2019 Market Outlook

Jeff Tumbarello

Director SWFL REIA

Broker/Owner Steelbridge Realty LLC

• Data from MLS (exported 1/14/2019 9:26 AM) and public records.

• Trended with Microsoft excel.

• Unless otherwise stated, charts contain all Residential assets.

What Market Are We in Today?

** Each cycle varies in depth, duration and intensity. No two cycles are ever alike. That is true 50 percent of 100 percent of the time.

Market conditions could be different for various niches, different locations, and different users. Therefore, you first need to identify exactly what you mean by “the market.”

• The Commercial market?

– Retail. – Office. – Industrial.

• The Residential housing market? – Resale. – New Construction.

• The Rental market? – SFR. – Multifamily.

Dow Jones Industrial Average (^DJI) for December 2018

Lets talk about the December 2018 Stock Market.

• In my opinion the stock market correcting was three things: – Wall Street traders are/were reallocating for a cyclical

bear market. • They did this because of Fed Bank rate hikes.

• When the prime lending rate breaks 5.5%, we generally have a recession in 9 to 18 months.

• Our leverage structure as a result of the aftermath of 2008 is different than previous cycles.

– High Frequency trading gone wild as a result.

– The Plunge Protection Team Gone wild as a result.

Year over year metrics 2017 versus 2018

2017 2018 DIFF

Sales Volume $5,584,071,334 $6,164,000,697 10.39%

Sales Counts 19,453 20,649 6.15%

Average Price $287,055 $298,513 3.99%

Median Price $219,998 $227,900 3.59%

Year over year metrics December 2017 versus December 2018

2017 2018 DIFF

Volume $449,669,822 $415,682,106 -7.56%

Counts 1,650 1,336 -19.03%

Average $272,527 $311,139 14.17%

Median $218,000 $230,000 5.50%

Sales by Year Built 2017 Versus 2018

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2017 2018

Sales by Year Built Dec 2017 Versus Dec 2018

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2017 2018

Sales Count Patterns

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Jan Feb March April May June July August Sept Oct Nov Dec

2018 2017

Bubbles of activity 500K and below.

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Bubbles of Sales Activity Lee County Resi

2018 Lee Cnty 2017 Lee Cnty

Bubbles of activity 500K and below. December Only

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Bubbles of Sales Activity Lee County Resi

2018 Lee Cnty Dec 2017 Lee Cnty Dec

By City By City % Difference YOY % Difference YOY

Sales Volume Sales Counts Average Price

St. James City 19.76% 19.35% 0.34%

Sanibel 23.66% 15.09% 7.44%

Punta Gorda 18.51% 14.29% 3.70%

North Fort Myers 10.61% 9.74% 0.79%

Miromar Lakes 20.27% 22.54% -1.85%

Lehigh Acres 9.81% 0.47% 9.29%

Fort Myers Beach 3.98% 7.53% -3.30%

Fort Myers 11.33% 7.05% 3.99%

Estero 14.89% 12.25% 2.35%

Captiva 8.01% -14.10% 25.75%

Cape Coral 7.28% 3.71% 3.44%

Bonita Springs 4.40% 5.52% -1.06%

Bokeelia 1.84% -0.89% 2.76%

Alva 37.11% 28.03% 7.09%

By City December VS

December % Difference YOY % Difference YOY

Volume Counts Average Price

St. James City -0.51% 0.00% -0.51%

Sanibel -10.31% -20.83% 13.29%

Punta Gorda -4.08% 11.11% -13.68%

North Fort Myers -17.00% -28.87% 16.68%

Miromar Lakes -18.96% 40.00% -42.11%

Lehigh Acres -15.79% -18.54% 3.37%

Fort Myers Beach 21.64% 23.53% -1.53%

Fort Myers -16.59% -19.54% 3.67%

Estero 15.48% -11.54% 30.54%

Captiva -30.60% -50.00% 38.79%

Cape Coral -25.50% -28.85% 4.70%

Bonita Springs 49.96% 5.98% 41.49%

Bokeelia 45.72% 10.00% 32.47%

Alva 70.63% 20.00% 42.19%

What else is going on?

Pricing Since 2001

$0

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$100,000

$150,000

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$250,000

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$400,000

Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Lee Avg Price

Since 2009

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Lee Avg Price Since 2009

Since 2015

$200,000

$220,000

$240,000

$260,000

$280,000

$300,000

$320,000

$340,000

Lee Average Price Since 2015

Sales Counts by Property Type

2017 2018 DIFF

Single Family 12,519 13,295 6.20%

Villa Attached 811 884 9.00%

Low Rise (1-3) 3,466 3,643 5.11%

Mid Rise (4-7) 709 778 9.73%

Townhouse 742 738 -0.54%

High Rise (8+) 522 522 0.00%

Manufactured 587 702 19.59%

Pricing by Property Type

Average Price 2017 Average Price 2018 Difference

Single Family $319,728 $335,470 4.92%

Villa Attached $207,076 $222,212 7.31%

Low Rise (1-3) $206,005 $209,948 1.91%

Mid Rise (4-7) $266,539 $263,556 -1.12%

Townhouse $187,575 $195,226 4.08%

High Rise (8+) $512,338 $526,010 2.67%

Manufactured $106,816 $110,881 3.81%

Cash Sales Percentage

2017 2018 DIFF

Number of cash sales

7,988 8,306 3.98%

Cash % 41.06% 40.22% -2.04%

Distressed Sales Percentage

2017 2018 DIFF

REO 630 454 -27.94%

REO % 3.24% 2.20% -32.11%

SS 100 79 -21.00%

SS % 0.51% 0.38% -25.58%

Distressed 3.75% 2.58% -31.22%

Waterfront/Gulf Access Sales Percentage

2017 2018 DIFF

Gulf Access Sales Counts

2764 2797 1.19%

Gulf Access % of sales counts

14.21% 13.55% -4.67%

Waterfront Sales Counts

6620 7028 6.16%

Waterfront % of sales counts

34.03% 34.04% 0.01%

Supply and Demand

As of 1/16/2019 @2:31 PM we have 6.11 months Inventory for Lee County

Residential Assets listed in the MLS

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Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Lee Cnty Avg Price Lee Cnty Sales Counts

Inventory by City

City Active listings # of Sales in last

12 months 12 month burn

rate Number of

months inventory

Lehigh Acres 746 2143 179 4

Cape Coral 2613 5846 487 5

Fort Myers 3144 6651 554 6

Alva 80 164 14 6

North Fort Myers 531 1073 89 6

Estero 807 1425 119 7

Bokeelia 67 108 9 7

Matlacha 21 32 3 8

St. James City 125 179 15 8

Inventory by City

City active # annual sales Monthly absorb Months

Inventory

Bonita Springs 1199 1710 143 8

Punta Gorda 51 72 6 9

Fort Myers Beach 363 465 39 9

Miromar Lakes 74 80 7 11

Sanibel 343 347 29 12

Matlacha Isles 8 5 0 19

Captiva 111 65 5 20

Useppa Island 17 5 0 41

Inventory by Zip Code

Postal Code Active listings

annual sales counts monthly absorption

Months of inventory

33972 104 350 29 4

33971 151 504 42 4

33976 114 335 28 4

33907 159 447 37 4

33905 224 615 51 4

33991 302 828 69 4

33974 121 330 28 4

33909 322 878 73 4

Inventory by Zip Code

Postal Code Active listings

annual sales counts monthly absorption

Months of inventory

33973 22 58 5 5

33990 266 693 58 5

33967 219 526 44 5

33936 236 563 47 5

33919 462 1102 92 5

33917 286 631 53 5

33966 167 366 31 5

33914 726 1517 126 6

33928 512 1052 88 6

Inventory by Zip Code

Postal Code Active listings

annual sales counts monthly absorption

Months of inventory

33913 478 970 81 6

33901 194 388 32 6

33904 558 1103 92 6

33912 355 661 55 6

33993 468 861 72 7

33903 248 447 37 7

33916 220 389 32 7

34135 832 1389 116 7

34135 832 1389 116 7

Inventory by Zip Code

Postal Code Active listings

annual sales counts monthly absorption

Months of inventory

33908 816 1355 113 7

33922 67 109 9 7

33956 126 179 15 8

33955 51 72 6 9

33931 366 468 39 9

34134 569 581 48 12

33957 341 346 29 12

34119 24 24 2 12

34110 29 24 2 15

Distressed Market Update

• The negative price pressure from the last cycle was driven by distressed sales.

Lee County Florida

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mortgage Related Lis Pendens

Mortgage Related Lis Pendens

In Closing.

A word of caution about listening to Real Estate Agents speak of their production.

• Most agents can not see past their own financial status.

• There are a lot of agents right now. These are only Residential sales in the MLS. – 7,088 Agents had at least a closing in Lee County for

2018. – 4,932 Agents had at least 2 closings in Lee County for

2018. – 1,143 Agents had at least 10 closings in Lee County for

2018. – 345 Agents had at least 20 closings in Lee County for

2018.

Trend to Watch 2018 was pretty awesome across the mean.

3 months had more than 2,000 sales! That may be hard to beat.

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Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

Sales Counts 2018

New Construction outside of MLS or do we lack inventory?

• There are 153 homes with a year built 2017 and newer, that are active as of 1/16/2019.

• 843 have sold in the last 365 days.

• That is 2.17 months inventory.

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SFR Permits Cape Coral

Outlook for Retiree Market

3,000,000

3,200,000

3,400,000

3,600,000

3,800,000

4,000,000

4,200,000

4,400,000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

62 Year olds 70 Year Olds 66 Year Olds

Should the market correct.

• Most corrections are fueled and amplified by unsustainable debt.

Commercial Debt levels

Residential Debt Levels

Closing Thoughts.

• 2018 was a great year from a statistical perspective. • It may be tough just by the sheer numbers to beat that year. • In 2016, all of the economic talking heads were calling for a recession 2

years out. In 2018 they were saying the same thing. At some point, it has to happen.

• We 2 different economic trends happening in real estate. The Baby Boomer generation retirement. The Millenial/Gen Z coming of age. Each will have different and specific impacts on the market.

• This market does not share the same modalities of the 2006 crash. If and when a correction happens, it will be different in intensity and duration. Using the last correction as a playbook can be problematic.

• December 2018 was pretty awful from a statistical point of view, January 2019 appears to be on the same path from a year over year perspective, Is this a trend or just the economy playing wait and see with the Macro pictures trials and tribulations?

Questions? 239 694 3300