Real Estate Marketing & Beyond
A recent report from CoreLogic out last month forecast growth in nationwide home prices to drop one percentage point due to higher interest rates impacting mortgages across the country. Overall, the market looks to cool compared to 2018. In the Florida market, mixed signals indicate a stagnancy at best, but price leveling may well create a domino effect for investors.
In an article at The Real Deal last month, experts predicted that prices in South Florida's luxury market would continue to tumble in 2019. At the heart of this sagging market, oversupply has caused a logical dip as sellers have been forced to drop in order to float inventory. A report by the Miami Downtown Development Authority showed average resale prices for condos falling to $392 per square foot from $405 per square foot at the end of 2017, with an increase in inventory of 28,000 condo units by the end of Q2 of 2018.
In the aforementioned story, Edward Easton, founder and chairman of The Easton Group predicted prices in the luxury housing market to decline by 15 percent before the start of 2019. Meanwhile, South Florida's commercial real estate market continues to grow. Experts in this sector say a blossoming tourism industry, key trade and transportation connections, and heightened consumer spending power are also contributing to growth in this segment. Colliers International’s Executive Managing Director Kenneth Krasnow framed the trend using eCommerce and distribution as key examples an interview for Commercial Property Executive:
"The continued expansion of e-commerce heightened in 2018 and is only expected to continue heading into 2019. With the expansion comes the need for facilities that accommodate a denser distribution network. With scarce land available, infill opportunities have become viable alternatives and creative architectural designs such as multi-story last-mile distribution centers are being considered."
News Triple Five Group gained approval from Miami-Dade County commissioners to build the largest mall in America adds an uptick to Easton's commercial prediction as do 8 other megaprojects in the works.
In Central Florida the "mixed message" of South Florida is echoed. On the one hand, commercial projects and residential housing starts are reacting to the $10 billion-plus in infrastructure projects underway in this region. In
downtown Orlando alone, there is more than 1 million additional square feet of construction underway. As for single-family and multifamily housing developments, the third-quarter of 2018 saw an increase of housing starts of 15% over third-quarter 2017. But, this may end in a pricing fiasco like the Miami luxury market suffers from in 2019 if oversupply becomes an issue.
Across other areas of Florida we find more ups than downs. For instance, in
Escambia County in the panhandle prices in 2018 went up as low inventory peaked demand and a pricing war. Santa Rosa County saw a similar situation accentuated by sluggish housing starts. This HUD report reveals the situation for Pensacola and surrounds. In Tampa a downtown rejuvenation project promises to lift the city, and an overall lack of residential inventory make the wider region a bright spot for the overall Florida market.
The verdict for Florida in 2019 seems to be stagnant growth, all aspects considered. Fears of recession and the sluggish stock market further hamper luxury and upscale residential sectors, and oversupply in an already crowded state do nothing but worsen the situation. Pending housing sales in places like Sarasota are key indicators for me. Northeast Florida seems like a bright spot in the overall outlook as new property comes on the market that was previously locked up, and since eCommerce has created a demand for distribution projects. Overall, Florida will follow the blueprint predicted by Mansion Global, succumbing to the reality of the "vanishing home buyer." The state won't see a great house buying recession exactly, but the state will become a massive buyer's market. There was just too much speculation from 2016 onwards. Losses for so many projects are going to hit a lot of people, this is the bottom line.
