Florida Real Estate Outlook For 2006

**Central Florida Real Estate led by hot commercial sector

Throughout 2005, commercial developers and real estate investors in the Orlando area have seen the same kind of impressive price increases as home owners across Florida. One of the hottest segments of the market is the sale of apartments. Two of the Orlando area’s largest apartment brokerages have done more than $2 billion in sales this year. It is expected that 20,000 apartments have changed hands and will be sold as condos in Orlando in 2005.

One apartment complex developed by the Disney Co. recently sold to a developer planning to turn them into condos. The sale price to the developer was $402,000 per unit.

Other types of commercial buildings also were making impressive gains. The value of industrial buildings rose more than 15 percent in 2005. Space has gone from $55 a square foot in 2003, to more than $70 in 2005.

Two bank buildings in downtown Orlando were in high demand among buyers. The AmSouth Bank drew 47 offers and sold for $ 50.4 million. And the Wachovia Bank went for $30 million in 2002 and sold for $55.35 million in 2005. That represents an increase of 85 percent in two years.

**Tampa Bay area office market very hot

Led by very high employment growth, the Tampa Bay office market is expected to be one of the best performing in the entire country for 2006.

In a Wall Street Journal article, the Tampa Bay area was ranked as the fourth most hopeful office market in the country for 2006. The others on the list included New York-Manhattan, Orange County, California, and Riverside-San Bernardino, California.

The Tampa Bay area has one of the highest employment growth rates in the country (3.7 percent), and most of these jobs are in office-using positions. In 2005 office sales volume rose 35 percent with a median price of $116 per square foot.

**Jacksonville area not slowing down

Real estate activity in the Jacksonville area of Florida has been booming for a number of years. And it shows no signs of slowing down. According to Ray Rodriguez, a real estate analyst with the Real Estate Strategy Center of North Florida, “We’re OK. We will let some steam off, but the bubble here won?t burst anytime soon. It will slow down a little bit and we will get back to reality. Speculative buying is slowing down a little bit due to rising interest rates.”

New condo developments are going ahead at a brisk pace, with available, affordable land being the major deciding factor determining where new developments are taking place. On the beach, much of the development is focused on “refurbishing” older buildings. Small duplexes are being bought up, torn down, and replaced by multi-floor condominiums.

As in the rest of Florida, the housing market is complex and unpredictable. It is being fed by a steady influx of new residents and a booming job and commercial sector. People are moving in from the Northeast, from the Midwest, and from Latin America.

**Effects of hurricane season on real estate activity short lived

The Florida hurricane season of 2005 was one of the worst on record. In the southern parts of the state, home sales declined in October slightly, primarily due to insurance issues. Most insurers stopped issuing new policies as Hurricane Wilma approached the state. And some mortgage lenders required reinspections before mortgage money was released.

But in the northern parts of the state, in Jacksonville, where the hurricanes were not much of an issue, real estate agents saw a 38 percent increase in the number of homes sold.

Median home prices continued to climb across the state. In October of 2005 the median home price for all of Florida was $ 241,000 — 28% higher than $188,800 in October, 2004. In October of 2000 the median price was $116,100.

For comparison sake, median prices in some other states in September were: California – $543,980, New York – $275,000, North Carolina – $208,097. This shows that Florida prices have actually been undervalued and are now approaching national averages.

**Miami area experts predict 2006 real estate trends

According to a South Florida Sun-Sentinel poll of real estate experts in the South Florida area, real estate may cool off a bit in 2006, but will generally remain very active.

Richard Bass of Keller Williams Realty in Boca Raton expects a bit of a slowdown in the residential market in the first part of 2006. “Overall, I expect prices to level off for a while and then pick right back up where they left off.” Gradually rising interest rates will have a bit of a dampening effect, but they will “continue to be low enough for the market to expand.”

David Dweck with Re/Max Advantage Plus in Boca Raton thinks the lingering effects of Hurricane Wilma will start to take their toll in 2006. He says “some homeowners and investors will get clobbered by the increase in taxes, insurance and potentially higher interest rates.” He expects it to become more of a buyer’s market “and we will return to 10 to 15 percent price appreciation rates.”

Jeff Kahn with Florida Beach Inc. of Fort Lauderdale agrees the market will gradually turn from a stong sellers’ market to a more balanced one. “I believe that in 2006 home prices will begin to recede. Listing prices will become more realistic.”

David Levin, a real estate industry consultant based in Delray Beach is more blunt: “In 2006, residential unit sales and prices will decrease 10 percent from peak 2005 levels.”

About the Author: Rick Hendershot publishes Linknet News | For Travel news and info see Travel USA | For Commercial Real Estate Loans see Commercial Real Estate Guide.