The Florida Association of Realtors has produced a series that details the prospects for 2008 and the market forces that will drive them.
GROWTH
As one of the fastest growing states in the nation, Florida’s population is expected to increase by 325,000 in 2008, spurring demand for working-age and retirement housing.
“Florida remains a prime destination for workers seeking new jobs and for the growing wave of baby boomers,” said economist Hank Fishkind, president of Fishkind & Associates in Orlando. “However, a slower national economy means that 2008 growth will be somewhat below the levels seen during the recent boom years.”
Fishkind’s analysis of demographic data indicates Florida enjoyed a net population growth of 350,000 each year from 2000 to 2006. That includes about 203,000 people who moved to Florida from other states, about 107,000 migrants from foreign countries and about 47,000 from natural increase (total births minus total deaths).
“It’s important to note that this is net growth,” added Fishkind. “The actual number of people who move to Florida each year is far greater.”
On the domestic side, the strongest “sending” states are New York, New Jersey, Illinois, Ohio, Pennsylvania, Georgia, Michigan and California. Among top foreign countries are Venezuela, Puerto Rico, the United Kingdom and Canada.
“Florida has a long history of population growth regardless of the nation’s economic cycle,” said Nancy Riley, a broker with Coldwell Banker Residential Real Estate in Pinellas County and 2007 president of the Florida Association of Realtors. She added that Florida has been one of the top 10 fastest growing states for seven decades in a row, exceeding the U.S. average by 100 percent since 1970.
In fact, the U.S. Census Bureau projects that in 2010 Florida will surpass New York and become the nation’s third most populous state. By 2030, the Census Bureau projects the state’s population will reach 28.6 million, an increase of 12.7 million since 2000.
One reason for that growth is that the state’s highly diversified economy continues to attract jobs in tourism, technology, international trade and business services. That brings in individuals, couples and families in their 20s to 50s, primarily to Florida’s larger metropolitan areas.
In addition, Florida traditionally captures a large share of the domestic retiree market, ranging from highly affluent entrepreneurs and executives to moderate-income couples seeking a warm-weather destination with plenty of recreational opportunities.
According to the Census Bureau, there are 76 million baby boomers born between 1946 and 1964. If only five percent retire to Florida, that alone would add 3.8 million new residents.
International buyers provide a third stream of migration into Florida, including working-age professionals, retirees and affluent second-home buyers.
As Riley said, “The bottom line is that more than 900 people move to Florida every day. That provides a solid foundation for our state’s residential real estate market.”
INTERNATIONAL
From the United Kingdom to Canada, Mexico and Argentina, foreign buyers love Florida real estate. And by purchasing luxury vacation homes, mid-priced primary residences and commercial properties, they provide a strong, steady flow of investment throughout the state.
“Foreign buyers like our state’s location as a convenient point of entry to the U.S. from Europe and South America,” said Alicia Cervera, chairman and CEO, Related Cervera Real Estate Services in Miami. “Our warm weather, recreational and cultural offerings are also very compelling. This is a very welcoming state to everyone, regardless of background.”
A mid-2007 survey by the National Association of Realtors found that Florida led the nation in foreign home buying, accounting for 26 percent of all international purchasers. California was next at 16 percent, followed by Texas at 10 percent.
The 2007 NAR Profile of International Home Buying Activity, which covered buying patterns from April 2006 to April 2007, noted that U.S. real estate is still considered a prime investment opportunity for foreign buyers and a “safe haven” for their money.
“Whether they use their U.S. home as rental/investment property, as a vacation home or both, non-U.S. residents account for a significant share of home buying activity,” the report said. “It is likely they will continue to do so.”
One of the key reasons is a weaker U.S. dollar against major foreign currencies, including the euro and the British pound. That gives foreign buyers more purchasing power in the Florida market.
“Compared to home prices in other countries like Spain, the United Kingdom and Ireland, real estate in Florida remains highly affordable,” noted Vani Ungapen, director of international operations and research, Florida Association of Realtors, in Tallahassee.
Florida is also one of the most international U.S. states with easy accessibility, thanks to 31 major airports and 14 deepwater seaports, she added. That supports international tourism, as more than four million visitors from 100-plus countries visit Florida in a year according to the U.S. Census Bureau.
A 2005 FAR survey found clear patterns among international buyers, who accounted for 15 percent of total home sales in the state in the prior year. British homebuyers – the largest single component of the international buyers’ market in 2005 – strongly favored the Orlando market, followed by Naples-Fort Myers and Tampa-St. Petersburg.
About one-third of foreign buyers that year were from Latin America. Miami-Fort Lauderdale was the favored destination for buyers from Venezuela – the largest Latin market – followed by Orlando and West Palm Beach.
“In South Florida, we’ve assisted many high-end purchasers from Venezuela, Mexico and Argentina,” said Cervera. “We see Europe as an increasing player in the statewide market.”
TECHNOLOGY
It’s attracting skilled workers
With its warm business climate and appealing lifestyle, Florida is fast becoming one of the nation’s leading technology states.
Statewide, Florida’s high-tech industries added 10,900 net jobs in 2005, reaching a total of 276,400 jobs, according to Florida Cybercities 2007, a recent report by the American Electronics Association using the most current state data available.
With a 4 percent growth rate in tech jobs, Florida was the second fastest growing “cyberstate” in 2005, and the fourth largest overall. Miami-Fort Lauderdale was the state’s largest technology hub, employing some 75,300 tech industry workers, followed by Tampa-St. Petersburg (55,900 jobs), Orlando (42,600), Palm Bay-Melbourne (20,900), and Jacksonville (18,200).
“This report may surprise a lot of people around the country who do not think of Florida as a high-tech state,” said Maryann Fiala, executive director of AeA’s Florida Council in a September press release. “In fact, many people in Florida may not realize that the state employs more tech workers than every state but California, Texas and New York.”
Fiala added that Florida’s high-tech economy is diffused across the state.
“Nine of the state’s top 10 metropolitan areas added jobs in 2005,” she said. “This benefits Florida’s economy greatly, as tech industry jobs pay, on average, 70 percent more than the state’s average private sector wage.”
Florida’s diverse technology sector ranges from the aerospace industry, centered on Cape Canaveral and the “Space Coast,” to a growing optics, laser and simulation training cluster in the Orlando area. In addition, South Florida, known as the “iCoast” has a long heritage in computer hardware, software applications, telecommunications and other IT fields.
Wired magazine named Orlando one of the “Top 10 Tech Towns” and one of the “Top 10 Places to Get Your Geek On” — rankings based on factors as diverse as proximity to top-ranked engineering schools to Circuit City stores per capita.
Led by the steady growth of Scripps Florida in Palm Beach County, the state has emerged as one of the top sites for biomedical research and development. Site Selection magazine recently rated Florida 7th in the nation as a life science R&D location among site selection consultants and real estate executives.
In recent years, Florida has also attracted other leading bioscience research facilities, including Torrey Pines Institute for Molecular Studies in St. Lucie County and the Burnham Institute for Medical Research in Orlando.
Leading universities and colleges are also investing in biotech research, including the University of Miami’s new Clinical Research Institute in Miami and Florida Atlantic University’s Centers of Excellence in Biomedical and Marine Biotechnology.
“Throughout South Florida, the biotech corridor will grow and create a solid foundation of high-wage jobs,” said real estate analyst Brad Hunter, director, South Florida region, Metrostudy in Boca Raton. “This will be a long-term process that will enhance the value of both commercial and residential properties in the region.”
RETIREES
Florida remains a powerful magnet
Like many Florida Realtors, Alison Anderson recognizes the state’s appeal to retirees.
“Retired people come to Florida for more than just golf and warm weather,” said Anderson, a broker-associate with Amerivest Realty, Naples. “Florida provides an excellent quality of life for the money. Retirees know a bargain when they see one.”
As the aging baby boom generation moves into retirement years, Florida remains a prime destination for active adults, according to real estate professionals around the state.
“We’re seeing signs of growing demand for homes in our market – especially from the Baby Boomers,” said Nancy Riley, a broker with Coldwell Banker Residential Real Estate in Pinellas County and 2007 president of the Florida Association of Realtors. “More boomers are turning 60 every year and a substantial number are looking to buy in Florida.”
According to the U.S. Census Bureau, there are 76 million members of the baby boomers generation born between 1946 and 1964. As of 2007, the boomers range in age from 61 to 43 and comprise nearly 28 percent of the adult U.S. population. If only 5 percent of the boomers eventually retire to Florida, that alone would add 3.8 million new residents.
“We are in for a retiree boom and we are in the right place for it,” said Patricia Osborne, a sales associate with Prudential Tropical Realty’s Port Richey office. Looking at 2006 Census statistics, Osborne said 10.6 percent of the U.S. population will reach retirement age in the next decade.
“That’s nearly 32 million people who are age 55-65 right now,” she said. “Because of our weather, the cost of living and the services already in place, we will continue to attract retirees.”
Karen K. Ashley, a sales associate with Watson Realty in Jacksonville, notes that the flow of retirees benefits many different sectors of the state’s housing market, from luxury second homes to modestly priced residences.
“It’s important to avoid stereotyping today’s ‘seniors’ into one category because the needs and desires of one generation can be completely different from another,” she said. “Those born in the G.I. generation (1901-1924) may be looking more at assisted living or age-restricted communities. On the other hand, the baby boomers can be looking to simply downsize into something smaller with less maintenance, while remaining active and close to family and friends.”
JOBS
New job creation will accelerate in Florida next year, as the state’s increasingly diverse economy continues to outperform the nation as a whole in terms of labor outlook.
“Our projections indicate employment growth will pick up in 2008 as we put 2007 behind,” said Sean Snaith, director, Institute for Economic Competitiveness, University of Central Florida, Orlando. “While the U.S. economy slows, Florida continues to grow. Some of the state’s major metro areas, including Orlando, Tampa Bay and Jacksonville, will be at the top of the list in terms of employment growth through 2010.”
The institute’s figures show Florida will end this year with a 1.7 percent increase in new jobs, slightly above the U.S. average of 1.4 percent. In 2008, Florida will see a distinct pickup in economic activity with a 2.1 percent job increase – nearly double the 1.2 percent projected for the U.S.
For the 12-month period ending in July, Florida’s economy added approximately 184,000 new jobs, with the strongest growth occurring in the professional and business services sector. State labor statistics indicate Florida’s total non-agricultural employment rose to nearly 8.1 million in July 2007, compared with 7.8 million in July 2006.
Economist Hank Fishkind, president, Fishkind and Associates in Orlando, agrees that Florida’s job market is fundamentally strong. “Outside of the construction industry, Florida is generating a significant number of new jobs, particularly in leisure and hospitality, healthcare, trade and education.”
With a growing consumer market, an expanding talent pool, a supportive government and a strong asset base, Florida offers an attractive environment for business growth. The state had 12 cities named to Economy.com’s Business Vitality Index – more than double the number of leading cities in any other state.
In addition, Forbes magazine named 11 Florida metro areas “best places for business and careers,” based on criteria such as cost of doing business, job growth and educational attainment.
For a third consecutive year, Florida metropolitan areas dominated the Milken Institute/Greenstreet Partners 2007 “Best Performing Cities Index,” which looks at five-year and one-year job growth, as well as other factors.
Ranked first on the list was Ocala, followed by Orlando-Kissimmee (No. 5), Naples-Marco Island (6), Cape Coral-Fort Myers (13) and Sarasota-Bradenton (14). Ten other Florida cities ranked in the top 55 of the 200 largest U.S. metro areas surveyed.
In a separate survey, the Fort Lauderdale-Miami-Miami Beach metro area ranked No. 1 in the nation on the Kauffman Index of Entrepreneurial Activity, an annual study that measures business startup activity across the United States.