Market Watch 2020: Thibaut, Grimes, Stouder agree on smooth market but differ on handling
Southwest Florida real estate market metrics point to smooth sailing in 2020, one expert said.
Another advised not be afraid of the recession boogeyman but to respect that one could be out there somewhere, someday.
And a middle speaker wanted the audience of about 1,100 brokers, citizens and elected officials on hand to be cautious. To not make the same mistakes leading up to the market bubble burst of 2006, even if the same warning signs aren’t in play right now.
The 21st annual News-Press Market presentation on the state of the area real estate market took place Tuesday night at Hertz Arena in Estero.
Randy Thibaut, CEO of LSI Companies, Denny Grimes, president of his team at Keller Williams Realty and Stan Stouder, founding partner of CRE Consultants, captured the trends of 2019 while looking ahead to 2020 and beyond.
A year ago, all three cautioned a recession could be on the horizon. At his separate Market Trends event, Thibaut called it the “small elephant in the room.”
Those concerns have all but disappeared. Permitting for single and multifamily homes and units fell in 2019 by about 18% from the previous year.
Still, the number of permits held steady at about 16,000, a number dwarfed by the gargantuan number of 44,000 in 2006, just before the Great Recession began with the big bust of just 3,000 permits in 2009.
“It’s a good, stable market,” Thibaut said. “Another big point is Southwest Florida is transitioning from the evolution to the revolution that’s occurring in our market.”
A revolution in housing is coming. Just as “unicorns” – billionaires under age 40 – revolutionized social media with Facebook, electric cars with Tesla and shopping with Amazon, similar disruptions are coming in housing, Thibaut said.
“Manufactured homes, cargo container homes, panelized homes,” Thibaut said, showing photographs of each type of home on the big screens behind him. The young entrepreneurs behind the companies that make these homes could do for housing what Facebook co-founder Mark Zuckerberg did for social media and Tesla founder Elon Musk did for the auto industry.
“This is a home built in two days,” Thibaut said, showing a photo of a paneled home. “It’s completely ready to roll. Waterproof, TV on the wall. There’s a huge demand for these. I’m not talking about your grandma’s trailer. I’m talking about hurricane proof for $150,000.”
During Thibaut’s presentation of about 30 minutes, he also noted the top-selling communities across the region.
In Collier County, it’s Ave Maria with 307 homes permitted and Naples Reserve with 239 homes permitted.
In Lee County, it’s The Place at Corkscrew with 255 homes and then Arborwood with 205.
In Charlotte County, it’s Heritage Landing with 152 homes off Burnt Store Road. And then boom: Babcock Ranch with 450 homes permitted.
“Whoa, whoa, whoa,” Thibaut said. “Boy, have they made me a believer, with 450 homes. It’s by far, the fastest-selling community in all of Southwest Florida. Who would have thunk it? This guy. Syd Kitson. He’s amazing. He’s a visionary. Four thousand people show up randomly to come to events at this community. Most of them don’t even live there. They come there because it’s an experience.
“Location, location, location is secondary to price and experience.”
Thibaut wrapped up his presentation on a high note.
“We should be celebrating this enthusiasm,” Thibaut said. “But keep this in mind. At 15,910 permits, we’re still around 2004 levels. We’re not at 44,000. We don’t have an opportunity for a big crash.”
Grimes talked about the positive trends in existing home sales – or resales – in the Fort Myers and Naples areas.
First he took the audience back in time, showing a slide of a DeLorean, like the one in the movie “Back to the Future,” to remind listeners how a grave situation was just starting to turn around in 2010 after four years of an ugly market in the region.
Back then he described Market Watch as a “who's left event,” instead of a “who's who” happening in Southwest Florida.
“It was really ugly,” he recalled. “However, my message was 'hang on.'”
Fast forward a decade and what a turnaround it has been for those who did hang on.
"We just finished the best year ever, and 2020 is going to be better," Grimes said.
At last year's Market Watch, Grimes warned of a downward shift in the Southwest Florida market that would get worse before it got better, but as it turned out, the big shift never came as he and other experts anticipated.
“The economy is roaring and I don't think anyone last year thought the economy would be as strong as it is now,” Grimes said.
Other reasons for a strong market last year? No major events, such as a Hurricane Irma in 2017, or a nasty breakout of red tide and blue-green algae in 2018, which impacted sales. Interest rates never spiked as feared.
However, Grimes warned the audience about getting too giddy. He cautioned that this may be “as good as it gets,” with danger signs of a market that may be overheating.
Think of the old proverb, “what goes up, must come down.”
“I'm going to do my best to control people's expectations and keep their feet on the ground, so we don't go into another bubble,” Grimes said. "The hangover is not worth the binge.”
When the bubble burst last time, Grimes said he “lost his shirt,” and he doesn't want anyone to go through that experience again.
To further drive his point home, he shared this quote by Cormac McCarthy: “Scars have the strange power to remind us that our past is real,” adding that he has scars of his own from the last recession.
Last year, existing single-family home sales in Lee County – or the Fort Myers area – grew nearly 4% over the year to 14,520. In Collier County – or the Naples area – they rose 10% to 5,524.
While those numbers aren't too alarming, what Grimes saw in January stirred angst.
In January, existing home sales rose 22% over the year in Lee. They were up 13% in Collier.
“Our market is picking up steam,” Grimes said. “Just be careful how loud you clap.”
Stouder’s stance hit the middle between Thibaut and Grimes in terms of excitement.
“I think there’s an irrational fear of a recession,” Stouder said. “I don’t know that it’s ever good to have an irrational fear. I think it’s good to have a healthy respect. When I look at the metrics, they tell us we’re in a sustained market.”
Stouder put the spotlight on three new hotel projects that will make downtown Fort Myers a more attractive place to stay for a Southwest Florida vacation. The Luminary is set to open in the fall with 243 rooms.
The Hampton Inn has just broken ground at the southwest corner of McGregor Boulevard and U.S. 41. It will have 111 rooms.
And a Holiday Inn, to be located near the Fort Myers library, will have 135 rooms, a restaurant and a pool.
“All of those are synergistic to sustain the convention center activity,” said Stouder, who applauded the City of Fort Myers with prioritizing these hotels, which represent some of the $400 million in projects coming out of the ground now.
“It’s so refreshing to have a municipality that values the private property owner and values its citizens,” he said.
Stouder advised attendees to be open-minded and fluid, to roll with the market as the unexpected arises. He showed the example of the Edison Mall land but not buildings selling for $33 million and Gartner buildings but not the land selling for $67 million.
“This is an example of people adjusting to what opportunity presents,” Stouder said. “We have to adapt to what’s happening. If you feel like a rainy day’s coming, get out of debt. I would encourage you to get out of debt as quickly as you possibly can.”
That said, “debt has never been less expensive." He said people can get a 15-year loan for under 4% interest. "That is incredibly cheap. I’d encourage you: Find. Find a property and invest in a property and take advantage of these low interest rates.”
To further encourage being fluid with the market, Stouder showed a clip from the late martial artist film star Bruce Lee.
“Empty your mind, be formless, shapeless — like water,” Lee said. “Now you put water in a cup, it becomes the cup; You put water into a bottle it becomes the bottle; You put it in a teapot it becomes the teapot. Now water can flow or it can crash. Be water, my friend.”