The Central Palm Beach County Chamber of Commerce luncheon on Thursday, March 8 at the Breakers West Country Club offered a “2018 Real Estate Forecast” with local real estate experts Jim Corbin and Karen Johnson as the keynote speakers.
A Realtor in South Florida for more than 40 years, Corbin specializes in residential real estate working for Illustrated Properties. He is a co-chair of the Multiple Listing Service — or MLS — Committee and is part of a strategic planning board for the MLS as well.
Corbin, who has lived in Wellington since the late 1970s, initially spoke of the fall and rise of the local housing market through the years.
Detailing the rapid rise of house pricing in 1990s and its following quick decrease, Corbin explained that the skyrocketing change of home pricing and buying during 2005 to 2007 did not entirely surprise him.
“I knew this [change in pricing] was not going to last forever,” Corbin said. “I know that what goes up must go down.”
One thing that did surprise him, though, was the increase in people’s investments in homes with the purpose of renovating and flipping, in order to profit from them.
“Anyone could look at that scenario and know that something was wrong,” he said. “The lending practices were [not what they are now] and because of the lack of income verification, residential communities were suffering from very terrible fraud.”
Corbin explained that, though the market is not back to the way it was before the bubble burst, it is two-thirds of the way there.
Measuring progress through housing starts, Corbin said that from 2012 through 2016, there were about 4,000 housing starts each year. In 2017, housing starts increased to about 5,000, signaling progressive improvement in the housing economy. Corbin added that, considering new nearby developments like Westlake, housing starts are predicted to increase significantly in 2018.
The reason for the increase in housing starts, according to Corbin, are because those who purchased homes when the housing market was low can now — since the market is getting better — sell them at a profit.
Corbin also explained that, between 2017 and 2018, short sales decreased by 63 percent and foreclosures went down 20 percent.
“Things are getting better,” he said. “Things are getting back to a more normal market.”
Comparing the change he foresees to a pendulum, Corbin said that as the community experienced a lack of housing in 2005 due to more people renting and investing, it is now going to experience an immense amount of housing emerging.
“Every bubble has an overcorrection, and the overcorrection is what is now happening,” he said. “The future market is looking steadier and healthier.”
Johnson moved on to discuss how the future looks on the commercial side of the real estate market.
Johnson has worked in commercial and residential real estate for 27 years. She works for Keller Williams Realty and is a director for the National Association of Realtors and was awarded the Commercial Realtor of the Year award in 2017.
Johnson noted Palm Beach County’s rapid population growth, which she highlighted as one of the most vital components of commercial real estate.
“Palm Beach is one of the fastest-growing metro areas, with its population predicted to reach 1.5 million within the next year. It is currently one of the top three places to move to,” Johnson explained.
The relationship between the area’s population growth and commercial real estate, she explained, is that as the population grows, the necessity for more services, buildings and commercial spaces grows as well. As people relocate to the Palm Beaches, they need places to work.
“We don’t have affordable workforce housing, which is a huge issue we have to focus on, because we need people to work and to be able to live near their work,” Johnson said.
She added that vacancy rates in Palm Beach County are currently lower than the American average. She explained the current vacancy issue in commercial buildings using apartment buildings as examples. Johnson compared a four-star apartment building to a three-star apartment building, showing that the four-star building has higher vacancy because it is unaffordable to many people who relocate to the area.
The issue deepens, Johnson said, when considering which areas of the county are currently building more commercial spaces. The areas that currently have the most commercial spaces under construction are not the typically affordable areas.
“We will have an absorption problem, since we will end up with an oversupply [in those areas],” she explained.
Johnson specified Greenacres as an area that could use more development in affordable housing, but has nothing currently under construction, while areas like Boca Raton do have current projects in the works.
On the other hand, Johnson said that retail is doing fairly well. She analyzed retail in businesses, malls and shopping centers, and found the vacancy rate to be low.
“We did have a dip of sales in retail in the past couple of years,” Johnson said. “However, our numbers are still very strong and steady.”
As far as industrial buildings, Johnson said that the county has a lot of work to do, but that demand is now growing.
“What we want to see is steady and healthy [growth],” Johnson said.
The Central Palm Beach County Chamber of Commerce will host an Afterhours Mixer at the Brass Monkey Sports Bar & Grill (7781 Lake Worth Road) on Wednesday, March 28 from 6 to 8 p.m. The next luncheon will focus on “Sports & Tourism,” featuring George Linley of the Palm Beach County Sports Commission and Jorge Pesquera of Discover the Palm Beaches, on Thursday, April 5 at 11:30 a.m. at the National Croquet Center (700 Florida Mango Road).
For more information about these upcoming events, visit www.cpbchamber.com.