Recent financial crisis fails to hurt confidence in Florida real estate
The national economic crisis has failed to rattle Florida real estate experts, who, despite serious concerns about the availability of financing, remain surprisingly calm about market conditions within the state, a new University of Florida survey finds.
The most recent quarterly survey of Florida real estate trends, which was completed in September, shows the investment outlook for various types of properties remains steady, according to Wayne Archer, executive director of UF’s Bergstrom Center for Real Estate Studies.
“People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” he says. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”
Although Florida’s housing crisis is worse than other states, over the long term Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said. The Sunshine State’s mild climate and outdoor amenities make it an attractive retirement destination, despite high property taxes, insurance rates and hurricanes, he said.
Unfortunately, the plunging stock market combined with the fall in housing prices and tightening of home financing requirements will likely temporarily delay plans baby boomers may have to retire and move to the state, he said.
For the state’s real estate market to recover at all in the short term, banks and other financial institutions must ease credit restrictions, Archer said.
“If the financial crisis continues, that would really change the picture,” he said. “Our respondents, I think, are keeping the faith that they may have seen the worst and the shock will not be overwhelmingly severe.”
One sign of optimism is the trend in the latest survey toward a more favorable view of new single-family home development, Archer said.
“The respondents actually moved in a somewhat guarded but positive direction,” he said. “It suggests to me that they believe we may have already reached the bottom in that category.”
Although the survey does not include the market for existing single-family homes, one respondent said houses were beginning to sell in Lee County, once dubbed the foreclosure capital of the world, indicating perhaps the market is beginning to stabilize, he said.
Several neighboring counties in southwest Florida are likely to be in trouble for a long time, however, along with the Miami condo market, where an estimated 40,000 units are for sale, Archer said. Prospects are particularly bleak for higher-end condos in the city’s downtown, he said.
The weak dollar and general confidence in the United States as a safe harbor for investment could lure international investors to Miami, but that would be unlikely if the economic crisis deepens into a worldwide recession, he said.
While condo markets throughout the state face problems, which are likely to persist in the foreseeable future, the outlook for apartment rentals bounced back a little from the last survey in June, Archer said. “There was an expectation that occupancy rates would be falling, and while they’re not great, they are viewed as stable,” he said.
The weakest rental markets are in retail, which has been particularly hard hit by the economy as consumers spend less money, Archer said.
“After seeing what’s happening to their home values and watching the news, they are deferring purchases,” he said. “As a result, most retail organizations are curtailing their expansions and consolidating their operations and stores, which is creating higher vacancies.”
Perhaps the most negative survey result was that respondents’ perceptions of their own business outlook, which has declined steadily for 11 quarters, took an even larger downturn this quarter, Archer said.
“This is in marked contrast to their views of the market as a whole,” he said. “Although keenly aware of the downturn in the availability of capital, they remain surprisingly calm.”
The latest survey is based on 392 responses and is 12th in a series. It is the only Florida-centered survey of leaders and professional advisers in the real estate industry. The largest group of respondents was appraisers, about 51 percent, followed by brokers and other service providers.
© 2008 FLORIDA ASSOCIATION OF REALTORS® - GAINESVILLE, Fla. – Oct. 21, 2008