Florida's Economic Outlook? Quite Bright for Growth, Jobs & Housing
Posted by Benjamin Dona on Sunday, August 3rd, 2014 at 1:15pm.
The following excerpts on economic expansion for the State of Florida come from The College of Business Administration at the University of Central Florida's quarterly economic projection report for July 2014. According to their findings, between now and 2017, it is expected that Florida’s economy will expand at an average annual growth rate of 3.7% and payroll job creation will average an annual pace of 2.6%. Both measures are well above the pace expected for the national economy.
These are some of the highlights of the report with regards to the housing market:
- As of May 2014, 41.7 percent of single-family home transactions were cash sales, down slightly from 46 percent one year earlier. It's the fourth year in a row that cash sales were at 40 percent or higher, suggesting that investors continue to play a role in Florida's housing market.
- Low inventories and rising sales prices have triggered a surge in new home construction. Housing starts will average 31.3 percent growth during 2014-2017. The most rapid growth will be in 2014 and 2015, when starts are expected to grow at an average rate of 51.6 percent.
- Housing starts should more than double their 2013 levels by mid-2017. Total starts will be over 95,200 in 2014, just over 136,000 in 2015, 162,700 in 2016 and 166,200 in 2017. This growth in residential construction activity will catalyze growth in the commercial sector and "push employment growth" in the construction sector into the double-digit level.
- Sectors projected to have the strongest average job growth during the period of 2014 to 2017: Construction (11.3 percent), Professional and Business Services (4.6 percent), Trade, Transportation & Utilities (4 percent), Education & Health Services (2.5 percent), and Leisure & Hospitality (2 percent).
- Housing prices have made a strong upward movement from the depths to which they plunged during the housing crisis; in 2007, median home prices fell to a low of $122,200, but are now at a level of $180,000 (up 47 percent) as of June, 2014. This upward trend in median price is likely to continue at a sustainable pace and by the middle of 2017 is projected to be up by as much as another 20 percent or more.
On a local SW Florida level, the report's projections for the Naples-Marco Island MSA mimic quite closely many of the business research groups predictions for the four year time period thru mid-2017. In essence, all are projecting the purchase market will continue to suffer from a lack of inventory which should continue to drive prices higher year over year. By the middle of 2017, the median price is likely to rise (from its current level of $282,000) by as much as another 30 percent or more.
Update - 8/8/2014
Forbes Magazine released their study of data from Moody's Analytics and ranked the Naples area as number one out of 200 of the largest metros with an expected job growth rate of 4.1 percent through 2016. Key industries for growth are in housing and retail and of course, in the tourism industry also. Cape Coral came in ranked at the number 10 position in the study.
It is also important to note, that even though Florida is leading the way in construction job growth in the country, SW Florida is currently experiencing shortages in the availability of skilled construction workers. The shortages are so severe in some construction trade categories, that many local builders are now partnering with apprenticeship schools to help those individuals who are looking to become journeyman in fields like plumbing, electricians and finish carpentry.
We highly concur with these projected conclusions. The bottom line is that it is still a good time to buy in Southwest Florida even with the recent rise in prices. By purchasing now, buyers can also anticipate a pretty nice return on their investment over their first few years of ownership. And, for those buyers who just can't find something to their liking in the limited inventory re-sale market, there is a wealth of new construction that is available, most of which is being priced extremely well by the builders.
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