Throngs of newcomers to the Treasure Coast this year has culminated in a piping hot residential and commercial real estate market.
The problem is there’s not enough inventory to adapt — forcing prices to skyrocket.
Historically, that would deter buyers and cool the market. But not this time.
People continue to purchase properties, conforming to an expensive market that shows no sign of leveling out any time soon.
“I’ve been in the business since 1980 and I’ve never seen this before,” said Douglas Davis, president of Richard K. Davis Construction, a Fort Pierce commercial development agency. “I’ve been through all the ups and downs, cyclical recessions and booms, but this one takes the cake.”
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The real estate market
The Treasure Coast’s population has been increasing in number and wealth for the last few years, said Yvonne Baker, executive director of Florida State University’s Real Estate Center.
The region’s affordability is the predominant driving force, Baker said. A majority of newcomers are moving from far more expensive markets in South Florida and New York — and they have the money to spend and drive up costs.
“The higher the demand, the higher the cost,” Baker said. “If a lot of people want something, you can charge more for it.”
COVID-19 was a catalyst in the influx, Baker believes. There are a few reasons why:
- People improving their quality of life, based on how and where they live
- Remote jobs that allow employees to work from any location
- Extremely low interest rates on loans.
A housing boom from June to October 2020 diminished the area’s inventory before another onslaught of buyers arrived this year — consistently increasing prices and speeding up sales.
According to market data, the median sale price of single-family homes as of June so far this year have increased by:
- St. Lucie: 13%, reaching $305,000
- Indian River: 12.6%, peaking at $340,000
- Martin: 8.9%, hitting $490,000
“If it hits a certain price point, the demand will start to slow off, but we haven’t hit that number yet,” said Mike Lafferty, president of the Realtor’s Association of Indian River County. “The demand is the demand … and sometimes the prices will just continue to rise. There’s no end in sight, really.”
Buyers are moving quickly, too. Since February, median sale times — from listing through closing — have decreased by:
- Martin: 27.2%, at 59 days
- Indian River: 20.5%, at 62 days
- St. Lucie: 18.2%, at 54 days
The commercial real estate market follows residential statistics, said Anthony Gambardella, with the Realtors Commercial Alliance of Broward, Palm Beaches and St. Lucie.
As more people move to the area, the workforce also increases and requires additional warehouses, office spaces or business storefronts.
Commercial property owners and tenants are now seeing the effects brought on by the housing boom, Gambardella said — raising rental rates to meet the market’s high demand with little supply.
“The rent will always increase when the supply is very, very low … We’re not filling the inventory up fast enough to make the prices stay the same,” said Gambardella, who is a 32-year industry veteran based in Port St. Lucie.
Vine & Barley’s owner said a 50% rent increase will force him to close the downtown Stuart craft beer and wine bar in September, for example. The South Florida landlord, who said the spike was only 30%, said he needed to adjust to the current market.
St. Lucie County has over 5 million square feet of commercial property scheduled to break ground by the end of the year, Gambardella said. But all might not go as planned.
Construction supply shortages this year have increased prices, delayed shipments and lengthened project timelines.
Richard K. Davis Construction recently waited 26 weeks for a window shipment that typically would have taken six weeks, Davis said.
The issues have worsened progressively throughout the year, Davis said. The uncertainty surrounding prices and availability makes for an unpredictable market that is now spiraling.
“You’d think that would bring a halt to the market, but it hasn’t,” he said. “People are still willing to wait and willing to pay more. That’s where I’m surprised … the phones continue to ring.”
Should residents be concerned?
High demand is a double-edged sword for local businesses, said Mark Brechbill, the president of Main Street Stuart.
It’s great that the Treasure Coast is a more desirable area, Brechbill said, but out-of-town investors increasing costs could force out longtime residents.
Brechbill remains hopeful that local businesses, with the influx of new residents, will be able to generate more revenue to compensate for higher rent, he said, but that hasn’t happened yet.
“What’s happening has been good — good for the local real estate market, good for local business,” he said. “But it is a concern that others need to keep an eye on, because it could change.”