [St. Petersburg Times]