been unable to travel overseas or take cruises which left many not only valuing home ownership more in general, but also looking for that “getaway” here in the states with Florida capturing a lot of that traf- fic. As a result, single family homes have been in extremely high demand for vacation rentals as buyers and institutional investors (who account for 20% of all sales right now across most markets) see the yield return potential given that other investment vehicles like US Treasuries have tanked and commercial real estate quickly became unappealing thanks to massive shutdowns. TAX BENEFITS Let’s not forget the many tax ben - efits of living here in Florida such as having no state income tax (1 of only 7 states) which means Social Security retirement benefits, pension income, and income from an IRA or a 401(k) are all untaxed. There’s also no estate or inheritance tax saving families a considerable amount of money after loved ones pass. Bot- tom line, your retirement accounts will go a lot further and it makes financial sense to live in Florida. INTEREST RATES On 15 separate occasions in 2020 we’ve broken all-time lows while bottoming out at 2.67%. Even though rates have bumped up a bit, they still remain historically low and are one of the many accelerants of the current market. With inflationary pressure mounting, some fear a drop in mortgage bonds which could have an adverse effect on interest rates causing them to rise. HOMESTEAD TAX EXEMPTION Primary residents enjoy the benefit of a reduced taxable value, on top of protections capping any tax assess-
a result. New construction is our direct source to new supply of homes and their ongoing trends are always a good indication of what lies ahead. SUPPLY/DISTRIBUTION CHAIN & PRICING Given the nature of this past year with mass economic shutdowns and rising material costs across the board, inflation and supply chain issues continue to be an obstacle to economic recovery. Appliances, lumber, roofing & plumbing materi - als, have all taken longer to procure, and significantly more expensive than what it was pre-pandemic. We are seeing the added cost to new construction homes ($24k on aver- age) and on remodels as a result. It’s estimated that the price of steel mill products has jumped 22% in the last 3 months alone. SOUTHWEST FLORIDA INTERNA- TIONAL AIRPORT (RSW) RSW Currently ranks #1 out of 50 airports in the US and has recovered 60% of its pre-pandemic traffic… more than any other airport. Con- struction continues on a new $80 million airport traffic control tow - er and the plans to build the $280 million 200,000 square foot terminal expansion will be bid this month, per Ben Siegel the Executive Director for the Lee County Port Authority. This would certainly indicate expected growth and future optimism here in Southwest Florida. Also, the addition of new non-stop routes into RSW from the west coast and Texas are fueling travel to the region. IS THEREACORRECTION COMING? Although it’s hard to say with absolute certainty, especially given the nature of this past year, but the
ment increases at 3% per year vs 10% for non-homestead owners. Further- more, per the “Save Our Homes” pro- vision, any accrued savings over time up to $500,000 can be picked up and moved into a new homestead proper- ty which is considered “Portability”. We’re certainly seeing a shift in use as more people are making Florida their home-base and flocking north during the summer months, thus the term “snowbirds”. COMMERCIAL MARKET With the rise of remote working and concern for health and well-be- ing of employees, expect more of a “hybrid-type” model for many com- panies going forward. Shared flex spaces are expected to be an area of growth while we might see some polarization between high-quality/ adaptable buildings vs those outdat- ed/less flexible. It’s still too early to tell but it’s no secret that online shopping has forced downward pres- sure on brick and mortar retail space and hotels have suffered as well. According to the National Associ- ation of Realtors, Southwest Florida was ranked as the #1 commercial market in the US in 2020, more specifically Cape Coral and Fort Myers. This shows that investors are comfortable making moves here in Florida which is a big boost for the local economy, thus helping provide more jobs. NEW CONSTRUCTION Since the bubble burst 12 years ago, homebuilders have remained cautiously optimistic and as a result built only half as many homes over the past decade leaving us short on new inventory. We have officially hit a bottleneck point where our market cannot keep up with the current rate of demand thus maintaining an upward pressure on pricing as
58 | think realty magazine :: january – february 2022
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