ORLANDO, Fla. – Jan. 26, 2018 – Florida's economy grew in 2017, and that positive momentum should continue in 2018, according to economists and business data experts who spoke to a crowd of about 500 Realtors®at the 2018 Florida Real Estate Trends event Thursday during Florida Realtors Mid-Winter Business Meetings.
"For 2018, from a business point of view, Florida's economy benefits from a growing population, strong and growing employment, and a rising number of visitors," said Dr. Tony Villamil, founder and principal advisor of The Washington Economics Group and a former U.S. Undersecretary of Commerce for Economic Affairs under President George H.W. Bush.
"In fact, Florida is growing faster in terms of employment growth than the rest of the U.S., which is good for Florida real estate."
He noted the three major drivers of the state's economy are 1) Florida's business climate, including real estate sales; 2) the U.S. economy and financial market trends; and 3) the global economy.
"Overall, Florida is a positive, pro-business climate state and I don't see that changing significantly," Villamil said. "For U.S. economic activity, I see a lot of enthusiasm on tax reform and deregulation – the U.S. economy is poised for a strong performance this year. We'll likely see about 3 percent growth in the GDP (Gross Domestic Product) for the U.S." He added that Florida's GDP growth in 2018 is likely to also be about 3 to 3.5 percent.
Global economy activity is rebounding from its sluggish performance and growing, especially in major markets like Brazil and Canada, he noted. "Here in Florida, one of the sleepers is going to beIndia – itdeserves a closer look," Villamil said.
Another positive: Household net worth is at record levels, leaving consumers ready to spend – so real estate is in demand, he added.
However, "One downer here, is D.C. dysfunction," Villamil cautioned. "In Washington, there's a lot of animosity between the political parties. The key (for action) is going to be how we move toward less polarization between the parties.
"Florida's economy depends on open markets. Looking at the global economy, in this area, I'm concerned about the administration's policies. "
Other speakers who discussed trends for 2018 and beyond were Kevin Foreman, general manager of GeoAnalytics for INRIX Inc.; and Dr. Brad O'Connor, Florida Realtors chief economist.
Foreman discussed how self-driving cars will impact real estate in the future, noting that there are currently about 7,000 on the roads, with that figure expected to reach 4.5 million by 2035. There are four trends in self-driving cars: autonomous (Tesla, Uber, Google and others are working on versions of autonomous cars); also shared; electric; and connected. And there are five levels of autonomy, including hands-on at level 1, hands-off at 2, eyes-off at 3, mind-off at 4, and no-wheel at 5.
At his Seattle office, INRIX offers, on a rotating basis, the chance to get to work using a Tesla autonomous vehicle, Foreman said.
"It's really nice to go to work and be able to shave, to eat (with both hands) and check email – oh, yes, you're all Realtors – you already do that," he said, earning laughs from the crowd.
Foreman added, "We as humans are starting to measure distance differently. It used to be in miles or kilometers. Now, it's minutes – how long will it take me to get to the airport?Take a picture of traffic signals and milepost signs; they'll be gone in 30 years. "Now, many people want to search for homes in drive time, to see how long their commute would be to work, to school, and so on."
According to Foreman, with self-driving cars, the new landscape for real estate will include:
No more speeding tickets
No more drunk driving
No more drivers' licenses – the blind, elderly and kids can "drive"
No distracted driving – more texting, sleeping
Longer "drive" times – people can eat, sleep, work during commutes
Less office infrastructure
″More agent productivity
Wrapping up the event, Florida Realtors Chief Economist Brad O'Connor took a look at what happened in Florida real estate in 2017 after Hurricane Irma, which made landfall on Cudjoe Key on Sept. 10 as a Category 4 with winds of more than 130 mph. Prior to Irma, Florida had not been hit by a major (Category 3 or above) hurricane in about 10 years.
To analyze what Hurricane Irma's long-term impact might be on the market, Florida Realtors Research Department reviewed residential real estate sales data from Florida Realtors from 2004 and 2005 (during the span of time when Hurricanes Charley, Frances, Jeanne, Ivan, Dennis and Wilma struck Florida) as well hurricane claims data from the Florida Office of Insurance Regulation.
"Long-term market impacts from landfalling hurricanes are rare and highly localized," O'Connor said. "Long-term sales declines were observed only in coastal areas where a significant percentage of structures were severely damaged by Category 4-plus winds."
Short-term market impacts from a hurricane are more common and widespread, he added.
"Sales in areas where most homes did not experience severe structural damage rebounded within a month or two of landfall," he said. "These temporary slowdowns were due to business activity halting ahead of the storm and power outages, regulations and additional required inspections afterwards.
"Sale prices don't seem to care much about hurricanes. Plenty of buyers are happy to line up to buy the real estate as long as it's not completely annihilated."
Summarizing 2017 housing market activity, O'Connor said single-family existing home sales in Florida were up 1.2 percent over 2016's sales level – and would have been up by about 3 percent if there had been no Hurricane Irma. 2017 sales of existing condos and townhouses were up about 3 percent year-over-year; and would likely have been about 6 percent higher than 2016 without Irma. The statewide median price in both sectors was up about 8 percent compared to a year ago.
"Dollar volume is up, time on market is down and inventory is down," he said. "It's really inventory constraints that's bringing sales down. Not only aren't enough homes being built, but people who own their homes aren't moving. They used to stay in a home on average about seven years, and that median has moved up to 11 years now."
The Miami Association of Realtors®was the title sponsor for the 2018 Florida Real Estate Trends event; co-sponsors included the Realtors®of the Palm Beaches and Greater Fort Lauderdale; the Northeast Florida Association of Realtors®; Orlando Regional Realtor®Association; My Florida Regional MLS; and the Royal Palm Coast Realtor®Association.