2017-05-18 / Real Estate News

NABOR summit: ‘It looks like we’ve turned a corner’


2017 Economic Summit speakers: Mark Strain, chairman of the Collier County Planning Commission; Cindy Carroll of Carroll & Carroll Inc.; economist Elliott Eisenberg, Ph.D.; and Dominic Pallani, president of the Naples Area Board of Realtors. 2017 Economic Summit speakers: Mark Strain, chairman of the Collier County Planning Commission; Cindy Carroll of Carroll & Carroll Inc.; economist Elliott Eisenberg, Ph.D.; and Dominic Pallani, president of the Naples Area Board of Realtors. More than 400 Realtors and real estate professionals interested in the economic health of Collier County attended the Naples Area Board of Realtors 2017 Economic Summit, “The New Future: A View from the Top,” at the Hilton Naples late last month. Three industry experts provided national, state and local analysis of recent and future growth projections in home sales and business growth activity as well as predictions on what to anticipate from lending institutions and federal regulators in the next 12 months.

“It looks like we’ve turned a corner,” said Cindy Carroll of the real estate appraisal and consultancy firm Carroll & Carroll Inc., who presented an analysis and comparative review of local housing sales activity.

“In the last 12 months we’ve seen inventory increase 23 percent, but that is lower than the previous year, which saw a 35 percent increase,” Ms. Carroll said. “Our inventory may be slowing, but we still have an eight-month supply of homes for sale.” She added she considers a 12-month supply of homes a balanced market in Collier County.

Ms. Carroll combined her expertise with data from NABOR’s first quarter 2017 market report. NABOR tracks home listings and sales within Collier County (excluding Marco Island) and reports generated from the Southwest Florida Multiple Listing Service to ascertain a long view of market behaviors. Among the highlights of Ms. Carroll’s conclusions:

¦ The Crayton/Moorings Park/ Coquina/Park Shore area is saturated with new construction and has a 2.94- year supply of spec homes;

¦ The $300,000 and under segment makes up 47 percent of the area’s total condominium inventory. Condominium inventory is up across the board geographically, with the greatest increase showing up in the north, central and south regions; and

¦ Fifty-eight percent of the active listings in the Golden Gate Estates area off Everglades Boulevard and north and south of Golden Gate Boulevard are priced at or below $300,000.

Mark Strain, chairman of the Collier County Planning Commission, shared county growth projections and discussed proposed redevelopment and housing expansion plans. He told the group that 32 residential developments were approved in the last year, amounting to an additional 4,182 new lots for sale. He also reported 76 new commercial developments approved in 2016, and 56 senior living facilities currently existing with an additional 13 planned but not yet built.

“The Immokalee Road/I-75 and Collier/ US 41 corridors are the fastest growing areas in the county,” Mr. Strain said, adding a recent request to change building height limits at the entry to the city of Naples “may produce some rapid new construction, as laid out in an ambitious redevelopment plan for the Gateway Triangle area.”

As the county continues to grow, he added, more than a dozen new schools at all grade levels are planned throughout the critical growth areas of the county.

The summit’s third speaker was Elliot Eisenberg, Ph.D., a nationally acclaimed economist and founder of Graphs and Laughs. As his presentation coincided with the release of President Trump’s proposed tax plan, Mr. Eisenberg shared that he thought the plan would hurt the deficit, but he doubted it would pass in its current form.

“The economy is improving,” he said. “We are feeling tail winds, not headwinds anymore.” But he warned that he is seeing a mild deterioration in the quality of new home loans.

“There are several proposals out there that intend to do a lot of things, including loosen regulations, begin housing finance reform and provide relief for community banks,” he said. “But the devil’s in the details, and it remains to be seen if any one of them will be delivered.”

He also pointed out that while consumer confidence is up, household spending has been weaker as of late. “There are two things Trump has to do to get our Gross Domestic Product above 2.5 percent: increase labor supply and increase productivity,” he said. “But the labor force is going down. Productivity growth is going down.

“The only way to get a better GDP is to have more productivity, which requires more capital investments and less regulation. There also needs to be a focus on career retraining to develop new skill sets. These steps are not in the proposed Trump tax policy.”

Mr. Eisenberg said another concern he had for the economy is the fact that there are roughly the same number of people retiring as there are entering the workforce. “We are slowly running out of workers,” he said.

In terms of inflation, he said the Federal Reserve is going to have to keep increasing interest rates. How high? “Not much,” he said. “We can expect two hikes in 2017, maybe three next year and another three in 2019, at which time the federal rate should reach 3 percent. But it won’t grow fast enough to cause another recession.”

He shared several projections about the housing market. First, residential fixed investment is on the rise, and overall household formation is improving. Millennials are getting older and beginning to enter the housing market. But first-time home-buying activity is still low as this generation continues to face a lack of credit and wealth, with student loans burdening many.

Mr. Eisenberg recommended that Realtors suggest short-term adjustable rate mortgages because people don’t intend to stay in their homes for 30 years anymore. For Millennials, this might mean looking at loans that better correlate with how long they intend to stay in one place.

Other factors impacting the housing market include available land and the rising cost of inputs such as wood. “Trump has increased Canadian wood tariffs 20 percent,” he said. “This is going to make it costly for Americans to build new homes.”

In conclusion, he said, “Housing prices are increasing faster than wages, and cash sales are down from their peak. But home values in the Northeast have recovered. When the markets up there are good, then Florida will be OK.” ¦

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