Economists share insights at NABOR’s annual economic summit in Naples –

Three economists shared their outlook and forecasts on the region’s real estate market and the economy in general at the 10th Annual Economic Summit of the Naples Regional Real Estate Commission.

Market statistics and forecasts were released Thursday afternoon at the Hilton in Naples by Lawrence Yuen, chief economist for the National Association of Realtors. Brad O’Connor, chief economist at the Florida Real Estate Association. Elliot Eisenberg, chief of Graphs and Laughs his economist and former senior his economist at the National Association of Homebuilders.

A certain level of uncertainty always creates background noise when it comes to the economy, but inflation-driven uncertainty has become a common theme. “The stock market has been volatile this year and hasn’t gone in the same direction as last year,” O’Connor said. “It gives people a pause. How fast interest rates are rising and concerns about the future of the housing market. Everything is always a little bit uncertain, which makes people pause.”

Yun said that despite rising mortgage rates, those considering a rent increase are the first to realize that buying a home is a great financial investment. Consumers are hesitant to buy homes under construction because supply issues make it difficult to predict completion dates. But consumers are buying homes that have already been built.

Yun encourages builders to take risks and build their homes. “We are short of housing, build more,” he said. “Once you’re done, you’re going to sell it, and you’re going to sell it at a profit.”

Eisenberg doesn’t think the economy is going through a recession yet, but Yun thinks it is, despite continued job growth. He said the region’s employment growth has been particularly strong over the past two decades.

“In 2000, less than 100,000 people had jobs in the Naples area,” he said. “There are more jobs now compared to the pre-COVID situation. Compared to 2000, total employment is now up by about 60,000 or 65,000. The relative size of this regional market When you think about it, this is a very notable growth, which is why so many people are moving to the area that house prices have risen.”

O’Connor said overall job growth and population growth in the region continue to be impressive. “There will always be upward pressure on the property market as more people need to be accommodated,” he said.

house prices, inventories

Demand for homes from out-of-state buyers has declined, but is still well above pre-pandemic levels, O’Connor said. -19 is not the concentrated number experienced when moving the needle. “It’s decreased a little bit, so it’s a little out of sight from there. It doesn’t mean it’s gone at all,” he said.

O’Connor says there’s still a lot of potential in the Sunshine State housing market. “Florida is still a hot place. Reading articles in state media, people are still talking about how they want to go to Florida,” he said, noting that international buyers are also returning to some extent. pointed out.

“[Housing]inventory levels are very low. We have no inventory,” Yun said. “Yes, inventory levels are up, but they are still well below normal despite recent increases.”

Yun said that despite rising mortgage rates, home prices will not fall significantly in the domestic market due to a lack of housing inventory. “Stocks are very tight today so don’t expect prices to go down,” he said. “I don’t think we’ll even see a decline in the Naples region. But if there is any decline, it will be very modest and temporary.”

In addition to rising rents nationwide for macroeconomic reasons, migrants to Florida are putting more pressure on rents, pushing them higher, O’Connor said.

“As of July, the median selling price in Florida has actually gone up 40% in the last two years,” he said, adding that those elevated prices are a huge boost for New Yorkers, the largest group of people moving here. “So your typical Floridian is thinking, ‘Oh my God, California, New York, Boston, or anywhere, now it’s 40% more, and this is still cheap.’ So you are still seeing activity from these parts of the country.”

rate of up

According to O’Connor, the sharp rise in interest rates was a shock not because it reached that level, but because it happened within about two months. “It was part of the shock that none of us expected. I think some people are sitting on the sidelines because they’re trying to understand how they’re going to react. It will not rise.”

Rising mortgage payments aren’t just affecting those at risk of buying or renting, O’Connor said. It impacts everyone interested in financing any kind of real estate.”

The slowdown here is more pronounced than elsewhere in the state. “Again, a lot of the rest of the state has markets that are much more affordable than this market, so you’ll probably see more of that change,” O’Connor said. “The luxury market is kind of the first market to really slow down. .

Once the COVID lockdowns were lifted, home sales surged beyond their pre-COVID days until rising mortgage rates became a really big deal, Yoon said. Two years of remarkable performance before a steady decline Why is it declining We all know Your clients are completely stunned by the impact of rising mortgage rates ‘ he said.

While sparing buyers who have sold expensive homes in markets such as New York and Chicago and come to the Florida market with all their cash, mortgage borrowers are still a sizeable part of the market, and mortgage rates have risen sharply. Yun said the rise is causing sales to decline. .

“For pending contracts, you are down more than the rest of the country. You are down 34% compared to other countries down about 20%,” he said. I was.

inflation rate

Eisenberg, known as the “bowtie economist,” said rising inflation created an economic dilemma. “Right now, food inflation is down, energy inflation is down, but not general economy-wide inflation. If it stays at , we’re in trouble and the Fed will hike rates.

The federal interest rate is currently 2.375%. To combat hyperinflation, the Federal Reserve will meet two more times by the end of the year to raise key interest rates by at least half a percentage point, and possibly by three-quarters of a percentage point. The most likely scenario, according to Eisenberg, is that the Fed raises to 2.875% this month and as high as 3.375% by Dec. 31.

“And they are talking about further rate hikes. It all depends on inflation.” “No one knows what will happen. If inflation drops as quickly as the next few months, like an anvil being pushed off a cliff, there will be no recession. Come down, Hallelujah.

“But under normal circumstances, I think inflation has fallen too slowly and the Fed continues to raise rates, pushing us into recession. I think that will happen sometime next year.”

No one knows the future, but Florida is a dynamic and growing state, so the outlook looks good, Eisenberg said. “They say Florida looks pretty good because immigration coming north is good, high income people move here, taxes are low, the weather is good, housing prices are cheap. Pretty good.”

Eisenberg believes the economy as a whole is weakening, but he doesn’t believe the country is still in recession despite negative growth in the first two quarters of the year. No. We’ve had lousy growth, two quarters of negative growth, and we’re going to end up close to zero over the course of the year.”

Eisenberg is more worried about next year, depending on what happens in the final quarter of the year. “The Fed keeps raising rates. How much they raise depends on inflation. What about inflation? I wanted to know,” he said.

As far as the Federal Reserve is concerned, inflation is the number one public enemy, and unemployment is the closely related public enemy number two, Eisenberg said. “We have to see inflation calm down. We have to see unemployment go up before the Federal Reserve starts to feel happy and gives us happy moonlight.”

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