A Comprehensive Market Report for the Homebuilding and Land Development Industries in Southwest Florida
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© LSI MARKET TRENDS 4TH QUARTER 2019 A COMPREHENSIVE MARKET REPORT FOR THE HOMEBUILDING AND LAND DEVELOPMENT INDUSTRIES IN SOUTHWEST FLORIDA PRESENTED BY NELSON TAYLOR, MRICS, MSRE 6810 International Center Blvd. Fort Myers, FL 33912 www.LSIcompanies.com 239.489.4066 Need a Custom Report or Specific Project Evaluation? LSI Companies, Inc., has one of the most comprehensive and effectively staffed research departments in the region. We provide the most extensive property and market strategy reports available. Whether you need data to support a decision, or an expert evaluation from some of the most experienced land and commercial brokers in the market, you’ll see why LSI Companies is more than just dirt. Contact us to learn more: [email protected] | 239-489-4066 www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 2 Table of Contents Executive Summary 4 Socioeconomic Overview 5 Population 5 Airport Traffic 10 Age Distribution 13 School Enrollments 15 FGCU Enrollment 17 Household Income 18 Employment 21 Migration 26 Housing Overview Collier County Permits 30 Lee County Permits 35 Charlotte County Permits 52 Total Combined Permits 56 MLS Sales Trends 57 Mortgage Trends 63 Cape Coral and Lehigh Acres Lot Sales Trends 69 Notable Transactions 70 Construction Material Costs 76 General Limiting Conditions 78 www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 3 Executive Summary “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” – Benjamin Graham As we close out 2019 and focus on expectations in 2020, our past gives little credibility to where we are heading. Economic data continues to be positive with GDP continuing to expand and consumer confidence up. If borrowing costs remain low, inflation remains in check and wages continue to grow, 2020 should be another upbeat year. Following the data and proper reasoning should continue to produce quality investment results, as the above quote from the father of value investing suggests. Regionally, each of the three counties are experiencing an unemployment rate at or below 3.0% while the number of jobs continues to grow. Airport activity is at all-time highs bringing tourists dollars to our market pushing our unemployment rates to all-time lows. Tourist season is in full swing and will likely keep employment numbers strong over the next six months keeping growth in that area steady. Texas and Florida continue to lead the charge in residential permit activity for the country. Overall in Southwest Florida, permit activity has deaccelerated with issuances totaling 15,910 over the last 12-months closing out 2019, down from the 17,600 issued in the 2018 calendar year. Brisk apartment development will continue in 2020 regardless of slowing absorption as many of the recently purchased sites already have construction loan commitments. Look for a slowing of secondary sites for apartment developments as more national developers continue the focus in more robust growth areas of Southwest Florida. As LSI Companies prepares to move forward, the forecast for single-family permit activity should remain at near term levels. On your lot builds continue to dominate the local market area albeit national homebuilders have targeted sites in which new communities can be delivered with competing price points. The multi-family sector will continue to affect permit projections as they pull in chunk numbers and skew growth perception. Primary home demand from full time residents will likely remain strong in the more affordable areas such as Cape Coral, Golden Gate Estates, Lehigh Acres and Charlotte County as a whole. Baby Boomer retirees will also continue to fuel demand for new housing. Here at LSI Companies, we track numerous economic indicators which contributes to our market insight and advisement of clients. This report is a summary of those indicators and their effect moving forward. LSI Companies presents the facts and allows the reader to decide where the market is heading, like a “choose your own adventure” novel. So, we encourage the reader to explore these facts along with LSI Companies; since we have our own ideas of what the future holds, and wisdom born from years of experience navigating change. www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 4 Socioeconomic Conditions Population Southwest Florida continues to be one of the fastest growing areas in the nation. Growth is attributed to in-migration mostly from Northeastern and Midwestern states. However, foreign migration and intrastate migration are also significant factors for growth. U.S. Census Population Estimates, released on April 19, 2019, showing the recent growth can be seen in the graph below. The data highlights population estimates as of July 1st each year through 2018. It shows Southwest Florida continuing to experience significant gains in population with a 1.91% gain (or 24,708 people) in 2018 over 2017 for Collier, Lee, and Charlotte Counties combined. This is three times the national population growth rate (0.62%) and 24% higher than Florida’s population growth rate (1.54%) over the same period. The population trends for all three counties can be seen below. Collier, Lee & Charlotte Populations 754,610 775,000 739,506 699,530 725,000 659,920 675,000 620,454 722,386 677,361 582,678 625,000 644,243 575,000 522,431 610,984 555,029 525,000 443,903 475,000 478,889 425,000 372,345 356,107 375,000 339,065 322,595 312,621 378,488 347,326 365,345 325,000 332,277 275,490 316,641 296,021 275,000 181,537 254,080 184,998 225,000 177,722 159,867 162,749 168,075 142,229 150,123 157,755 157,099 160,467 175,000 125,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: US Census Collier Lee Charlotte 2019 U.S. Census Population Estimates at the county level are scheduled to be released in mid-2020. www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 5 The Florida Department of Highway Safety and Motor Vehicles (DHSMV) collects data and conducts research in order to provide lawmakers, partners and stakeholders, the media, and citizens with important facts and valuable information related to public safety and motor services. The following charts illustrate the growth in population by tracking the number of licensed drivers (Age 15+) in conjunction with registered vehicles within the Southwest Florida market area. Collier County Licensed Drivers & Autos/Pickups Registered 310,000 301,441 300,000 295,178 297,708 290,000 285,848 290,959 277,352 280,000 285,291 268,619 270,000 275,351 262,517 262,597 261,773 260,466 257,398 259,098 260,000 263,865 250,000 255,009 240,000 246,464 247,021 243,281 241,784 240,983 230,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: DHSMV Vehicles Dr ivers Lee County Licensed Drivers & Autos/Pickups Registered 605,000 578,528 585,000 566,040 565,000 546,993 539,923 545,000 529,294 527,279 525,000 511,287 513,693 505,000 497,983 495,287 488,132 487,875 488,110 487,642 491,485 485,000 471,792 465,000 455,687 439,214 439,829 441,260 445,000 431,050 430,593 425,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: DHSMV Vehicles Dr ivers www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 6 Charlotte County Licensed Drivers & Autos/Pickups Registered 160,000 154,434 155,000 151,703 150,000 147,495 143,640 145,000 138,132 137,968 139,018 140,000 136,437 142,651 135,118 135,493 135,900 139,987 135,000 137,649 130,000 132,547 125,000 127,112 120,000 123,343 121,585 121,155 121,026 120,304 119,964 115,000 110,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: DHSMV Vehicles Dr ivers Collier, Lee & Charlotte Licensed Drivers Total 1,050,000 4.00% 3.41% 3.32% 1,025,000 3.16% 3.50% 1,000,000 3.00% 2.50% 975,000 2.12% 2.50% 950,000 2.00% 925,000 1.17% 1.50% 900,000 0.67% 1.00% 875,000 0.50% -0.13% 850,000 -0.29% 0.00% -0.55% 825,000 -0.50% 800,000 -1.00% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: DHSMV Dr ivers Annual % Change www.LSIcompanies.com | [email protected] | 239.489.4066 © 2020 LSI Companies, Inc. All Rights Reserved. Duplication of this report is prohibited. 7 The University of Florida’s Bureau of Economic and Business Research (BEBR) released their updated population projections through 2045 in April of 2019, which can be seen below for each county. Lee County’s population is expected to grow 38.5% from 2018 (U.S. Census) to 2045 (BEBR), which is the fourth highest percentage gain for any county in the state of Florida with a current population of 350,000 residents or more. Only Orange, Lake and Osceola County have higher projected percentage increase.