Market Watch 2018: Recession or hiccup on the way

A recession may be on the way, but first-time home-buyer millennials and retiring Baby Boomers looking for a deal may be coming to the rescue in Southwest Florida’s residential market.

That was among the big takeaways Tuesday at The News-Press Market Watch Real Estate 2018 at Germain Arena, where more than 1,000 people were on hand to gauge the market pulse from industry experts.

Presenters included Randy Thibaut, land sales and development expert and owner and founder of Land Solutions Inc.; Denny Grimes, residential real estate expert and president of Denny Grimes & Co.; and Stan Stouder, CCIM, commercial real estate expert and founding partner with CRE Consultants.

As Thibaut entered the stage, a screen showed a roller coaster on its way up a track.

“We’ve been climbing this roller coaster that’s behind me for almost nine years since the downturn,” he said. “Are we going to go up and over and are we going to lose our lunch, or are we just going to have a little hiccup? One thing is for sure: we’re going to have change.”

Total single-family and multifamily permits increased 28 percent in Lee, Collier and Charlotte counties year-over-year, with Lee leading the way.

Why? “Apartments and assisted living were again on fire,” he said. “That changed the dynamics of the market.”

On the home front, more buyers are looking for “value” properties, those under $300,000, and builders who cater to that demand are benefiting.

“The millennials are coming and they are buying homes because they’re having families,” he said. “There’s a different type of baby boomer – they’re coming here with less money in their pockets. They’re coming. The difference is they’re not looking for $500,000 homes.”

On the other end of the market, there’s strong demand for luxury high-rise condos in Naples and Bonita Springs, in developments such as Aqua and Seaglass at Bonita Bay.

“The product came out and they gobbled it up,” Thibaut said.

Downtown Fort Myers is a bit of a different story, where developments such as ONE, The Place on First and Prima Luce are in the works.

“These projects are still trying to get started, and I think some of them will,” Thibaut said. “It hasn’t been for the lack of trying.”

Market watchers should also keep a close eye on the Corkscrew Road corridor, where there are a lot of development plans.

But ultimately, how are things?

“We’re not going down into the abyss,” he said. “Are we going to have a little hiccup? I think so.”

Prior to the event, Thibaut was asked about impact fees, which are a hot topic in Lee County.

“The impact fees that are scheduled to be looked at in March will be the deciding factor over whether we’ll be able to serve our workforce and Middle America employees,” he said. “If they raise the impact fees a lot, they will hurt the biggest percentage of the buying sector. Now is not the right time for a full increase.”

Thibaut said people looking to buy a home under $300,000 are the sector that “can’t afford the increase or they won’t be able to own and live the American Dream.”

Grimes was next on stage, touching on seemingly controversial topics — fake news, the wall and DACA — in a nonconfrontational way because his points weren’t really about those topics at all.

National headlines about the hot real estate market are giving some buyers and sellers a false perspective on the local market, which isn’t so hot.

“There’s a party going on and we’re not part of it,” he said. “But that’s OK. We’ll win in the end.”

The number of home sales was down 3 percent in Lee and up 3 percent in Collier year-to-year.

Grimes used the words “steady” and “stable” in describing the market, with an exception here and there.

“Cape Coral was the star performer in Lee County,” he said. “Collier South is the star performer there.”

In the Cape, dry lot prices have been rising, commanding $20,000 and up, while Lehigh lot prices start at $5,000.

“Cape Coral is in for another growth spurt,” Grimes said.

Home prices, however, have hit a wall. The median sales price for an existing home was $238,500 in December, compared to $250,000 a year earlier. That median price is close to $450,000 in Collier County and $217,500 in Charlotte.

On DACA — homes where you can dock a boat — Grimes said the cost to live on the waterfront in Cape Coral averages $479,000, not far below the cost in Fort Myers.

“It’s the best waterfront value and it’s gaining on Fort Myers,” he said.

Stouder started out by saying self-storage is going gangbusters.

Eight self-storage businesses went up between 2010-14, with 12 built between 2015 and now, with another 12 under construction.

“There’s a correlation between those and the robust number of apartment units being built,” he said.

Senior housing, too, has also continued to surge. Ten senior housing projects were completed between 2000 and 2014. In the past three years, 21 senior housing projects have come to market.

A few notable projects for market-watchers to keep an eye on: the Meridian Place industrial property near Southwest Florida International Airport, where a 201,000-square-feet of space is expected to be built.

“That’s a big industrial project and that’s because the vacancy rate is so low,” he said.

Stouder also talked about the likelihood of a recession.

“The stock market is having heartburn, but not a heart attack,” he said.

Stouder pointed to the fact that it’s been “about eight and a half years since the last recession was declared over in June 2009,” so a recession is inevitable due to market cycles, it’s just a matter of when.

Stouder also offered a “what’s that?” segment.

In the “what’s that?” segment, market-watchers should look for the Grand Central project to come out of the ground across from Page Field Commons. That project will have the area’s first Krispy Kreme location.

For people who might be wondering what to do with their money, whether after a property sale or because they simply want to make a smart investment, “it’s time to sell.”

“How many of you wished in 2009 that you’d have sold in 2006,” he said. “If you get greedy, you will get burnt.”

Connect with this reporter: email clogan@news-press.com and follow on Twitter @caseylo