After 36 years of selling real estate on the Space Coast, a local broker has seen the market temperature rise and fall … and it’s starting to get hot around here again. “Multiple offers are back,” the broker/owner said. “People are even bidding above the asking price. … I never expected to have multiple offers again in 2013. But it’s happening.”
With a number of big-name companies – Embraer, AAR Airlift and Northrop Grumman – either establishing or expanding operations in Melbourne, there will be a significant number of new families looking for housing in Brevard. On top of that, Taylor believes there are plenty of renters who are deciding it’s the right time to buy.
That kind of demand makes it a good occasion to be a seller in today’s market. However, it’s also a good time to be a buyer because there is a chance to get more home for less dollar.
Conditions Are Aligning
“What’s helpful now are the rates are so low, so a guy who could have bought a $100,000 house in 2001, today you could probably buy a $200,000 or $300,000 house because the rates are at 3 percent instead of 7, 8 or 9 percent.”
The problem – and there is a problem – is that while there is plenty of action in the marketplace, the inventory is shrinking from what was once a robust 10,000 offerings. At the end of March, the Melbourne Area Association of Realtors listed 1,927 active residential homes, 352 condominiums and 123 townhouses. That’s 2,402 available properties, which is not exactly a large stockpile.
If you’re on the fence about putting your house up for sale, now just might be the right time. “When [inventory] drops that much and you’ve still got the same normal demand, there’s nothing out there, so when something new hits the market, if it’s priced appropriately, it will sell.”
While there is nothing like a healthy residential real estate market to help create headlines and make life good for brokers, there are three other areas of business that can be affected as well: homebuilders, commercial real estate and commercial building. In fact, in many ways, they all go hand in hand.
New Construction, In More Ways than One
Chris Burton, president of Christopher Burton Luxury Homes, said he expects his company to build between 45-55 homes in 2013 with price points ranging between $500,000-$600,000 and upward into the millions. Historically, building 25-30 houses was considered a banner year.
“Having volumes right now that are exceeding the height of the market for us is obviously a refreshing change of pace and very exciting,” Burton said. “It’s a great market indicator. We’re never the least expensive in our category; we’re traditionally on the higher end of housing. For us to be having a banner year in terms of housing says a lot about the state of the market.”
While potential buyers may have to wait between 6-9 months for their new home to be built, Burton said changes to building and energy codes over the past five or six years have made it possible for his company to build properties that are not only more energy efficient, but markedly distinctive from what was being built back in 2007 or 2008. That’s especially important given that his market is also changing in terms of the kind of property that is drawing interest.
“Everything we’re doing – from design to styles … even above just the general code changes – is light years of difference,” he said. “People just live differently. I think they use their house differently now than they used to. Before, it was the big, formal monster houses. Now, they’re definitely a lot more homey and comfortable and people want to use every square inch of the house. We’re building more jewel boxes that are more efficient in terms of their size, but (are) more livable.”
Up Tick on the Commercial Side
While business may be booming on the residential side of things, life on the commercial end of the business is starting to look a little rosier, too. Lightle Beckner Robison (LBR), which deals strictly in commercial real estate, is coming off its best year ever and is on that same track.
Brian Lightle, a broker as well as company president, feels the market has “bottomed out” in terms of prices, with 2012 being the year to sell off a majority of bank-owned properties. The fact that Embraer, a Brazil-based jet builder, has chosen to locate in Melbourne is a sign of what kind of reputation Brevard County is building. Embraer’s 67,000 sq. ft. Engineering and Technology Center is expected to open in 2014 with an expectation of having 200 employees by the end of 2016.
“We’ve got a really good story to tell about what’s going on in Brevard County these days, and to me the biggest positive is why we’re different than the rest of the state of Florida,” Lightle commented. “It’s that high-tech aspect. We have the highest percentage of high-tech employment in the state . . . and that’s different. That’s what drives real growth. I think we’re definitely headed in the right direction.”
Jeff Robison, a principal owner in LBR, said commercial real estate prices have begun to increase 3-5 percent both nationally and locally. On top of that, companies like L.A. Fitness, Baer Furniture, Bass Pro Shops, Cheddar’s Casual Café, Bonefish Grill and Chipotle have either opened up locations or are in the process of coming to Brevard County. After all, the more people who live here … the more shopping options it pays to have.
“The number of retail tenants that are showing interest in our area speaks to what’s going on in the market,” Robison said. “The reason why I say that is groups of that caliber are very scientific. They’re not just willy-nilly going to say, ‘Oh that looks good, let me try it.’ Most of them have very complex software programs that they’re forecasting and programming.”
Although he has not seen any official research, Mike Williams, president of MH Williams Construction Group, said commercial building usually has a two-year lag behind residential building. “It’s a different cycle,” he explained. “When residential picks back up, more people buy homes, more people move here and then there’s going to be a bigger need for commercial construction. We’re on the verge of starting to pick up. … We’ve got a lot of potential work coming up.”
While retail and office building construction is starting to increase, the speculative work is still slow. Most buildings are for single-occupant businesses, though Williams did say his company is talking to a few clients about potentially building a place for themselves and a potential tenant.
“We keep telling people now is the time to build, before the prices start going up and getting expensive again,” Williams commented.
While the overall market is obviously getting stronger across the board, the question that must be answered is … How long will these good times last?
“In terms of sustainability, we anticipate we’re probably in for a 5- to 7-year good time,” Burton said. “I’m not anticipating it being a boon the entire time, but just getting back to any kind of normalcy in the market is incredibly encouraging for any of us who went through the down times.”