Pasco County is in a rapidly growing region, so more growth is expected, a national real estate expert said last week at an event organized by the Central Pasco Association of Realtors.
Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors, made his first visit to Pasco County, to address more than 150 real estate professionals gathered at Pasco-Hernando State College’s Porter Campus at Wiregrass Ranch in Wesley Chapel.
Yun anticipates moderate growth in national home sales, forecasting 3 percent to 4 percent in most parts of the country, and slightly greater increases in Florida.
There are a number of factors contributing to Florida’s strong real estate market, and Pasco County, in particular, Yun said.
Florida continues to attract foreign investors, Yun said.
Canadians come to the Sunshine state to escape the cold. British are very dominant in purchasing property in Orlando. Germans like areas such as Fort Myers and Naples. And, Latin Americans are attracted to the Miami area.
“Many Puerto Rican residents are seeking better opportunities here in Florida,” he added.
“Greater Tampa, including Pasco, has not had a large global exposure, but you are getting more of it,” Yun said.
He predicts Florida will continue to see an acceleration in population growth, especially in light of recent changes to the tax code.
“The end result, it is an additional tax burden for people living in the New England states, Connecticut, New Jersey and New York,” he said.
“People will be seeking: ‘How do I lessen some of the burden?’ One way to do that is coming to Florida,” Yun said.
He also noted that the current housing recovery is on healthy footing.
The nation certainly doesn’t want what happened in 2005, when the housing market was hot: “Anyone with a heartbeat was somehow able to get a mortgage and buy a home,” he said.
“I’m fairly confident that this increase will not lead to another decline because the fundamental backdrop is different. We’re in a job-creating environment,” he said.
And, perhaps most importantly, underwriting standards are tough.
Much higher credit scores are required to get a mortgage, he said, noting that, if anything, underwriting standards may be too stringent, especially for people who are self-employed.
“Home sales are rising, but in a very moderate way,” he said. “We are nowhere back to the 2005 ‘easy lending’ days.
“There is no bubble, even with the strong price recovery, because we don’t have that easy subprime lending,” Yun said.
However, he noted that rising home prices are beginning to hurt affordability.
“We hope that price increases do not become 8 percent, 10 percent every year. Your clients will diminish, if this was to continue.
“The ideal solution in the future, in the upcoming years, price growth to match similarly to wage and income growth,” he said, noting a 3 percent to 4 percent annual price increase would be ideal.
A shortage of inventory is having a negative impact, he added.
“Contract signing appears to be flattening out,” he said.
Buyers want more choices when they are shopping for a home, Yun said.
“You need more inventory,” he said.
“We just don’t have enough inventory because homebuilders have not been building aggressively, or even (a) normal amount, for 10 straight years,” Yun said.
Yun said efforts are being made to provide regulatory relief to community banks, which have been a primary lending source for small homebuilders.
“For many years in America, most of the homebuilding was done by Mr. and Mrs. Jones Homebuilding Company. They’d do about 10 homes a year. They’re not in the game today. They have challenges entering the game,” Yun said, noting that’s because of regulatory restraints on small community banks.
Yun also urges local governments to do their part to get more housing permits approved.
When more houses are built, prices moderate and consumers have more options.
When prices moderate, “middle class families who want to own a home have a better chance to own a home,” he said.
Yun noted there’s a huge mismatch between the percentage of increase in home prices and percentage of increase in incomes.
“Home prices, ideally, should rise in relation to people’s income,” Yun said.
Published May 16, 2018