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More than 400 REALTORS®, real estate professionals and local leaders interested in the economic health of Collier County and its effect on the local real estate market attended, in person or virtually, the Naples Area Board of REALTORS® (NABOR®) 10th Annual Economic Summit, “The Naples Area Real Estate Market Outlook,” Thursday, September 8, 2022, at the Hilton Naples. Three leading economists provided qualitative insight into the factors affecting the economy and shared their analysis of a looming recession and its impact on home sales in the near future.

The data-filled hybrid event began with a welcome message from NABOR® President, Ryan Bleggi, followed by remarks from event sponsor, BJ Cottrell, who is Managing Partner of FIRPTA Group. Longtime Summit moderator Jeff Lytle set the tone for the day by assuring attendees they would hear answers to questions about the possibility of a recession and how certain economic factors might contribute to its influence. in the housing market.

First to take the stage was Dr. Brad O’Connor, Florida Realtors® Chief Economist and Head of its Industry Data and Analysis Department. O’Connor began his presentation with charts showing Collier County had the most home sales in 2021 compared to all other counties in Florida. But, in July 2022, O’Connor noted that home sales in the state were below 2018 levels. To allay concerns that a recession could derail future home sales in Florida, he assured the crowd that “there has never been a year without any home sales”.

O’Connor also pointed out that economic uncertainty fueled by a falling stock market and consumer price inflation is causing buyers to take a break from buying properties. However, he reminded the audience that “rates on a 30-year fixed mortgage are still lower today than they were in 2012.”

He went on to say, “The good news is that if you bought a home in Florida before the pandemic, your home value has increased dramatically, with home sales prices across Florida jumping 40% over the course of the pandemic. of the past two years. Half of the homes for sale in Florida today are listed at $380,000 or less, which is still a bargain for some buyers. New listings and closed sales have slowed, so inventory is flattening. However, even though new registrations have recently fallen, they are still expected to be better in 2022 than they were before the pandemic.

Presenting virtually, Dr. Lawrence Yun, the Chief Economist of the National Association of REALTORS® announced that “The Federal Reserve is on the verge of another big rate hike [75 basis points]then another after the midterm elections [50 basis points]and another hike in early 2023 [50 basis points]. If consumer price inflation persists through the end of 2023, the Fed could cut rates and not be as aggressive.

Yun announced that “if we go into a recession, it will be the most bizarre recession ever because we are also in labor shortage.” Yun’s presentation slides showed Florida had 4.8% more people with jobs today compared to March 2020 (pre-COVID), and job creation in Naples, Immokalee, and Marco Island, increased by 65,000 jobs since 2000.

Yun also posted stats that show U.S. pending sales are down due to the impact of mortgage rates. “The mortgage rate was 3% last year and now it’s knocking at 6% today,” Yun said. “Pending sales are down 24% nationwide, but in Collier they’re down 34%.”

Could the 2006 bubble happen again? Yun replied, “No. We don’t have an oversupply situation or subprime mortgages today.

“When the Federal Reserve raises rates in a few weeks, mortgage rates may not change much because banks have already adjusted rates to anticipate future actions,” Yun added. “Rates will bounce back around 6 or 6.2%, but probably not much more.”

Yun went on to say that for our area, half of the houses are sold at list price or above, but the other half needed a price concession to get a contract. “If a house stays on the market for more than three months, the average discount is 11%, so it’s important to price the house correctly upfront.”

Yun concluded by saying, “If your buyers tell you that they think house prices are going to crash, tell them ‘no, they won’t because we don’t have the inventory!’ Even with the recent increases, it is still well below the normal condition. In 2006, there were 4 million dwellings available; today, there are only 1 million available on the market. And the prices should not drop.

Last to feature at the summit was Dr. Elliot Eisenberg, a national economist and renowned speaker who was the former senior economist for the National Association of Home Builders. Dr. Eisenberg, whose presentation style injects humor into an often mundane topic, began by stating that he believed “we’re not in a recession yet. But we will get there.

He shared, “We’re in a basically decent economy that’s creating a ton of jobs. What is happening is that the GDP is starting to ebb because the bottom half of the population is running out of money. During COVID, there was a household savings rate of 13%. But now people are spending those savings.

Eisenberg thinks our salaries aren’t keeping up with inflation. “Even if we get a 6% salary increase, inflation is 8%. And there are a lot of headwinds our economy has to deal with. His presentation slides showed statistics from the University of Michigan that revealed consumer sentiment was lower than it had been for the past 20 years. In response, he said, “Small business confidence is also struggling because it’s basically households, the stock market is bad, and inflation is bad. This is not the kind of environment in which we want to strengthen fiscal policy. Usually you want to raise interest rates when the economy is booming.

Eisenberg said a lingering issue is that “China has not lifted its COVID zero tolerance policy and continues to shut down major cities when infections are present. This has an impact on imports and foreign markets. But overall, property inflation is a problem that will go away in America. Corporate profits are significant, but they will not persist. Fiscal policy is now deeply contractual. The US government has spent historic sums to support the economy during the pandemic. Its withdrawal will create an exceptionally large fiscal cliff. This is the most massive contract tax policy since World War II.

In conclusion, Eisenberg said, “GDP used to grow 3% a year. Today, GDP has weakened to 2% growth per year. Most recessions occur within two years of the Fed’s first rate hike. The Fed’s first rate hike recently took place in March, but it’s raising rates so quickly that I think a recession will hit in April. But when it ends will depend on when we get inflation under control.

The Economic Summit is a collaborative effort of the NABOR® Board of Directors, the Media Relations Committee and the Economic Summit Task Force under the leadership of Brenda Fioretti, Chair of the Economic Summit Committee.

NABOR® would like to thank its event sponsor The FIRPTA Group, technology sponsor Supra, program sponsor Buckeye Lending Solutions, media sponsor SWF Home Inspections, reception sponsor Lacke Michigan Credit Union, as well as the sponsors of table: Discovery Village, DR Horton, Gulfshore Insurance, Keep Collier Beautiful, Law Offices of Sam Saad III, National Association of Hispanic Real Estate Professionals (NAHREP), Naples Moves Managers, Seagate and Women’s Council of REALTORS®.

NABOR® is located at 1455 Pine Ridge Road in Naples. For more information on the Economic Summit, contact Marcia Albert at (239) 597-1666.