Positive growth in Southwest Florida’s housing market is expected to continue into 2014. Like other housing markets hit hard by the Great Recession, Southwest Florida is now experiencing a rapid recovery.
According to the latest Market Trends statistical report from the Fort Myers-based real estate company Land Solutions, Inc., home permits up 61% in Lee, Collier and Charlotte Counties. Mortgage interest rates are low and foreclosure rates are on the decline.
“Where we’re at right now is ‘Wow,’ to put it in one word,” said Land Solutions CEO and founder Randy Thibaut. “It’s been an incredible year.”
A low volume of existing homes available for sale coupled with increased demand is causing home prices to increase. According to Thibaut, its all part of a positive trend, but that there’s also concern and confusion about the market as we look toward 2014.
“Along with the great booming news we’ve experienced this year, in Southwest Florida in 2003, 04 and 05 that led up to a significant real estate bust,” said Thibaut. “While we’re experiencing these great results and everyone’s getting back to work and permits are being pulled and homebuyers are buyer, we also have to look at, ‘Is it too good to be true?’ The main question that we get is ‘Is this sustainable? Are we in another run up?’”
The last boom-bust cycle is still fresh in people’s minds and Thibaut thinks that could be a good thing. “I think people are making more prudent decisions this time around,” he said.
As 2014 approaches, market watchers are concerned about what could happen if home prices continue to rise. “A home that two years ago, just for rough numbers, was $250,000; that home today is approaching over $300,000 because of cost of materials, land prices going up, greed and builder’s profit margins,” said Thibaut.
“All of the sudden you start knocking off a lot of buyers when you raise that much including adding interest rates which will increase, so we start chunking off a big segment of our market as these prices escalate so high.”
In addition to concerns about the local housing market’s sustainability, the construction industry is facing a workforce shortage. “Builders are fighting and competing and stealing each other’s subcontractors,” said Thibaut.
“One of the reasons why we’re not getting many of the laborers that we did before is a lot of those people went ahead and moved to the center portion of the country; the energy producing states of Texas, Oklahoma and up into North Dakota,” said economic analyst Mike Timmerman with Fishkind and Associates. “So those people are in those particular markets which are much more stable and didn’t go ahead and have the boom-bust that we saw in Florida. And they’re sitting down and saying, ‘Well, I could move back to Florida, but then again I’m going to have this boom-bust or I could stay in these energy producing states which is a steady, constant income.’”
Even with all of the positive growth, eight out of the ten cities with the highest foreclosure rates in the country are currently in Florida.