Global Wealth and the State of Florida’s Residential Markets
On the same day that I read that there are 11 million households worldwide with incomes of $1 million or more, and 4.7 million of them are in the U.S., I reviewed the Census Bureau’s report that Florida leads the Nation in the number of vacant homes; 1.6 million to be accurate, or 18% of the total residential market here in the Sunshine State.
Putting these two observations into the melting pot I call my brain, the flood of thoughts that follow rapidly format a structure of more questions.
My first and foremost question is: What does this mean for Nassau County, where sales have been up recently. In order to get to a clearer picture I discard all the useless additional information that comes with a Census Bureau report, such as the fact that it is a rise of 63% of the past 10 years, because that number does not take into consideration all the shifts and changes we have witnessed in those 10 years.
So I do my own research that clarifies that if 18% vacancy represents 1.6 million homes, Florida has a total inventory of 8,888,888 homes. Even though there is some dispute about the size of Florida’s population currently, I’ll insert a high 19 million for now, although other numbers have the population decreased to 16 million in recent years. At 19 million however this means that we have a home available for every 2.14 residents in this state. The average family size in the US is according to the same Census Bureau 3.14. Using “simple” mathematics, this would calculate and translate, that 6,050,955 houses in Florida would suffice to put a roof over every state resident’s head, given the Nation’s average family size.
This now would leave a vacancy number of 2,837,933 (8,888,888-/-6,050,955 – just in case you ask) homes or almost 32% of the total inventory, or equal to the numbers seen around Naples. Yes, of course I’m mocking the statistics used to build a story of general anxiety. General statistics are dangerous if you let them define your life’s decisions.
Statistics as in this case create misplaced attitudes;
• first it established a general picture that Florida as a whole is hurting more than other states,
• secondly it establishes that homes can be get at super bargain prices all over the State and have not reached bottom by a far stretch;
• thirdly it establishes that the mere thought of investing in Florida real estate across the board, should get you committed to a mental institution.
How else would you react to the following statements from “experts” in their ivory towers.
For example Celia Chen, a housing market analyst for Moody’s Analytics, is downbeat in her forecasts for Florida. Not only will prices fall another 11%, she said, but the bottom won’t hit until mid-2012, about a year later than the nation as a whole. Some metro areas won’t get back to their pre-recession peaks until long after the present owners are old and gray.
“If you’re buying in Florida for retirement,” said Ingo Winzer, a housing market analyst and founder of Local Market Monitor, “maybe you buy next year when prices will be near the bottom. If you’re buying for investment — don’t”, followed by another statement that shines in all its vagueness: “The housing recovery will take years, perhaps many years, to complete.”
Ms. Chen, with her exceptional crystal ball, doesn’t expect Naples, for example, to come all the way back until the late 2030s. Other Florida metro areas with a 20-year wait or longer include Punta Gorda, Palm Bay and North Port. Yet, asked who is buying, they all agree that the Rich are buying, essentially defying their earlier assessment, that buying for investment would be stupid.
The rich are not rich because they’re stupid. They buy because Florida is much more than just real estate; Florida is a lifestyle that has attracted 7 decades of population growth, before a Wall Street manufactured recession put an end to that and retirees with cheap mortgages had to move back home up north, followed by construction people that had no work anymore.
In those decades before the crash, construction and everything indirectly related from home improvement to gardening, to transportation etc. etc. became the leading employer. With construction way down, Florida caught much more of the recessionary misery than most other states. But Florida’s exceptional qualities in climate, infrastructural layout and population mix, will make the state recover and diversify long before the rest of the union has the answers to adjusting to a new paradigm of economics.
Something all of us here in Northeast Florida and Nassau and Duval Counties already know. The new Florida is up here, where the economy is already attractively diversified and we still enjoy the benefits that make Florida special.
And the wealthy of the world know that. You could have witnessed that two weeks ago when they came from all corners of the World to buy classic and antique vehicles at the Concours d’Elégance. The rich hate one thing more than taxes and that is cold and nasty weather. Guess what!