What will Florida's real estate markets look like in the coming year? That was the question on the minds of a standing-room-only crowd of about 400 Realtors® at the 2016 Florida Real Estate Trends event last week during Florida Realtors® Mid-Winter Business Meetings.
"Florida is positioned to become one of the hottest spots in the country with rising demand, positive gains in recovery, really good fundamentals and positive momentum," said Jonathan Smoke, chief economist of realtor.com®. He said 2015 was a good year and 2016 looks to be similar. Smoke discussed the national housing outlook for the coming year, saying, "Home sales have pretty much recovered to their normal levels."
"Fundamentally, we are experiencing a market with not enough to sell," he said. "We are forecasting slightly better growth for construction and new home growth, but still not to the usual supply, which is putting pressure on the existing home supply (and existing home prices). On realtor.com, every single month in 2015 had less inventory and inventory was moving more rapidly – and we're seeing the same in January 2016."
Nationally, rents are rising faster than prices, Smoke added. He said that means Realtors should tell their clients: "For homebuyers, this is quite literally the year to buy a home – and the same is true for sellers who want to sell and buy another home. This should be our best year since 2006. It is now cheaper to buy a home than rent in 77 percent of counties in the U.S."
Smoke told Realtors to get ready for an onslaught of would-be homebuyers in the spring through summer months.
The realtor.com forecast for 2016? Existing home prices will appreciate 3 percent; existing home sales will grow 3 percent to 5.4 million; new home sales will grow 16 percent to 580,000; and housing starts will increase 12 percent, he predicted.
Other speakers who shared their 2016 forecast included Dr. Elliot Eisenberg, a nationally known economist and a former senior economist with the National Association of Home Builders (NAHB); and Dr. Brad O'Connor, chief economist for Florida Realtors. Eisenberg discussed the national economic outlook, while O'Connor offered insight on Florida's real estate markets.
Eisenberg pointed out that the national economy is doing OK – households are repairing their balance sheets, disposable incomes are rising, energy is cheap and people feel wealthier. The dollar is strengthening against all currencies, which hammers imports, he added, but job creation has been very good, unemployment is fine and the labor market is improving.
"Essentially, (the economy) ain't going to be bad, but it ain't going to be especially good either," Eisenberg said. "If you enjoyed 2015, you'll enjoy 2016 – if you didn't, you have a whole year to get to learn to enjoy it. No recession is in the cards: We're not in a recession and we're not likely to get one. We're not going to have great growth, but that's a long way from, and a lot different than, a recession."
For 2016 and in the years to come, both Eisenberg and Smoke agreed that Realtors should look to baby boomers and millennials for clientele. They pointed out that boomers are still a huge part of the market as they look to retire, relocate or downsize, but an even bigger wave of millennials eager to become homeowners is the market's future driving force.
"2015 was a very good year for both home and condo sales," said O'Connor, who noted that as of December, statewide median prices have increased (year-over-year) for 49 months in a row. "The estimated Florida shadow inventory is slowly but surely disappearing. We're down to about 200,000 non-listed but potentially in foreclosure homes (the so-called shadow inventory). Negative equity loans are down to below 20 percent."
And Florida's real estate sector will continue to experience growth and positive momentum in the coming months, he added. "We expect home sales to increase 8-10 percent in 2016, while home prices are likely to rise about 5 percent," O'Connor said.
Sponsors for the 2016 Florida Real Estate Trends were the Miami Association of Realtors®, Realtors® of Greater Fort Myers & Cape Coral, and BB&T Bank.
Florida Realtors® serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its 155,000 members in 55 boards/associations. Florida Realtors® Media Center website is available at http://media.floridarealtors.org.