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Market by Market

Interested in knowing how your market will fare in 2007? Here’s a closer look at the outlook for Florida’s major regions.

Orlando, FL
Orlando
With Orlando’s strong job growth, its market may well lead the state in 2007, according to Anthony Crocco, director of Metrostudy’s Central/North Region in Orlando. “I think we’ll see a much stronger market this spring, led by family- and job-related buyers,” he says. “Real estate volume in most areas will be back to normal levels by next summer.”
 
Overall, the Orlando economy will continue to benefit from a strong tourism market and defense-related spending. And while Central Florida builders are cutting back on their new single-family home projects, Crocco believes it will take most of the year to absorb units now in the pipeline and reduce overall inventories.

As for condominiums, Fishkind expects the Orlando market to recover more quickly than other parts of the state because so many of its projects involved conversions. “Other than several downtown buildings, Orlando hasn’t seen a large volume of new condo projects,” he says.

Tampa Bay
For the Tampa Bay metropolitan area (Hillsborough, Pinellas and Pasco counties), the outlook for 2007 may well hinge on the regional economy’s ability to create new jobs.

Through the first three quarters of 2006, job growth in the region slowed to less than half the pace of early 2005, according to Tony Polito, Tampa/Sarasota director for Metrostudy. “The big question is whether the Tampa economy can create enough new jobs to accommodate population growth,” he says.

However, a slowdown in single-family home starts in both Hillsborough and Pasco counties bodes well for a decline in overall market inventory. “After overheating in late 2004 and in 2005,” says Polito, “the Tampa Bay market will regain its balance, most likely in 2007.”

Southwest Florida
Because Southwest Florida—from Naples to Sarasota—relies heavily on retirees and second-home buyers, an upturn in the region’s real estate market may not occur until late 2007, says Polito.  “It will take Sarasota-Bradenton another year to recover from the effect of investor buyers on market dynamics,” he says. “Even though Florida remains the top state in the nation for retiree and second-home purchases, many of those buyers have pulled back for now.”

To the south, Fishkind expects the Fort Myers-Cape Coral market to benefit from housing prices that are relatively lower than Naples or Sarasota. The region’s increasingly diversified economic base remains a positive factor for the real estate market.

Miami-Dade
While Miami-Dade will enjoy a strong population inflow in 2007, the pace of new-job creation will slow, says Fishkind. That may slow absorption of the area’s high inventory of new condominium units—especially luxury residences at higher price points.

With thousands of units in the pipeline, Goodkin expects builders to continue offering discounts and other incentives to attract buyers and ensure that residences now under contract will actually close.  “Buildings in marginal locations will have the most difficult time,” he says.

Miami-Dade’s economic strength is its role as the global gateway to Latin America and the Caribbean, attracting both business and leisure travelers. “South Florida is well positioned to maintain its economic vitality over the next 10 years,” Goodkin says. “Once again, the question for developers, builders and property owners is how to adjust their strategies and find long-term success in this ever-changing marketplace.”

Broward
Metropolitan Fort Lauderdale’s real estate market is likely to recover more quickly than those of its neighbors to the north and south, according to Goodkin. Lack of available land for new single-family home development and a smaller backlog of new condominium units than in Miami-Dade or Palm Beach County will mean a faster absorption of existing inventory.

Broward’s population growth will continue to be strong in 2007, although new-job creation will slow, according to Fishkind. That means move-up and second-home buyers will play an increasingly important role in the county’s real estate market.

Palm Beach
In 2007, Palm Beach County may enjoy the strongest economy in South Florida. Led by the new Scripps Florida research facility coming to Jupiter, the county is seeing increased interest and investment from life science and biomedical companies. At the same time, the amount of land available for new single-family home construction is dwindling.

However, the county is facing a growing inventory of unsold new condominium units, especially in downtown West Palm Beach. “It may take several years for this excess supply to be absorbed,” Fishkind says. “However, lenders have set strict criteria for developers, making it more difficult to launch new projects.”

Treasure/Space Coast
Attractive beaches, a slower-paced lifestyle and relatively lower real estate prices are among the key attractions of the Treasure and Space Coast communities from Martin to Flagler counties.

However, these eastern coastal counties attract a high percentage of retirees and fewer primary homebuyers, according to Crocco. “These buyers are waiting to see how the market stabilizes,” he says. “As a result, there is a lot of inventory—especially in condominiums—all along the coast, putting a downward pressure on prices.”

Northeast Florida
Jacksonville may be one of the few regions in the state to see an increase in new-job formation this year. And because the real estate investment boom reached Northeast Florida relatively late in the cycle, the market is not overbuilt. “Builders are still discounting very aggressively, but overall, the Jacksonville market is healthy,” Crocco says.

From his perspective, Gene Rivers of Keller Williams Realty expects the first quarter to determine the pace for the year in Jacksonville and the northern coastal markets. 

“Primary housing in the North Florida market will be steady and may see a solid revival in 2007,” he says. “More than 60 percent of the market is not investor/second-home based and will buy if the prices are affordable and rates stay low.” 

The Panhandle
With a new airport under construction by regional developer St. Joe Co., Panama City is poised for solid growth in the next few years. On the other hand, Pensacola’s coastal communities are still recovering from 2004’s Hurricane Ivan, and the high cost of property insurance is a concern throughout the Panhandle.

“In Tallahassee, we’ve seen a correction in terms of pricing, and the builders are basically out of the market, so inventory levels should tighten up,” says Rebekah Rivers, operating principal of Keller Williams Realty in Tallahassee. “We expect to see an improvement in 2007 throughout our region.”