Florida Real Estate Outlook For 2006
**Central Florida Real Estate led by hot commercial sector
Throughout 2005, commercial developers and real estate investors
in the Orlando area have seen the same kind of impressive price
increases as home owners across Florida. One of the hottest
segments of the market is the sale of apartments. Two of the
Orlando area's largest apartment brokerages have done more than
$2 billion in sales this year. It is expected that 20,000
apartments have changed hands and will be sold as condos in
Orlando in 2005.
One apartment complex developed by the Disney Co. recently sold
to a developer planning to turn them into condos. The sale price
to the developer was $402,000 per unit.
Other types of commercial buildings also were making impressive
gains. The value of industrial buildings rose more than 15
percent in 2005. Space has gone from $55 a square foot in 2003,
to more than $70 in 2005.
Two bank buildings in downtown Orlando were in high demand among
buyers. The AmSouth Bank drew 47 offers and sold for $ 50.4
million. And the Wachovia Bank went for $30 million in 2002 and
sold for $55.35 million in 2005. That represents an increase of
85 percent in two years.
**Tampa Bay area office market very hot
Led by very high employment growth, the Tampa Bay office market
is expected to be one of the best performing in the entire
country for 2006.
In a Wall Street Journal article, the Tampa Bay area was ranked
as the fourth most hopeful office market in the country for
2006. The others on the list included New York-Manhattan, Orange
County, California, and Riverside-San Bernardino, California.
The Tampa Bay area has one of the highest employment growth
rates in the country (3.7 percent), and most of these jobs are
in office-using positions. In 2005 office sales volume rose 35
percent with a median price of $116 per square foot.
**Jacksonville area not slowing down
Real estate activity in the Jacksonville area of Florida has
been booming for a number of years. And it shows no signs of
slowing down. According to Ray Rodriguez, a real estate analyst
with the Real Estate Strategy Center of North Florida, "We're
OK. We will let some steam off, but the bubble here won't burst
anytime soon. It will slow down a little bit and we will get
back to reality. Speculative buying is slowing down a little bit
due to rising interest rates."
New condo developments are going ahead at a brisk pace, with
available, affordable land being the major deciding factor
determining where new developments are taking place. On the
beach, much of the development is focused on "refurbishing"
older buildings. Small duplexes are being bought up, torn down,
and replaced by multi-floor condominiums.
As in the rest of Florida, the housing market is complex and
unpredictable. It is being fed by a steady influx of new
residents and a booming job and commercial sector. People are
moving in from the Northeast, from the Midwest, and from Latin
America.
**Effects of hurricane season on real estate activity short lived
The Florida hurricane season of 2005 was one of the worst on
record. In the southern parts of the state, home sales declined
in October slightly, primarily due to insurance issues. Most
insurers stopped issuing new policies as Hurricane Wilma
approached the state. And some mortgage lenders required
reinspections before mortgage money was released.
But in the northern parts of the state, in Jacksonville, where
the hurricanes were not much of an issue, real estate agents saw
a 38 percent increase in the number of homes sold.
Median home prices continued to climb across the state. In
October of 2005 the median home price for all of Florida was $
241,000 -- 28% higher than $188,800 in October, 2004. In October
of 2000 the median price was $116,100.
For comparison sake, median prices in some other states in
September were: California - $543,980, New York - $275,000,
North Carolina - $208,097. This shows that Florida prices have
actually been undervalued and are now approaching national
averages.
**Miami area experts predict 2006 real estate trends
According to a South Florida Sun-Sentinel poll of real estate
experts in the South Florida area, real estate may cool off a
bit in 2006, but will generally remain very active.
Richard Bass of Keller Williams Realty in Boca Raton expects a
bit of a slowdown in the residential market in the first part of
2006. "Overall, I expect prices to level off for a while and
then pick right back up where they left off." Gradually rising
interest rates will have a bit of a dampening effect, but they
will "continue to be low enough for the market to expand."
David Dweck with Re/Max Advantage Plus in Boca Raton thinks the
lingering effects of Hurricane Wilma will start to take their
toll in 2006. He says "some homeowners and investors will get
clobbered by the increase in taxes, insurance and potentially
higher interest rates." He expects it to become more of a
buyer's market "and we will return to 10 to 15 percent price
appreciation rates."
Jeff Kahn with Florida Beach Inc. of Fort Lauderdale agrees the
market will gradually turn from a stong sellers' market to a
more balanced one. "I believe that in 2006 home prices will
begin to recede. Listing prices will become more realistic."
David Levin, a real estate industry consultant based in Delray
Beach is more blunt: "In 2006, residential unit sales and prices
will decrease 10 percent from peak 2005 levels."