Michael Timmerman has been making forecast presentations to developers and builders in the Fort Myers-Naples area for 17 years, but he wasn't exactly the most popular guy in recent years because of the bad news he was bearing.
“I'm not wearing a flak jacket this year,” jokes Timmerman. “Things are finally moving in the right direction.”
At a recent meeting of the Urban Land Institute in Fort Myers, Timmerman says population growth is fueling the recovery. “I haven't been this busy in five years,” says Timmerman, a senior associate with Fishkind & Associates in Naples. “Our recovery is finally under way,” he says.
The collapse of home prices in Florida has attracted buyers and baby boomers in particular. “People are taking advantage of the pricing and moving to Florida faster than expected,” Timmerman says. “We're adding about 250,000 people a year.”
Inventories of new and existing homes have been dropping, which has started to translate to moderate price increases. “Absorption is key to the investment,” Timmerman says. “You've got to tie absorption to price increases.”
Foreclosures, which have been dropping, are no longer a major competitive threat. “We don't expect foreclosures will have a dramatic impact on values,” Timmerman says.
The velocity of sales has also picked up. Timmerman says residential developments that were selling two homes a month last year are now selling four. The labor market for construction will stop shrinking and start to grow as a result. “We're going to see that turn around,” Timmerman says.
Despite the rosier outlook, Timmerman says homebuyers remain cautious. “People are being very conservative before the election,” he says, referring to the presidential contest in November.
Fishkind & Associates is forecasting lower economic growth nationally and there are other looming crises. These include a recession in Europe and the government's uncertain fiscal policies. “We've got to be cognizant of these things,” Timmerman says.
The Federal Reserve's recent announcement of a third round of quantitative easing by purchasing billions of dollars worth of mortgage-backed securities should boost the housing market if regulators loosen controls for banks to lend more freely.
While second-home markets such as Naples and Sarasota are leading the way, Timmerman says affluent homebuyers aren't willing to pay as much for a home as they did before the real estate bust. He estimates that fewer homes priced at more than $2 million will sell in the future in part because many of these buyers lost money in soured real estate. “That piece of the market is much smaller,” Timmerman says.
The other challenge for second-home buyers is financing is hard to come by. “The biggest problem right now is that there's no secondary market to sell the loans,” Timmerman says.