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Wednesday, October 1, 2014

Home Sales BOOM on Horizon?

With 8,000 baby boomers expected to retire daily for the next several years in the U.S., Southwest Florida stands to benefit from a massive influx of home buyers, the chief economist of the National Association of Realtors believes.

Lawrence Yun said the baby boom influx will not be just from the U.S. states, because the phenomenon was not limited to America.

"After the war, servicemen came home and started having babies," Yun told an audience of 200 Wednesday at the annual Sarasota International Real Estate Conference.

"The same thing happened all over the world."

Already, half of all foreigners who buy real estate in Florida are retired.

In all, foreign buyers make up about 10% of the state's buyers, Yun noted, though locally that figure may be higher.

While German buyers tend to acquire property in Naples—partly because there's a direct flight from Dusseldorf to Southwest Florida International Airport outside Fort Myers—Sarasota attracts a more diverse international buyer, led by Canadians and residents from Great Britain, Yun said.

Chinese buyers may become a greater presence here, too, because that country's economy continues to "turn out millionaires right and left," Yun said. Economic growth there is roughly 8 to 9%annually, on par with America's growth in the 1950s.

"We have seen a surge of Chinese buyers coming into the U.S., primarily on the West Coast," Yun told the conference, which was sponsored by the Sarasota Association of Realtors' Global Business Council. "But they will begin to see that other parts of the country are attractive."

Yun said he expects interest rates to rise to 5% in 2015, but that the rate hike will likely have little effect on foreign buyers, because 80% pay cash for Florida homes.

Although the national real estate market has cooled after two years of recovery—the result of rising interest rates and low inventory—the Sarasota region remains strong.

Yun expects increases in the number of homes sold and the prices for which they sell, in part because a long period of "pent-up demand" has not yet been satisfied by home construction.

The market's "solid fundamentals," Yun said, will make this a multi-year recovery. Those fundamentals include a large number of cash purchases, larger down payments, better credit scores among buyers and an improving employment picture.

"Four of the next five years will be strong because of solid fundamentals," Yun said.

"The factors that support growth are evident in the Sarasota region, while the international market is always a wild card," he added. "There could be a sudden surge, there could be a steady trickle—it depends on situations globally with visas and what is happening in foreign economies. The economies are strong in Germany and the U.K.; people there have the cash necessary to come over here."

Source:  Herald-Tribune

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