Europe

The Florida Panhandle A Terrific Place To Invest In Real Estate

We have vacationed in Northwest Florida, Walton County in particular, for twenty years – and love it! The best, uncrowded beaches in the country – reasonable cost – great restaurants – terrific beach properties to lease! So we are very enthusiastic about the area – but what about the economic realities of investing in Florida — at this time?

Northwest Florida has a vibrant and steady tourist business, with low unemployment. The brand new Panama City International Airport, projected to open in January 2010, will make the area quickly accessible from virtually anywhere in the United States and Europe. It is expected to provide a major boost to the areas economy, and should increase demand for real estate.

We believe the Florida panhandle is a solid place to buy real estate, and that real estate values, though flat right now (January 2008) are likely to move sharply upward, especially for oceanfront and Gulf view properties. But thats our view! Here are some other folks opinions on the area.

CNN Money.com (Feb. 12, 2007) highlighted Panama City, Florida as the #1 place to buy real estate in the United States.

American Express says that the Florida panhandle is one of its Top Ten tourist destinations in the United States. The Florida panhandle is second only to the Orlando area in Florida tourism. Northwest Florida beaches are among the best in the world, attracting over seven million visitors annually – more than any other East Coast beach area.

Real estate professionals in Walton County say that prices are less than during the peak year of 2005. But they are expecting closings to increase, as more deals become available. Many residences are priced below the cost to build. “If you are looking for a property to hold on to for the next five years, the time to purchase is now. We are still very undervalued compared to other regions of Florida.”

The St. Joe Company (NYSE:JOE), whose corporate headquarters are in Jacksonville, FL, is the largest landowner in the Florida panhandle, owning some 718,000 acres of development land – half of it less than ten miles of the coast. St. Joe has been a big player in the area for a long time, beginning as a timber company but realizing in recent decades that the value of its holdings was far greater as investment property. So now theyre in the vacation home development business, with a great deal of activity centered on Walton County.

According to St. Joe’s Investor Relations Department the long term outlook for Florida panhandle real estate is particularly upbeat.

Long-term economic and population trends continue to favor Florida, whose economy is fundamentally solid and diversified. The state’s population is forecasted to increase by three-fourths (to 28.6 million) by 2030. Its demographic growth rate regularly outperforms that of the rest of the United States: since 1970, the State’s yearly rate of growth has outpaced the national average by 100%. By 2010 Florida will pass New York to take its place as the nation’s third most populous state.

Florida’s solid, diversified economy regularly outperforms the U.S. mean, with a burgeoning tourism industry, plenty of high-tech jobs and a strong high-tech manufacturing sector. A large military presence with a number of active and expanding bases provides stability to the region’s economy. Within the Florida panhandle, Walton County has one of the lowest unemployment rates in Florida and the U.S.

Florida is the commercial center of the Americas. Geographic location, as well as economic and political stability, places Florida at the heart of trade and business throughout the region. Vacation property sales to retirees remain robust, and Florida is a favorite spot for retirement relocation.

Northwest Floridas beaches are the states second favorite tourist destination, behind only Orlando. They draw over seven million visitors each year, more than any other stretch of beach in the eastern United States.

Beaches in the Florida panhandle rate as some of the most beautiful in the country and the world. Beaches in Walton, Bay and Gulf Counties have been selected for the number one ranking by Dr. Stephen P. Leatherman, an authority on beach quality and author of America’s Best Beaches.

Northwest Florida enjoys a very favorable climate, with mild winters, lots of sunshine and clear days. Northwest Florida is located in U.S. Climate Zone 8, the same climate zone as renowned vacation areas such as Hilton Head (SC), Amelia Island (FL), Kiawah Island (SC) and St. Simons and Sea Island (GA). Floridas beauty and variety of landscape is well-known. The Emerald Coast has a distinct geography, culture and cuisine that is very different from Miami or Orlando.

Northwest Florida entertains approximately seven million visitors annually. According to Visit Florida, the states tourism and visitor agency, 33 percent of these visitors are from households with incomes over $75,000 and 16 percent are from households with incomes over $100,000.

The number of private resort developments in the Florida panhandle is increasing. At communities like Seaside, Rosemary Beach, WaterColor and WaterSound Beach, oceanfront lots have sold for $40,000 per linear beachfront foot to prosperous families who have chosen Northwest Florida.

The new Panama City airport now under construction is expected to be in operation by February 2010. It will be a major international airport, thus opening the Emerald Coast to easy access from both coasts, the Midwest, Canada and Europe. Previously, access to the area by air was limited to regional airports.

Economists expect that the new airport will become a strong economic development engine for the area. Throughout history airports have a powerful track record for increasing economic development activity.

The new Panama City airport will be the first major airport built in the United States in almost fifteen years. As a large-scale greenfield airport location, it offers unique opportunities and unmatched flexibility for companies dependent on air transport and logistics infrastructure.
Examples of how airport construction stimulates local economies may be seen in Huntsville, AL, Savannah, GA, Jacksonville, FL, Fort Myers, FL and Northwest Arkansas. All of these airports have stimulated significant adjacent development.

The State of Florida projects that over its first decade, the new airport is likely to create 8,000 new jobs and at completion a total of 13,000 jobs. An important comparison is the construction of the new Southwest Regional Airport in the Ft. Myers/Naples area in 1983, which had a tremendous impact on real estate values. Since the airport opened in 1983, total residential real estate values in the region have increased an average of 11 percent annually.

Fortune Magazine (October 14, 2007) highlighted the St. Joe Company as one of the Ten Best stocks for 2008, citing the long-term potential of the company and its development business situated in the Florida panhandle. The article says: “When Florida real estate does rebound, investors will be kicking themselves for not recognizing today’s $28 stock price for St. Joe Co (JOE) — Florida’s largest private landowner — as a rare opportunity.”

In the quickly shifting economic climate, it is important to research and ask questions before making any investment choice. Yet the truth is that the Florida panhandle is a rarity, with a delightful climate and stunningly beautiful, mostly empty beaches. As you sit on the pristine, white sand with your feet in the emerald clear Gulf water, with pelicans and gulls flying overhead and dolphins cruising by you can see that there are some very important intangibles here. Northwest Florida is a very special place – and they’re not creating any more beach property!

Mortgage Fixed Interest Rates Cheaper than Variable Rates

Due to the worsening global economic crisis, the Reserve Bank of Australia has decided to cut the standard cash rate further. This scenario leads to the decreasing percentage of home lenders who avail of mortgage with fixed interest rates.

As the Europe debt situation continually affects the world market, interest rates for a 3-year mortgage deal has become lesser having an average rate of 0.6% compared to the standard variable rate which evidently is much cheaper.

From the earlier months, fixed interest rates were prompted to be more expensive compared to loans with variable rates. This has created a notion that the RBA will regularly cut rates to protect Australia against the threatening economic malaise that currently takes place globally. The Reserve Bank of Australia has taken a cash rate of 4.25% interest last November and December 2011.

The Central Bank’s minutes during the monetary meeting held last December 20, 2011 has decided to make a close call noting that the Reserve Bank of Australia noticed that the domestic economy has performed a bit stronger compared to the case over the last six months. The Central bank has also warned that Europe already has experienced consistent downside and has increased the risk of unstable economy affecting many nations worldwide, including Australia.

Most home lenders would base the fixed loan pricing from the movement of money on the market rather than the cash rate released by RBA. However, truth is the rates in the money market are still influenced by the policy settings of the bank.

As of December 20, Ratecity – a comparison group – found out that home loan clients are paying an average rate of 6.29% to cover a 3-year fixed mortgage, rather than the 6.89% standard variable rate. Last June, the standard variable rate was 7.30%, higher than the 7.42% rates that fixed loans offer to clients.

On the same month, the 3-year fixed loans has actually dropped by 1.13% points, just after the turn down in the Bank Bill Swap rate, which was considered the key standard of the money on the market that financial institutions will use to set the pricing of loans. At the same period, the official cash rate of the RBA has decreased into 0.50% point.

There were also signs that deadlines on fixed rates were slowing down along with the 3-year loans, decreasing from 6.41% (December 1), and 6.29% (December 20). The rates were smaller compared to the 0.25% point reduction in the official cash rate of the RBA last December 6.

Ratecity Chief Executive Damian Smith has pointed out that fixed rates are decreasing and there is a lesser chance for clients to see 3-year fixed rates going down at the same interest rates that they already have. Rates will continually come down at a much decreased rate compared to what they have from the previous 6 months.

At the end of the RBA minutes, economists has concluded that RBA would cut down rates over again on its next scheduled Monetary meeting, which will be on this coming February 2012.

Ben Jarman, JPMorgan Economist said that they view the current policy setting as appropriate, so the RBA would be on its feet from the worsening economic outlook. Jarman added that they expect more bad news from both local and international economy, which will permit RBA to ease over the line.

Bill Evans, Westpac Chief economist considered the case as significantly strong for a 0.25% point easing by the Reserve Bank of Australia on February, and will be followed by another quarterly reduction on May, making a cash rate decrease of 3.75%.

Evans further said that the RBA monetary policy meeting has concentrated on the European situation, which shows the RBA board members are completely concerned.

According to Paul Bloxham, HSBC Chief Economist, the minutes of the monetary policy meeting demonstrates that the global economic risk has greatly affected the rate cuts as the RBA is seeking to apply insurance for protection on the threatening global growth, which the board now expects. RBA is confident on their inflation outlook and this only means that they will cut rates on the first quarter of 2012.