MANY SOUTH FLORIDA Realtors and homebuilders were on track for a banner year before the pandemic lockdown that began in mid-March brought sales activity to a crawl.
At the same time, fears that COVID-19 might trigger a major slide in home values didn’t happen. As real estate professionals and their clients adapted with social distancing measures, a tentative return to the business of building, buying and selling residences that help fuel the region’s economy was underway.
“First quarter as a company we had the best performance in our history,” said Budge Huskey, president and chief executive officer of Premier Sotheby’s International Realty, a high-end luxury real estate company founded in 1983, in Naples.
“That was kind of the overall market, but I’d say the luxury side of the market was even stronger. I focus on the first quarter because we saw what the demand was, the desirability of our market. That hasn’t changed.”
Florida Weekly checked in with real estate sales and homebuilding companies in Lee, Charlotte, Collier and Palm Beach counties and Key West to find out how businesses have weathered the turbulent first five months of 2020.
Across the state, rising home prices continued to climb, albeit more slowly. With inventory declining in Florida, the overall median listing price was flat year-over-year at $335,000, according to Realtor.com.
“I think everybody thought there was going to be this great big dip in prices,” said Frank R. Jenkins, president of the Lee County Building Industry Association and president of Frank R. Jenkins Custom Homes.
“But we didn’t really see that. There’s still such a demand and a backlog of construction, there’s not going to be a major impact as far as any pricing. It will stay steady. We’re not going to see great increases because of what’s going on (either), we’re going to see good steady pricing.”
In terms of sales, Florida counties overall saw a 12 percent increase year-over-year through March, though local businesses report sales slowed sharply in April and May.
As businesses adapted to the lockdown with increased online activity, the sharp halt gave way to greater numbers of virtual sales. The idea of “contactless buying,” finding and purchasing or building a home entirely online often without having ever set foot inside, became an ongoing trend.
The pandemic accelerated other already growing trends as well, including wellness and home-office related features.
Some real estate professionals, especially those in the high-end luxury market, saw a boost from the pandemic as clients from heavily populated areas of the Northeast and other areas accelerated plans to purchase that second or third home as a place where they could comfortably weather a lockdown and work remotely.
“What I think is people realize, ‘Yeah this is scary, but life goes on,’ and they’re going to come to Florida and build their dream home,” Mr. Jenkins said. “They might actually be pushing it ahead instead of waiting.”
Other factors such as historically low-interest rates and Florida’s relatively tax-friendly status continued to play a positive role for sales activity as well.
The stock market dipped sharply at first but later recovered much of its gains, a barometer especially for wealthy homebuyers. And with no state income tax, Florida remains an attractive place to declare residency. That was further fueled by a 2018 federal law that limited deductions for state and local taxes (SALT), making states such as New York more costly for high earners.
While many of these factors bode well, no one knows how the pandemic will play out over the summer and fall and how consumers will respond if there is another major outbreak of COVID-19.
Inga W. Lodge, owner of the brokerage firm Wilson & Associates RE in Naples, saw web traffic for her company double in March and April during the lockdown.
Selling luxury highrise properties at Kalea Bay and other North Naples communities that are often second homes, Ms. Lodge saw the average age of buyers drop from 64 to 54 over the last decade, a trend accelerated by COVID-19.
“They’ve now upped their timeline and I think we’re going to see a lot more people want to have another place in the fall,” she said.
The Naples-based homebuilder Stock Development also had a strong start to 2020. The period from March 2019 to February 2020 was among the company’s “best 13 months on record,” said Claudine Leger-Wetzel, vice president of sales and marketing.
Stock builds homes in Sarasota, Charlotte, Lee and Palm Beach counties with an average price point of $1.4 million. In all through May, sales for the company were up 10% from the year before.
“Towards the end of April it felt like there was a black cloud over the sun and somebody pricked a whole in the cloud and people were starting to talk to us,” Ms. Leger-Wetzel said.
In Lee County, Realtors saw similar trends play out.
“Here really pricing has stayed stable, which is a very good thing because I think as Florida opens up more — and we’re already leading on that path — I think we’re going to see a lot of Northerners, especially from the Northeast and Midwest,” said Kevin Williamson, broker and owner of Realty World C. Bagans based in Lehigh Acres and 2020 president-elect of the Royal Palm Coast Realtor Association.
“If they were on the fence about buying they’re coming down, they’re coming,” he said.
Mr. Williamson and the Royal Palm Coast Realtor Association are looking towards an ongoing increase in virtual services. The association’s Realtors work in Lee, Hendry, Glades, Charlotte and Collier counties, selling properties that range from $50,000 lots to multi-million dollar waterfront homes.
“I think there’s certainly going to be a new norm, technology’s going to play a big part in it,” Mr. Williamson said. “So as an association one of our main focuses is going to be educating agents with technology.”
While contactless buying has become the norm with sales during this season of the virus — happening over Face Time and Zoom — Key West real estate agent Raymond J. Vazquez sees a return to a traditional approach, perhaps once there is a vaccine.
The lockdown slowed sales activity for him at first.
“When this whole COVID thing happened we all really got scared that the market would pretty much tank and we’ve seen the opposite,” said Mr. Vazquez, broker associate for Truman & Co. Real Estate Services.
“Three or four weeks ago we put a $650,000 duplex under contract. We put a $1.67 million dollar house and $1.3 million dollar house under contract. So it’s kind of interesting to see that things in general across the board are still moving.
“I think there are a lot of reasons why, but number one it’s kind of like after 9-11 when a lot of people wanted to leave the big cities and get out of there. And number two, the interest rates are at an all-time low right now so first time buyers are taking advantage of the interest rates.
“I would say that we are definitely seeing more and more people leave the bigger cities. Atlanta, for instance. And we get a lot of people from New York and Boston. I think that has a lot to do with the whole virtual thing (and working) remotely. They were already kind of starting to do that and now we’re seeing it even more.”
More so now than ever, clients of the husband-and-wife team Dan and Dawn, otherwise known as The Malloy Home Team at Premier Brokers International, are buying homes virtually.
They sell homes ranging from $200,000 to $5 million from Highland Beach to Jensen Beach, and in Jupiter, Palm Beach Gardens, Juno Beach, North Palm Beach, Palm Beach and Singer Island.
The brokerage found itself ready in that regard, having offered online services such as virtual tours as customers increasingly turned to the internet over the years.
“Being prepared years ago has helped us during this pandemic, as everything went virtual,” Dan Malloy said.
From January through May in 2019, the company’s Palm Beach County single-family home buyers closed on 1,703 homes compared to 1,416 this year, with nearly all the losses coming in April and May.
“With the pandemic affecting a lot of large populated cities, we believe that people will be looking for a place where they can escape,” said Mr. Malloy. “Florida is that destination.”
Delray Beach-based homebuilder Akel Homes has found that longer-term trends such as health and wellness features, consumers being highly educated online, and the idea of working remotely from home were accelerated by the pandemic.
“‘Home’ has become so much more and the definition has changed so drastically over the course of two months,” said president Alex Akel.
“So a lot of these new trends I’ve outlined were already occurring before COVID-19. But typically bad events accelerate ongoing trends and make them a reality and that’s exactly what we’re seeing across the board.”
One of their most popular products has been the two-story Sierra, a six-bed, fourbath, 2,800-square foot home.
“It gives families and homebuyers the ability to use additional bedrooms as multi-purpose spaces in their home as we see more trends like work-from-home or having to educate your kids from home or exercise at home,” Mr. Akel said. “The Sierra was always popular and extremely popular since the pandemic.”
Looking forward, Mr. Akel described his outlook as “cautiously optimistic.”
“In 2020 we got off to a strong start and then COVID-19 hit and because of all of the lockdowns our sales and model gallery was closed for almost two months,” he said early this month. “We only reopened two weeks ago and we saw a strong bounce back. And we do feel like there is a favorable environment that exists between low-interest rates, and people have maybe reevaluated their living circumstances during lockdown.”
Luxury real estate agent Vince Marotta at Illustrated Properties in Palm Beach Gardens said he believes sales remained strong in large part due to Florida’s tax-friendly status and the ability of his clients to work here remotely from home.
Mr. Marotta sells high-end real estate along the beach in Northern Palm Beach County and in country clubs, where buyers are often purchasing a vacation home.
“I’m very grateful for my market position,” he said. “You learn in very short order that the super high-end travels in very small circles and when you give clients 100 percent of your efforts you get a ton of referral business …
“I was having my best year ever in the first quarter. I had already closed over $30 million in business. Obviously when COVID-19 hit it was very slow for the back half of March and April, but I’m pleasantly surprised and happy to report in May things have really picked up and are as strong as ever.”
In Punta Gorda, Paul H. Schaefer II of Sage Homes reports that “the year has been great for interest and activity, of course with the exception of the lockdown period from C19.”
COVID-19 has also caused a delay in receiving some building materials.
“We’ve been taking advantage of the ‘lull’ to invest time into improving our selections, scheduling and communications processes to make us more efficient and effective as the market recovers,” Mr. Schaefer said.
Charlotte Countybased homebuilder Luke Brothers Custom Homes is expecting a strong summer season.
“The start of 2020 was extremely strong until the shutdown due to COVID-19,” said president Rod Luke. “Since the state began reopening, we have had a large increase in activity at our model center. So it appears we are heading for a stronger than normal summer selling season.”
Luke Brothers homes priced at over $600,000 and under $475,000 have been the strongest sellers recently for the company, with those priced in between selling at a slightly slower rate, possibly due to a higher number of homes already built in that price range, Mr. Luke said.
Aside from the lockdown, another trend that concerns him is a lack of young people entering the construction trades.
“I don’t think there has been a better time than now for a young person to enter the construction trade and create a lucrative and highly rewarding career,” he said.
Sotheby’s Realty CEO Mr. Huskey has a positive outlook as well.
“Fundamentally the underlying basis for the success of our region remains, and for that reason everybody has viewed this as something to get through and that we’ll return to business in a fairly brief period of time,” he said. “And I think that’s what we’re seeing.
“We’re not quite where we need to be at, we’re in the early stages of recovery. But I have every expectation that as we move through June and beyond we’re going to start to see business levels comparable with last year. We may even see a rebound for some pent up demand as a result of the gap period.” ¦