I thought I’d share some of my opinions about the future direction of real estate in our area and some of the influences that will have an effect on that direction. As everyone knows there have been recent declines in property values. In many locations the finished product, an existing house, can sell for less than the costs of the materials and labor needed to recreate the property, while other areas have seen much less drastic declines. In recent months the activity in the market place indicates a return to a more normalized local housing market. Unless we have some unknown additional shock to the system, this more balanced real estate market should be the new paradigm for the next several quarters.
Besides easy money, one of the drivers for development in the area was the belief that the baby boomers would come to states like Florida in droves. Years of population growth seemed to support that belief, until you looked at the numbers. Only about 15% of the recent population explosion state wide was in fact retirees. The bulk of the population growth was construction related job growth. Even as those working aged new residents left the state, the population of Florida remains stable. So if we assume that there is some truth to the opinion that the state population will grow as a result of an expanding retiree population, augmented by business and job growth needed to support a growing retiree population, it would be a reasonable assumption that the over built conditions will soon be behind us. Add to the retiree population assumption any expansion of business and jobs and it’s possible to see this area growing again in the near future.
While some will argue any possibility of future growth in the area, here are a few thoughts. The population of the US is still growing organically as well as through immigration. The area has an improving school system, and an ever expanding college and university presence. In other words the work force may become one that attracts business. In addition the state has made considerable steps to preserve the natural environment, as an example Sarasota bay has received notice because of the improving water conditions in the Bay. Not to mention that Sarasota area has earned a level of note in the area of the performing arts. This is a maturing area, becoming more well rounded.
It’s the form of the growth that tends to capture my imagination. I lived through the rapid growth in Collier County, where gated golf course communities sprang up, and only a few roads allowed for a north to south traffic flow. The congestion that resulted is one of the main reasons I no longer live in Naples.
I see a convergence of influences that may allow this area to avoid growth without planning. Sarasota County is already looking at sustainability issues, and with the recent spike in energy prices, the federal government is looking to influence the direction of growth. Today communities all across the county are looking at changing the way growth happens. Governments are updating building codes to reduce energy consumption, and to provide developers incentives to design energy efficient neighborhoods.
Future planning in our area is attempting to limit growth to the area west of 75, to the area where the infrastructure currently exists. To be successful planners will need to analyze the viability of many of the existing neighborhoods, and find ways of providing incentives for private capital to re-invent these neighborhoods. The paradigm for the future will be smart neighborhoods, places where people live, work, shop, and recreate in one area. We here on the Island are fortunate since John Nolan designed this city to be much in line with the thinking of the new urbanism concepts that are guiding the planners of today.
The energy bill that was passed by the house some months back will change the landscape should it become law in anything like its current form. There is a section addressing the “State Enforcement of Energy Efficiency Building Codes”. The federal law will have states adopting and enforcing new building codes for more energy efficient commercial and residential construction. Not only will we have new energy standards on new construction we will see incentives for energy efficient remodels of existing homes.
The energy bill has a section referred to as the ‘Green Resources for Energy Efficient Neighborhoods Act of 2009’. As a result of this section of the proposed law some mortgages and underwriting standards will reflect the added value of energy efficient property as well as energy efficient locations.
Whether this bill becomes law or not I think is immaterial to the issue, higher energy costs will have a significant impact on peoples real estate purchase decisions. Urban real estate will have a draw over suburban real estate as people look to save on commuting costs. The energy efficiency of a home will be more of a concern to the home buyer.
While many people are very attracted to new communities and new home designs, the current low cost of existing homes will drive many to buy existing homes and remodel. Builders and developers will look to develop infill lots, and augment their business with remodeling projects. Here on the Island we will see a wave of homes being razed and new homes being built. The existing walkable neighborhood near the beach is currently a powerful draw, and with the promulgation of energy efficient neighborhood concepts our neighborhood will be desirable for some time.