2011 Outlook for Cape Coral / Fort Myers Real Estate

The information doesn’t look GREAT for 2011!  I attended an ecomomic forecast meeting last week in Fort Myers given by Dr. Ted Stevens the Chief Economist with Stewart Title.  This was the second year that I have attended his meetings and based on his knowledge and insight, I will be attending every year that Dr. Stevens is willing to speak on this subject.

Dr. Stephens pulls no punches and tells it like it is adding his own subjective touches based on his conservative beliefs.  He touched on the U.S. economy as a whole and then specifically on our market and how the global market will affect our market.

Oil prices are going UP and this is GOOD for Florida!  From the surface it doesn’t seem to be the case but when you consider that high oil prices will lead to more people fleeing from the North to Florida whether it is to bring their business down here, to purchase a second home or to retire in a state with no income tax.  It’s hard to understand on the surface that $5 oil will make our Real Estate more valuable.  This is not to say that ALL Florida Real Estate will be more valuable.  Pressure from higher oil prices motivates people to move closer to shopping, schools, entertainment, places of worship as well as their jobs.  This is why Fort Myers and Cape Coral will benefit greatly.  There is excess home inventory on the market as well as vacant land to build on that is very close to everything.  In addition, our home prices are so low that people will decide to move sooner than they had originally planned.  Waiting will only mean higher interest rates and rising prices.

Did you know that Florida is the 5^th Business Friendly Tax State in the nation?  Florida is better than Texas even though neither state has a state income tax.  Believe it or not, when you look at the property taxes, corporate income taxes, unemployment taxes and sales taxes, Florida is  much less than Texas and the other 44 states.  Florida has consistently ranked number 1 in the southern states for the past several years.  In fact, Florida ranked 1^st in individual income taxes, 15^th on corporate income taxes, 32^nd on sales taxes, 3^rd on unemployment insurance taxes and 22^nd in the nation on property taxes.

When can we expect a recovery in our housing market?  From the 2010 data, foreclosure rates are diminishing and home sales are up which is reducing our inventory.  If inventory is going down and demand is going up, home price increases will follow.  Our market will soon turn from a buyers market to a sellers market.  When this will occur will depend on the job market.  The job market will need to show sustained growth for several months before we can get a clear picture of what is happening.  Some economists are predicting a 18 to 24 month cycle, however, there are some economists that predict a shorter cycle.  I heard it once said that Economics was developed to put economists to work.  When have all economists ever been in agreement on anything?  My point exactly.

I use a more practical approach using both logic and statistics.  Both Fort Myers and Cape Coral have been actively recruiting businesses, that are not seasonal or tourist oriented, to move to their respective cities offering various tax incentives.  When you consider our climate, housing prices, available housing, our quality workforce and business friendly tax environment, it just makes sense for businesses to move to Florida.  Depending on how successful and how fast these cities are in recruiting such businesses, will affect how strong and how fast our recovery will be.  In addition, if interest rates remain below 5.5%, our home prices stabilize or drop slightly, our home affordability index will continue to improve making homes affordable for more Floridians. 

This being said, we also have to factor in rising oil prices and what this means to our pocketbooks.  When oil prices rise it affects every product that is shipped by air, rail or truck.  Higher shipping costs increase the cost of goods sold.  When you factor in increased cost of goods including gasoline, our home affordability index is affected negatively.  Based on how dramatic the increases are, I predict that housing prices will continue to drop in the second quarter, stabilize in the third quarter and show a slight increase in the fourth quarter of 2011.

One last comment to make.  Let’s not forget about Politics and the role that it plays in our overall recovery.  Government can be pro business or anti business and history has proven that Government policies and regulations can shorten or lengthen a recovery depending on the burden that it places on small businesses or the burden that is lifted from small businesses.  Let’s just hope that 2011 is the year of the small business recovery.


Check out my websites at www.livingincapecoralnow.com and www.dancraddock.com if you are interested in taking advantage of our great home prices, please email me atd_craddock@yahoo.com.