Courtesy of NapleNews.com -The real estate market in Southwest Florida is ch-ch-ch changing.
Homes are still going up, but sales are slowing. And retail is changing but still alive. Those are some of the changes presented at The News-Press Market Watch 2019 on Tuesday evening.
Randy Thibaut, owner and founder of Land Solutions Inc., a real estate brokerage and development firm based in Fort Myers, started his presentation with David Bowie’s song “Changes” blaring in the background.
It’s time to face the changes, he told an audience of about 1,200 Realtors, brokers, investors and other market watchers at Hertz Arena in Estero Tuesday night.
“There are those trying to fight the market, ignore the facts,” Thibaut said. “Then there are those that are going to fly out of the market and there are those of us that are going to stay in.”
While there is a lot of good in the market, it’s not all good — and Realtors, buyers and sellers need to know it, accept it and react to it.
“Let’s just not stick our head in the sand,” he said. “We can’t.”
Answering the big question
Thibaut wasted no time answering one of the most pressing questions: Are we overbuilt? His answer: The jury is still out on apartments and assisted-living units, but for single-family homes “no way,” although there’s “some caution.”
“Steady absorption from new home sales while builders vie for a limited supply of vacant developed lots indicate that our local market is not overbuilt,” he said. “There’s still a lot of room for growth there.”
The perception of a changing market has become a reality over the past six to eight months.
Big builders have hit a price wall, where purchasers can’t pay any more and absorption has slowed, with fewer buyers coming to the closing table, Thibaut said.
About 80 percent of the demand in Lee, Collier and Charlotte counties is for homes priced at less than $300,000, which aren’t plentiful for many reasons in Southwest Florida.
Rising interest rates, more expensive building materials, a labor shortage, higher land prices and costly impact fees are some of the reasons more affordable housing isn’t getting built, Thibaut said.
“Government impact fees, this is one I can go on and on about,” he said.
Impact fees are one-time charges on new construction that help pay for growth, funding everything from roads to schools to libraries.
Collier County has some of the highest impact fees in the state. For a home, the fees are 10 to 15 percent of the purchase price, meaning they’re at least $30,000 on a $300,000 home, a cost passed on to the buyer, Thibaut said.
“That is an affordability killer. We can’t let government run away like that,” he said.
Every 1 percent increase in interest rates will take more buyers out of the market, especially millennials, who’ve never know them to be higher than 3 to 4 percent.
“They flee, they fly, they’re out of the market,” Thibaut said.
Home builders are now facing more competition from apartments.
An example of the surge in apartments? Thibaut said you need only look at Colonial Boulevard between Interstate 75 and U.S. 41 to see it. In that corridor alone, 4,800 apartments are under construction or will soon come out of the ground, he said.