Florida’s economy grew in 2017, and that positive momentum should continue in 2018, according to economists and business data experts who spoke to a crowd of about 500 Realtors® at the 2018 Florida Real Estate Trends event during Florida Realtors® Mid-Winter Business Meetings.
“For 2018, from a business point of view, Florida’s economy benefits from a growing population, strong and growing employment and a rising number of visitors,” said Dr. Tony Villamil, founder and principal advisor of The Washington Economics Group and a former U.S. Undersecretary of Commerce for Economic Affairs under President George H.W. Bush.
“In fact, Florida is growing faster in terms of employment growth than the rest of the U.S., which is good for Florida real estate.”
He noted the three major drivers of the state’s economy are 1) Florida’s business climate, including real estate sales; 2) the U.S. economy and financial market trends; and 3) the global economy.
“Overall, Florida is a positive, pro-business climate state and I don’t see that changing significantly,” Villamil said. “For U.S. economic activity, I see a lot of enthusiasm on tax reform and de-regulation – the U.S. economy is poised for a strong performance this year. We’ll likely see about 3 percent growth in the GDP (Gross Domestic Product) for the U.S.” He added that Florida’s GDP growth in 2018 is likely to also be about 3 to 3.5 percent.
Global economy activity is rebounding from its sluggish performance and growing, especially in major markets like Brazil and Canada, he noted. “Here in Florida, one of the sleepers is going to be India – it deserves a closer look,” Villamil said.
Another positive: Household net worth is at record levels, leaving consumers ready to spend – so real estate is in demand, he added. However, “One downer here, is D.C. dysfunction,” Villamil cautioned. “In Washington, there’s a lot of animosity between the political parties. The key (for action) is going to be how we move toward less polarization between the parties.
“Florida’s economy depends on open markets. Looking at the global economy, in this area, I’m concerned about the administration’s policies. “
Wrapping up the event, Florida Realtors Chief Economist Brad O’Connor took a look at what happened in Florida real estate in 2017 after Hurricane Irma, which made landfall on Cudjoe Key on Sept. 10 as a Category 4 with winds of more than 130 mph. Prior to Irma, Florida had not been hit by a major (Category 3 or above) hurricane in about 10 years.
To analyze what Hurricane Irma’s long-term impact might be on the market, Florida Realtors Research Department reviewed residential real estate sales data from Florida Realtors from 2004 and 2005 (during the span of time when Hurricanes Charley, Frances, Jeanne, Ivan, Dennis and Wilma struck Florida) as well hurricane claims data from the Florida Office of Insurance Regulation.
“Long-term market impacts from land falling hurricanes are rare and highly localized,” O’Connor said. “Long-term sales declines were observed only in coastal areas where a significant percentage of structures were severely damaged by Category 4+ winds.”
Short-term market impacts from a hurricane are more common and widespread, he added.
“Sales in areas where most homes did not experience severe structural damage rebounded within a month or two of landfall,” he said. “These temporary slowdowns were due to business activity halting ahead of the storm and power outages, regulations and additional required inspections afterwards.
“Sale prices don’t seem to care much about hurricanes. Plenty of buyers are happy to line up to buy the real estate as long as it’s not completely annihilated.”
Summarizing 2017 housing market activity, O’Connor said single-family existing home sales in Florida were up 1.2 percent over 2016’s sales level – and would have been up by about 3 percent if there had been no Hurricane Irma. 2017 sales of existing condos and townhouses were up about 3 percent year-over-year; and would likely have been about 6 percent higher than 2016 without Irma. The statewide median price in both sectors was up about 8 percent compared to a year ago.
“Dollar volume is up, time on market is down and inventory is down,” he said. “It’s really inventory constraints that’s bringing sales down. Not only aren’t enough homes being built, but people who own their homes aren’t moving. They used to stay in a home on average about seven years, and that median has moved up to 11 years now.”
Source: Florida Association of REALTORS®