How the ‘generational disruption’ of millennials is shifting real estate in Central Florida

The “generational disruption” unfolding today is of historic significance. The second wave millennials coming of age coincides with a transformation in the norms of life, work and society at every level.

The demographics of the millennial generation reveal they are the largest consumer group in U.S. history. There are currently some 75.4 million millennials (born between 1980-1997). That means a significant number of today’s real estate decisions, as well as those connected to the workplace, are made by people younger than 40 years of age.

Millennials are well-known for their love of cities and the ability to live, work and play in a single urban

 

area. But while this ethnically and racially diverse generation is postponing marriage and children, they are not putting it off indefinitely. In fact, 60 percent expect to live in detached single-family homes within the next five years. Real estate developers, investors, owners and builders must have a good grasp on location preferences, design and amenity features, and technology advances.

With readily developable land in Central Florida and great infill sites in our bedroom communities, suburban upgrades are being undertaken with mixed use, creating dense groupings of retail ventures, businesses, luxury condos/apartments and great communal spaces and evolving amenities. These types of live/work/play options also become viable alternatives for baby boomers to use for transition out of their primary residences as it becomes necessary.

Metro Orlando is seeing forward-thinking developments like Lake Nona that are designing creative, modern and collaborative communities and workplaces with the benefits of an urban setting. We can also look to Maitland City Centre, Ravadauge and Up Development on U.S. Highway 17-92 and Lee Road. And we can’t leave out the beautiful redevelopment of our suburban communities, such as what has been done in Winter Garden, DeLand and Sanford. It cannot be disputed that many millennials will live in cities their entire lives, but this is no different than previous generations. The difference is the size of this young generation is impactful for wherever they choose to live.

Millennials also are disrupting office space use. Building owners must be able to offer collaborative, flexible environments and make suggestions for customizable furniture and interior designs. The big challenge facing owners of older buildings is how to manage operating expenses with this flexible work population. This is a significant impact on utilities, security and maintenance, because millennials no longer work just 9 to 5. Will the rents increase to a level that can offset these impacts? All of this potentially affects the building value. Also expected are gyms, game rooms and smart-building technology. We also need to further explore capital costs to modernize building systems to accommodate this expanded use and keep these buildings as an option for the millennial generation. The long-term effect is going to be a change in how we conduct our real estate business.

By 2025, 75 percent of the workers in the world will be millennials. Their generational disruption is larger than any we’ve seen before — and everyone must learn to adapt. It’s an exciting time to be in commercial real estate and I can’t remember a similar period when every standard we believed to be true is now no longer so.

To learn more about the future of the real estate market in Florida contact a member of the 9 Core Realty team!

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US new home sales surge unexpectedly, hitting 10-year high in October

Sales of new U.S. single-family homes unexpectedly rose in October, hitting their highest level in 10 years amid robust demand across the country.

The Commerce Department said on Monday new home sales increased 6.2 percent to a seasonally adjusted annual rate of 685,000 units last month. That was the highest level since October 2007 and followed September’s slightly downwardly revised sales pace of 645,000 units.

New home sales have now increased for three straight months.

That together with last month’s increase in homebuilding and sales of previously owned homes suggests the housing market could be regaining momentum after treading water for much of the year. Housing has been constrained by shortages of homes for sale, skilled labor and suitable land for building.

Activity was also temporarily restrained by Hurricanes Harvey and Irma. Housing has been a drag on economic growth since the second quarter.

September’s new homes sales pace was previously reported at 667,000 units. Economists polled by Reuters had forecast new home sales, which account for 11 percent of overall home sales, falling 6.0 percent to a pace of 625,000 units last month.

New home sales, which are drawn from permits, are volatile on a month-to-month basis. Sales surged 18.7 percent on a year-on-year basis in October.

Last month, new single-family homes sales soared 30.2 percent in the Northeast to their highest level since October 2007. Sales in the South increased 1.3 percent also to a 10-year high. There were also strong gains in sales in the West and Midwest last month.

More than two-thirds of the new homes sold last month were either under construction or yet to be started.

Despite the rise in sales in October, the inventory of new homes on the market increased 1.4 percent to 282,000 units, the highest level since May 2009.

At October’s brisk sales pace it would take 4.9 months to clear the supply of houses on the market, the fewest since July 2016 and down from 5.2 months in September. A six-month supply is viewed as a healthy balance between supply and demand.  To learn more about the state of the US real estate market contact a member of the 9 Core Realty team.

 

Foreign purchases of Florida real estate grow to $24B

Florida remained the top destination of foreign buyers purchasing U.S. residential real estate in 2017, with 22 percent of all foreign buyers who bought residential property in the United States. Florida Realtors latest report, the 2017 Profile of International Residential Real Estate Activity in Florida, finds that international sales hit $24.2 billion this year, up from $19.4 billion in 2016.

The economic environment created a mix of opportunities and challenges for Florida’s foreign buyers in 2016 and 2017, according to the report’s analysts. Latin American countries faced political and economic difficulties and weaker currencies in the wake of the collapse in oil prices. Meanwhile, economic growth strengthened in Canada and the Canadian dollar stabilized against the U.S. dollar.

House prices rose in the United States, including in Florida, but the appreciation was modest compared to home price appreciation in Canada. Amid these challenges and opportunities, overall foreign buyer purchases of Florida residential property increased: the share of buyers from Canada rose, the share of buyers from Latin America and Europe declined and the share of buyers from Asia and Africa remained unchanged.

The report is based on an annual study done by the National Association of Realtors (NAR) in cooperation with Florida Realtors. It presents information relating to residential transactions with international clients of Florida’s Realtors as well as information on U.S. clients seeking to purchase property abroad during the 12-month period of August 2016-July 2017. In this report, the year 2017 refers to the 12-month period August 2016–July 2017, and the year 2016 refers to the period August 2015–July 2016. A total of 6,551 Realtors responded to this year’s survey, conducted Aug. 7-Sept. 9, 2017.

The survey considers only residential purchases in the state.

Report highlights

  • Foreign purchases in the state increased to $24.2 billion, a $4.8 billion increase from 2016’s $19.4 billion.
  • Foreign transactions accounted for 21 percent of Florida’s residential dollar volume of sales, a 2 percent increase year-to-year. Nationally, foreign buyers comprised 10 percent of the dollar volume of existing sales.
  • Foreign buyers purchased 61,300 Florida properties (47,000 in 2016), which made up 15 percent of Florida’s residential market (12 percent in 2016). Nationally, foreign buyer residential purchases accounted for five percent of existing-home sales.
  • The median purchase price paid by foreign buyers increased to $259,400 ($252,500 in 2016), which was in line with the overall increase in Florida prices.
  • The median price paid by foreign buyers was 18 percent higher than the median price paid by all Florida buyers.

Nationalities of Florida’s foreign residential buyers

  • Latin American and Caribbean buyers accounted for the largest portion of Florida foreign buyers (34 percent), though this group made up 39 percent the previous year.
  • Canadian buyers increased to 22 percent (19 percent in 2016).
  • Other countries remained consistent year-to-year: The share of European buyers was unchanged at 23 percent; Asian buyers at 10 percent; and African buyers at one percent.
  • Most foreign buyers were concentrated in five metropolitan areas: Miami-Fort Lauderdale-West Palm Beach (53 percent); Orlando-Kissimmee-Sanford (11 percent); Tampa-St. Petersburg-Clearwater (nine percent); Cape Coral-Fort Myers (six percent); and North Point-Sarasota-Bradenton (five percent).

Transaction details

  • 72 percent of foreign buyers made an all-cash purchase.
  • 68 percent of foreign buyers purchased residential property for vacation, residential rental or for both uses (72 percent in 2016); 49 percent bought a townhouse or condominium (52 percent in 2016).
  • 35 percent (40 percent in 2016) purchased in a central city/urban area; 15 percent purchased in a resort area (14 percent in 2016).
  • 93 percent of foreign buyers visited Florida at least once before purchasing a property (92 percent in 2016).

Florida clients searching properties abroad

  • 17 percent of Florida’s Realtors said they had a client seeking to purchase property abroad, up from 14 percent in 2016.
  • Top countries of interest from Florida residents looking elsewhere: Colombia, Costa Rica, Spain, Canada and the Dominican Republic.
  • 75 percent were interested in residential property (79 percent in 2016).
  • 75 percent intended to use the property for vacation, residential rental or both uses (84 percent in 2016).

Florida’s Realtors interaction with international clients

  • While international business rose, fewer Realtors in Florida (44 percent) said they worked with an international client in 2017 (48 percent in 2016).
  • 61 percent of Realtors said they did not have cultural and language problems.
  • Personal contacts, previous clients and business contacts accounted for 72 percent of referrals or leads.
  • An agent’s firm, franchise website or social media was the primary source of online leads, followed by other aggregator websites and realtor.com®.
  • Respondents were evenly split about the outlook in the next 12 months: 43 percent expected the same or an increase in international clients, 42 percent expected a decrease, and 15 percent had no opinion.
  • 56 percent expect foreign retirees to be potential clients.

To learn more about investing in Florida real estate, contact an expert member of the 9 Core Realty team.

Preparing for new homes, neighborhood at Babcock Ranch

Homebuilder, Pulte is getting ready to build its first inventory home in Babcock Ranch. It’s just the beginning of their plan to build more than 135 homes in that community. The Arbordale will be an unfurnished inventory home constructed in the Lake Timber neighborhood.

That is the reality — the dynamic need — people want to move in right away. With models, by the time you design the house and pick the options it takes longer. Having inventory homes for people to move in right away adds to the velocity.

The three-bedroom, two-bathroom Arbordale spans 1,980 square feet under air and is priced starting in the upper $200,000s.

One of the things that make this model right for Babcock is that the garage is in the back leaving more room in the front for a porch. A trademark of homes in Babcock are front porches that facilitate the idea of a neighborhood and neighbors meeting neighbors. The other thing that is great is the proximity to the town center.

The initial plans are to introduce four floor plans in the Lake Timber area. The four plans range from 1,758 square feet to 3,293 square feet. There are both one- and two-story options. Currently there are plans for six homes in that section but they might expand and add more sites if the product is successful.

To learn more about investing in Babcock Ranch, contact an expert member of the 9 Core Realty team!

Housing market at a regulatory crossroads

With home prices and sales continuing to rise across Southwest Florida, the state and the country, the real estate market appears set for a sunny future.

The talk in some quarters, though, brings up worries that another housing bubble could be developing, conceivably bursting into a runaway fire that scorches the economy again.

As unlikely as that is, some powerful political and business interests are bent on repealing some of the regulations on the financial sector that were adopted in the midst of widespread abuses in the banking and investment markets that beget the Great Recession.

September’s report by property data aggregator CoreLogic once again reflects a steady climb in housing prices. August figures compared with the same month last year show the national increase at 6.9 percent, Florida at 6.2 percent and Sarasota-Manatee at 3.9 percent. CoreLogic projects Florida’s home values will increase 6.6 percent over the next 12 months as the country’s rate rises by 4.7 percent. The company’s chief economist, Frank Nothaft, said that during the past three years, CoreLogic’s national index shows annual price growth from 5 percent to 7 percent. Home values in Florida still stand at 18 percent below pre-recession peaks.

One potential sign of trouble in the report is CoreLogic’s analysis of the country’s 100 largest metropolitan areas: 34 percent have overvalued housing stock as of August 2017. Of the 50 largest, 46 percent have an overvalued housing stock. The analysis defines “an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level … .”

The histories of the savings and loan crisis of the early 1990s and the Great Recession should serve as lessons in disaster prevention, not a road map to replay. The similarities between the causes of the S&L crisis and the financial crisis of 2007–2008 and the U.S. subprime mortgage crisis of 2007–2009 should not be startling, but demonstrate that we do indeed repeat history.

To learn more about the current state of the real estate market in SWFL, contact an expert member of the 9 Core Realty team.

Naples market shows resilience at end of third quarter

The Naples area housing market maintained positive traction during the third quarter of 2017 despite enduring a hurricane that impeded activity for three weeks in September. According to the September 2017 Market Report released by the Naples Area Board of Realtors (NABOR), which track home listings and sales within Collier County (excluding Marco Island), there were 398 closed sales during the month of September, a 30 percent decrease compared to September 2016.

September proved challenging for the real estate market as homeowners and agents were forced to wait while public and utility services rebuilt or repaired infrastructure damaged by the hurricane. This was reflected in statistics released for September, which affected total outcomes for the third quarter of 2017. However, year-to-date numbers tell a different story as activity in pending, closed and median price categories were up year over year at the end of the quarter.

To withstand a hurricane and still outperform last year’s activity is a clear sign of market. Broker analysts, who reviewed both reports, agreed that the county’s hurricane building code standards and quality craftsmanship by local builders helped to greatly reduce the amount of major structural damage in the area.

September is typically when the housing market takes a breath before it begins to intensify again. Yet despite a direct hit by a major hurricane, overall closed sales for the third quarter increased 3 percent (year over year). Not surprisingly, the storm’s short-term impact on the housing market in September only tempered sales slightly in the third quarter by 5 percent (quarter over quarter), which translated to just 86 fewer closed sales than in the third quarter of 2016.

Activity in July and August outperformed the same months last year. If the hurricane had not hit the area in September, the third quarter of 2017 would have shown much more impressive activity. A 55 percent decrease in pending sales for September is equivalent to three weeks of inactivity. These sales didn’t disappear, they are just delayed.

The hurricane’s force slowed inventory in September, which resulted in a third quarter decrease of 9 percent. This was most likely a result of homeowners either delaying to list because they evacuated or removing a listing because they needed time to clean up and make minor repairs to properties following the storm. The hurricane created big concerns and delays from banks, too. Most lenders are requiring re-inspections and re-appraisals of properties after the hurricane.

One element the hurricane failed to harm was the continued growth in property value for Naples. Overall median closed prices in the third quarter of 2017 increased 3 percent to $320,000 compared to $312,000 in the third quarter of 2016.

Compared to other tropical second-home destinations such as Puerto Rico, the Southwest Florida housing market fared quite well after it faced a hurricane. Broker analysts believe the area may see an uptick in sales from buyers who had their eyes set on an island home in the Caribbean.

To learn more about the Naples or Southwest Florida real estate market contact an expert member of the 9 Core Realty Team.

 

 

Buying Real Estate with Bitcoins- 5 Cities Trending Sales

 

 

Bitcoin is a next-gen, all-digital currency that’s already a global phenomenon.

Developed with high levels of security and anonymity in mind, it’s touted as a potential replacement for paper- and coin-based money in the near future.

Some industries, including real estate, are capitalizing on this emerging trend by letting clients buy property via Bitcoin. It’s a significant departure from tradition, but it’s one that is quickly gaining momentum.

  1. Miami, Florida

A Miami man recently made news by selling his home in Coral Gables for over $6 mln — or approximately 1,600 BTC.

The steep selling price is enough to rattle the headlines, but Bitcoin has been a part of the Miami real estate market for several years. Although it was only launched in 2009, tech-savvy real estate agents, investors and buyers quickly embraced the new cryptocurrency.

Realtors in the area are confident that South Florida — particularly Miami — is an ideal market for Bitcoin. They cite the worldwide reach of Bitcoin as a primary factor in driving increased interest and attention to the region. Using an alternate form of currency opens up properties to buyers and investors from all over the world, including Asia, Canada, South America and more.

  1. Dubai, UAE

The United States isn’t the only country to capitalize on the growing Bitcoin trend. A developer located on the Isle of Man recently announced plans for a joint residential-commercial development valued at $325 mln. Prospective residents will be able to use Bitcoin to purchase their property, with studio apartments starting at 33 BTC and one-bedroom apartments from 54 BTC — or approximately $250,000.

Some of the development’s units have already been sold for modern currency, but the remaining residential properties are reserved for Bitcoin purchases. Commercial units are not currently available for purchase via the popular cryptocurrency.

  1. New York, New York

Investors and real estate agents in The Big Apple also believe Bitcoin is the way of the future. The team with Magnum Real Estate is assuming a huge risk by accepting Bitcoin for deposits and purchases for recently converted apartments in Manhattan’s East Village. Known as Liberty Toye, the property represents a huge shift in the way we conduct business this century.

Real estate investment trusts have been looking to diversify their portfolios this year, and New York City provides the ideal launching ground. Known as an entrepreneurial-minded city that isn’t afraid to take risks, we already see homes and apartments available for Bitcoin. It’s only a matter of time until commercial buildings follow suit.

  1. Lake Tahoe, California

The popular vacation destination of Lake Tahoe accepts Bitcoin, too. An unnamed buyer recently purchased a 1.4-acre property with Bitcoin on a 42-site resort. The undeveloped property sold for $1.6 mln, or 2,739 BTC, making it the largest Bitcoin-driven real estate transaction at the time it happened in 2013.

According to reports, the Bitcoin purchase was originally the buyer’s idea. While we haven’t seen any further developments involving Bitcoin in the Lake Tahoe real estate market, the sale shows off the potential of digital currency in the industry and opens the way for future deals in both the residential and commercial sectors.

  1. Bali, Indonesia

The island of Indonesia isn’t the first place you’d expect to see a Bitcoin-backed real estate transaction, but it was actually among the first locations to support the cryptocurrency.

An unnamed buyer spent more than 800 Bitcoins, totaling approximately $500,000 at the time, for a villa in Bali.

Although residential real estate agents and buyers are comfortable with using Bitcoin to purchase real estate in Bali, we have yet to see any listings in the commercial or industrial markets.

Despite the uncertainty of the Bitcoin market, tech-savvy investors and agents are — at least for the time being — willing to take a risk on the cryptocurrency.

There are many advantages in doing so, but the risks are too steep for some to take the plunge.

To learn more about purchasing real estate with Bitcoin, contact an expert member of the 9 Core Realty team.