In the Know: What will be Southwest Florida's hottest real estate spots for 2022? And is the party over?
Phil FernandezNaples Daily News
Singer Willie Nelson may not have been writing about the upcoming 2022 Southwest Florida real estate market when he came up with "The Party's Over," but he might as well have.
And the pandemic-induced economic buzz of the past 18 months might have fit into another song he penned that was sung by Patsy Cline: "Crazy."
Those in residential sales would love for the housing records to keep spinning but even the most optimistic say the groove is disappearing. Even the continuing lack of inventory won't play as much of a role in pricing as it has.
Fewer available homes "doesn’t necessarily mean prices will keep rising at the rate we saw this past year," said Molly Lane, senior vice president at William Raveis Real Estate. "Interest rates will eventually rise so the number of potential buyers will thin, and this will likely also level out list prices.”
“Hot markets” don’t last forever, said Mike Hughes, vice president and general manager for Downing-Frye Realty. “It’s impossible to predict the
future, but we know from history that things happen, like pandemics, inflation or hurricanes, that have impacted the housing market in Naples.”
It's going to continue to be tough for potential buyers looking to match up with the right abode.
“The real estate market in Southwest Florida is going to be most impacted in 2022 by the inventory level," said John R. Wood Properties Managing Broker Ryan Bleggi, the new president of the Naples Area Board of Realtors, also known as NABOR. "Many agents have a backlog of buyers that have not been able to purchase for one reason or another."
"They may be going up against someone who is paying in cash, competing against an offer that's waiving inspections, or are simply outbid," Bleggi said. "There is not enough inventory to bid on at the moment."
Still, it's not time for a pity party for everybody.
"Many of our submarkets have seen year-over-year price increases of 25 to 35%. Obviously, that’s not sustainable," said Southwest Florida real estate appraiser and broker Matt Simmons, managing partner at Maxwell, Hendry & Simmons. "Price appreciation in most submarkets has already slowed down over the past six months. Keep in mind, that’s slower appreciation, but price appreciation nonetheless."
Simmons doesn't hesitate.
"The Southwest Florida residential real estate market is in a really strong position headed into 2022," said Simmons, who also had a positive point on inflation, which is expected to be a growing factor. "Tangible assets, like real estate, (are) typically a good hedge against inflation."
For builders, it doesn't look like it's going to become easier. Part of that is tied to the supply chain issues that began bubbling in recent years for the construction industry, which also is dealing with a worker shortage.
"Most of the builders in our area are building homes for people that have already contracted for them to live in," said Bill Steinke, the incoming 2022 president for Lee County-based Royal Palm Coast Realtor Association. "They're not adding to supply, We see this as more than likely at least a two-year trend."
"The strain on our contractors and home builders is unbelievable," Simmons told me. "People think builders must be making a fortune because of the prices they’re seeing, but it’s the opposite. Builders are bearing the brunt of this, and most of them are fighting to maintain a reasonable profit margin. To be honest, I’m afraid that one of the outfalls of what we’re experiencing is that many builders will end up going under."
So where are the growth markets of 2022?
"The communities that can create volume will be the winners," Simmons said. "For example, Babcock Ranch in Lee and Charlotte, and Ave Maria in Collier. Those areas are in a prime position for continued growth as they’re among the only planned development locations that can accept a high volume of new entrants to Southwest Florida."
What about more established places?
"Cape Coral, Lehigh Acres and Golden Gate Estates are areas where we’ve seen major growth in new construction, and we can expect to see more," Simmons said. "These are communities with finished lots ready to take new construction. Cape Coral has seen an average of more than 400 single-family building permits pulled each month, for more than six months now."
How does that compare to the past?
"That’s basically twice the number that was being pulled at that time in 2019," Simmons said. "Our research is suggesting that very little of that construction is speculative. It’s product being built for already identified end users."
2022 should be different in another way.
Largely unable to travel here since the start of the 2020 pandemic, international tourists have not been a factor in the booming Southwest Florida housing market. With their valuable euros and other currency and investments in mind, they just began arriving in droves after the lifting of some restrictions.
A few pre-COVID patterns resumed
And it's possible that the market may return to more of a seasonal winter schedule, depending on what happens with the various viruses.
A little bit of evidence: Showings have been on the increase since the summer, and that would follow pre-coronavirus patterns, according to NABOR.
Still, its data shows consumers are changing their approaches: COVID-19 affected buying behaviors, and sales of single-family homes outpaced condominiums as people sought more open space in 2020.
But as single-family was drained, homeowners turned to condos, which in October were rising in price faster. Its median close in October rose by 31% to $370,000 as compared to a year ago. Single family jumped 18.8%. Its median: $615,000.
Another change:
“There were fewer homes over $1 million coming onto the market in October than in previous months," said Spencer Haynes, vice president of business development and broker with John R. Wood Properties. "In fact, we saw more new listings of homes on the lower end and further east become available."
'God's waiting room'
One trend that will never change in Southwest Florida as compared to most every other market will always mean a somewhat steady supply.
"We also are kind of God's waiting room," said Steinke, who participated in his association's entertaining podcast this month. "People do come here to retire, and eventually they will have their ultimate retirement so that certainly brings vacant homes that are available as well."
The region will continue to be a destination, said Glen Harris III, regional partner for builder Alair Southwest Florida,
"There will certainly be no shortage of retirees and others moving to Florida," Harris said. "The newest post-COVID phenomenon that we've seen is the additional demographic of people moving to Florida. We are speaking with more and more people who are essentially escaping to Florida in search of relief. We've seen people taking early retirement given the circumstances.
"Others are realizing that working from home is possible in their career, which also means that home can be anywhere they want. For many people that we talk to, Florida has a host of advantages."
And Southwest Florida provides various options.
"From my perspective, Collier County's real estate costs are significantly higher than Lee County," Harris said. "That's not a bad thing for Lee County, because it drives middle-income earners north to Lee County and east to the inland side of Collier."
Based at the Naples Daily News, Columnist Phil Fernandez (pfernandez@gannett.com) writes In the Know as part of the USA TODAY NETWORK.