The light at the end of the tunnel
Last week, I questioned whether or not 2012 will be a better year for real estate in light of potential higher fees on mortgages and Florida insurance issues. This week, after receiving some encouraging news relative to population growth and an analysis of expected growth over the next five years, we may be looking at the long awaited light at the end of the tunnel.
After several years of people moving out of Florida, for the first time since the early 1970s, Florida's population is increasing. The U.S. Census Bureau recently reported that Florida had the nation's third largest population growth in the past year. There were 256,000 new residents from April of last year through July of this year, placing us within 400,000 residents of New York state.
Fewer people moving out of state and an increase in movement into Florida from the Northeast is the reason for the increased population. These numbers can only keep going up as baby boomers continue to seek out a retirement state that offers warm weather, low taxes and an abundance of housing options.
Right around the same time as the census report was published, the University of Central Florida published its Economic Outlook for Florida. The carefully worded report indicated that 2011 did not experience the economic recovery that was expected nor was there a drastic decline with a lot of activity in the leisure and hospitality sector.
The report's prediction for 2012 shows a slight improvement over 2011 with an accelerated economic growth in 2013 and 2014. Overall, there is reason to be optimistic about Florida's economic recovery. Jobs are being created with construction jobs improving in 2013, and population growth is expected to increase over the next three years.
Further, although robust economic growth may still be two years away, the economy will begin to grow more rapidly and labor markets will continue to improve with housing prices stabilizing. In 2017, the state will likely become a trillion-dollar economy, making the Florida economy one of the largest in the world. In addition, Florida is expected to grow even larger in the years ahead based on demographics and international interests in the business friendly state.
While researching this column, I came across Florida annual home price appreciation rates. 2003, 2004 and 2005 had appreciations rates of 11.79 percent, 19.58 percent and 27.24 percent, respectively. After that point, appreciation started dropping to a low of minus 20.57 percent in 2008, at which point things started during around. For 2010 ,the appreciation rate was 5.80 percent, 2011 numbers are not available yet.
If you don't believe the macro outlook for the state, just look at microeconomics unfolding on Anna Maria Island. New real estate companies either opening or expanding, local shops and businesses having record breaking sales over the holidays and, in case you haven't noticed, visitors and new residents all over the place in cars, golf carts, segways and on foot.
The bottom line on all of these reports continues to confirm that not purchasing Florida real estate at this point time will almost certainly be a lost opportunity. Three to five years from now, when the economic upswing is in full force, will probably be too late to jump in at an optimum value.
As tunnels go, this one may be coming to an end, and the light at the end of the tunnel is the sun shining from the Sunshine State.