From the Desk of Brian Andrus…
Greetings,
What should someone apply to BOTH residential and commercial markets? Local expertise and experience. One should use it when becoming engaged in either market in our area.
There are factors that affect every deal, and every deal is different. I oversee a lot of transactions myself and from our associates, and I learn something from each one.
One can talk about it (media, associates, etc.) as it is interesting. But getting a deal actually DONE and DONE WELL requires evaluation of a number of factors. Having long local experience and expertise in our area, I still take each property in a new unit of time. Price increases/decreases, construction quality, construction costs, repair costs, etc. differ in our own unique marketplace. We are in a vibrant and growing area and the market changes regularly. All the while we continue to grow with 800+ new additions daily to the Florida population.
Here are some residential real estate highlights:
• There starts to be a bit more inventory, and then that disappears through sales. The demand exists and the supply lacks. What’s up? The problem, as you likely already know, is many potential sellers don’t want to sell and thus end up becoming challenged when looking for a new place. It also may be the seller does not want to give up a low-interest-rate loan.
• I checked with a local broker today and found a 6.75% interest rate on a $700,000 mortgage. That is for a 30-year amortized loan. If you amortize less (such as 15, 20, or 25 years) the interest rate goes down, but the payment goes up.
• In June 2023, 16.3% of homes in Florida sold below list price. This is down 18.9% so far for the year. People are starting to more realistically price properties.
• Although it depends upon the information source, the current average U.S. home price is about $416,000. In Florida, it is an average price of about $377,000. In Pinellas County, the average is around $393,000.
Commercial highlights include the following (national trends and percentages):
• Overall Commercial Real Estate investment slowed volume-wise, decreasing 57% year-over-year in the first quarter of 2023.
• Rising interest rates, low rent growth, and the banking turmoil/tightness have contributed to a slowed investment volume. This is a generality, as well-located properties in decent shape are hard to locate and are earning higher sold prices.
• Those who have cash continue to invest via all-cash transactions. These often are the winning bidders on a desirable property versus those who are dependent upon getting a loan.
• Multifamily investment is strong but is down from peak 2021 growth. Why? There is a lot less inventory, interest rates are up and rent growth has leveled out to a large extent. Multifamily saw rent growth increase by 2.5% over one year, the lowest growth level since early 2021.
• The Industrial market is down from past peak performance but remains strong. Industrial rent growth increased by 10.3% year-over-year, while warehouse prices increased by 11.7%. Why? More demand than supply.
• Office demand remains low amidst ongoing headwinds. Other office markets experienced a flight to quality as investors vie for Class A properties and avoid Class C properties. Office rent saw lower growth at 0.9%, as demand remained low and vacancies reached new highs. This is changing.
• Retail saw 3.8% rent growth over the last 12 months. Rents from strip centers rose at 4.5%, the second highest pace within the retail sector, falling only behind neighborhood centers. This is after there was a fall-off last year.
That’s it for some highlights. We wish you continued success in your endeavors. Let us know if we can help regarding your residential or commercial real estate needs. Whether it is us or someone else regarding your real estate, it is clearly in your best interest to work with someone who has considerable local experience and expertise – the more the better.
Best Regards,
Brian Andrus
Broker/Owner/Past President of the Florida Gulfcoast Commercial Assn of Realtors
Stonebridge Real Estate Integrity is Everything | Andrus Development Group
33 N Garden Avenue | Suite 120 | Clearwater, Florida 33755 | www.StonebridgeRealtors.com
Cell 727.244.7470 | Office 727.443.5000 | Brian@andrusbroker.com