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In real estate, a new report by Cary, N.C.-based research firm Local Market Monitor predicts double-digit growth in both home prices and rents for both Naples-Marco Island and Cape Coral-Fort Myers in 2014.
This partly will be due to inflation, which the firm’s president Ingo Winzer expects will rise from current levels to 3 or 4 percent “fairly soon.” “Inflation won’t be rampant, but you can’t keep printing money forever,” he said. But other market forces will also be at play, propelling Southwest Florida to faster home price appreciation and rent growth, the report said.
For Naples-Marco Island, the firm predicts home values will accelerate by 12 percent over the next 12 months, on par with expected statewide increases but a faster pace than the national pace of 8.1 percent. It’s also faster than the area’s average home price growth of 8 percent, to $268,525, over the last 12 months.
The report forecasts 10 percent price appreciation in both 2015 and 2016.
Though home prices in the metro area have been on the upswing for months, they’re still 19 percent undervalued due to the metro area’s high incomes, Winzer said.
A 1.5 percent increase in population has swelled demand, drawn partly by gains in jobs, particularly in tourism, health care and retail. Over the past 12 months, jobs have grown by 7.6 percent, compared to a national increase of 1.7 percent. Increase in demand also is expected to push up rents by 17 percent over the next three years, to an average of $1,273 a month.
“It’s booming for us,” said June Prophet, rental division regional manager for Berkshire Hathaway Home Services in Naples, adding demand is strong for both annual and seasonal rentals in Southwest Florida. In Cape Coral-Fort Myers, the report forecast home prices will rise by 12 percent over the next 12 months. Then price growth will moderate to 9 percent in 2015 and 8 percent in 2016.
Currently, average home prices are $176,560, up 12 percent from a year earlier. Yet demand remains weak, resulting in homes that are underpriced by 26 percent, the report said. Job growth in the area has lagged Naples-Marco Island at 2.6 percent, but still outpaces the national increase of 1.7 percent.
Population is growing, too, up 2.1 percent last year, though that is far below the peak level of 2005, when a flood of newcomers pushed it up 5 percent year over year.
The report also predicted Cape Coral-Fort Myers rents will rise 13 percent over the next three years, to an average of $1,148 a month.
