The discussion, which took place at the University of South
The panelists included State Sen. Mike Bennett; Bill Earl, an environmental and land-use attorney and board member of Sarasota Citizens for Sensible Growth; Brad Edmondson, a consultant from Ithaca, N.Y., who recently completed a demographic study of our region; Jack McCabe, of Deerfield Beach’s McCabe Research and Consulting, who has discussed the
DAVID KLEMENT: Mr. Edmondson, could you give us a demographic snapshot of the next five years?
BRAD EDMONDSON: It’s easy to forget when there are so many homes in foreclosure and the economy seems to be in freefall that the fundamental economic supply for this area, which is retirees, is about to grow explosively. By 2025, there will be about 25 million more people aged 60 to 74 than there are now.
PAM DANIEL: How many of those boomers can we expect to come to Sarasota-Manatee?
EDMONDSON: The vast majority of them will not. It’s a demographic chestnut that people in their 60s don’t tend to move when they retire. Usually, only the most affluent people move across state lines when they retire. Over the last 50 years, only about one household out of 20 in their 60s has moved across state lines. But there are 78 million baby boomers. One out of 20 means about 1.25 million a year will be moving to new states for the next 20 years. And in the 2000 census, about 19 percent of the households that did move across state lines in their 60s moved to
KLEMENT: How many people is that?
EDMONDSON: Over the last 20 years, there’s been a net gain of about 6,000 to 8,000 taxpayers a year to Sarasota-Bradenton. Every year this flood of retirement wealth washes over the economy and makes everybody happy. And when the flood doesn’t come, like maybe it’s not coming this year, everybody gets a little panicky.
KLEMENT: Should we be panicked?
EDMONDSON: I think the chances are pretty good that Sarasota-Bradenton, once this correction is over, will hit its stride again and continue to attract people. And retirees are not everybody who moves to
DANIEL: Any other demographic changes?
EDMONDSON: Over the next five years, you’re going to see very rapid racial and ethnic diversification of your workers. Already, 37 percent of the children in the
DANIEL: Mr. McCabe, could you give us a snapshot of the real estate market?
JACK McCABE: You’ve seen restaurant closings, bankruptcies of lenders and furniture makers, and departure of marine firms to the
DANIEL: When will we close out the last inning?
McCABE: The next two or three years are going to be pretty ugly. I think we’re going to see prices on real estate drop in
PAT NEAL: If the prices go up 60 percent in three years and then go down 25 percent, that’s still up.
McCABE: A normal appreciating real estate market is six to eight percent a year. And what you had here in
McCABE: A lot of people whose homes are being foreclosed on and are losing their jobs aren’t saying hallelujah.
NEAL: The market is the market is the market.
DANIEL: Are there any investors left in this market?
McCABE: The Europeans, the Canadians and the vulture buyers. The Europeans and the Canadians because the favorable exchange rate gives them a 30 to 40 percent advantage walking in the door. The vulture buyers because they know the prices are going to come down. They’re looking at a very worst case scenario in
KLEMENT: You say prices are going to drop another 10 to 15 percent this year and then again in 2009. Why?
MC CABE: Because of the historically high amount of foreclosures. When those get resold, they’re going to be sold at substantially lower prices to investors. That’s going to become the gold standard appraisers have to use, and that’s going to drive prices down. You’re also going to have vulture buyers buying many of those condo units and the homes that are sitting empty. Most will be bought from the lenders at significantly lower prices. That will also hit the assessor’s record. And out at Lakewood Ranch and other markets, they’re giving away all types of buyers’ incentives that have not been showing up in the sales contracts. They’ve been done by separate addendum and take place after the closing. Those inflate the value because the seller is getting far less than the sales value by giving these concessions. Appraisers are now under the microscope because of all the shenanigans in the last five years, and they’re going to have to start considering these things, and that is also going to lower price values. On top of everything else, in this marketplace, you take an asking price and offer 30 percent less and start from there. These factors are all going to have an effect on pushing prices down.
KLEMENT: Sen. Bennett, what role do high taxes and insurance costs have in this economic slowdown?
SEN. MIKE BENNETT: Our property tax policy is out of whack. I do believe that fairness in property taxes would cause the market to come back. When we tried to pass legislation last year on insurance, we were told by the major insurance carriers that if we would increase that cap by $12 million, they would be able to bring down their insurance policies by an average of 24 percent. Remember, increasing the cap fund means we put you at risk. Every policy holder of every type of insurance in the state of
KLEMENT: Did it work?
BENNETT: Roughly 30 percent of the insurance companies lowered their rates, most by an average of 20 to 28 percent. But the major players, like State Farm, Allstate and
DANIEL: Mr. Earl, with growth at a virtual standstill, have you achieved the goals of CONA and Citizens for Sensible Growth?
BILL. EARL: We have to ask ourselves, why are
DANIEL: How so?
DANIEL: How else did local government contribute to the irrational real estate exuberance?
KLEMENT: Mr. Neal, as a developer, how do you see the market changing over the next five years, and how you plan to adapt to that market?
NEAL: I’ve got new homes under $200,000, real affordable housing—this is the time that the market can provide affordable housing. But looking ahead,
DANIEL: Many are saying that by putting all our eggs into the growth and real estate basket, we’ve made ourselves vulnerable to such downturns.
BENNETT: We’ve set all our policies to attract high-skill, high-paying jobs. And consequently, we have lost our marine industry, we’ve lost our manufacturing industry. We will spend millions of dollars to attract a few hundred jobs, but we won’t spend $10 to keep an industry here that’s employing thousands. Not everybody’s going to be a rocket scientist or a marine biologist or a biotech engineer. And we have to have our service industry. We should be asking how we can change our policies to take care of the jobs that are here, to provide more vocational education.
EDMONDSON: In a lot of places in the
NEAL: I wish, Brad, that you could find a way to change that for our future. But right now our industry is growth and real estate. And I just don’t think we have the infrastructure that more diversified areas do. We are a retirement state and we need to see our future within the parameters of what we’ve got.
KLEMENT: I keep reading that we have to accept that we’re becoming a high-cost state. It’s no longer going to be the retired auto worker from
EDMONDSON: Desirable resources that were once competed over by people in the
McCABE: We’re at a turning point. The two things that
DANIEL: Our region’s prosperity has come from being a beautiful place that people want to come to live in. But we’re also a very expensive place now. Given that, how realistic is it to think we can really diversify beyond growth and real estate? Are we fated to become an exclusive enclave, like
BENNETT: We can diversify. Look at what’s happening over on
KLEMENT: But if young families are leaving because they can’t afford to live here, then doesn’t that mean only that the wealthy can?
BENNETT: I think that’s a bubble with the market. I invested in real estate and I’m losing a lot of money right now, most of it on paper, thank God, but the market will come back if we create an environment that people want to continue to move to.
EDMONDSON: Bill made a good point. What drives the retirement economy that’s the basis of economic activity in Sarasota-Bradenton is the quality of the land, the quality of the sky, the quality of the light. If you want to see the end game of relatively uncontrolled growth process, just fly to
BENNETT: I’m not real nuts about what Bill and his group [Sarasota Citizens for Sensible Growth] want to do because I believe that’s like filleting fish with a chain saw. It will just escalate the problem of affordable housing for the work force when we shut down growth completely.
NEAL: If Mr. Earl has what he wants and he makes our property more valuable, he just changes the way our state will look.
DANIEL: You mean more like a
EDMONDSON: I don’t think that growth control necessarily turns a place into
NEAL: But should such decisions be made by people with staffs who understand the demographics of our community and elected public officials and stakeholders, or do we need to submit everything to a vote of the people, regardless of whether that’s consistent with the Constitution and where we want to end up in our state?
EDMONDSON: I don’t think every planning decision should be decided by a referendum, but I think that planning should be a public process.
KLEMENT: Mr. Earl, do you think we can keep our quality of life at its current level with the no-growth situation that we have?
EARL: The no-growth situation that we have now isn’t the fault of citizens like me. It’s the fault of overexuberance and speculation in the market. We want sustainable, sensible growth that provides jobs, construction jobs included, over the long-term, and to put policies in place that accomplish that. We can maintain the kind of values that we want in the community. Some of those are economic. You can kill the golden goose of high-end tourism, for example, very quickly by destroying the very things that people come to
DANIEL: Can anyone point us to communities that have managed to maintain a healthy growth rate without killing the golden goose?
EDMONDSON: We’re pretty close to
DANIEL: If the market is the market is the market, should the government play a role in housing bubbles and busts?
McCABE: Those who took high risks and now are losing money should not be bailed out at the expense of taxpayers who have lived within their means. But we should look at regulations and legislation that will help prevent the kind of greed-driven bubble we just had.