Economic Revival Afoot For 2012?

Willis (Sears)
and Trump Towers

Chicago!  City "where the fog comes on little cat feet..."  "Hog Butcher for the World, Tool Maker, Stacker of Wheat, Player with Railroads and the Nation's Freight Handler; Stormy, Husky, Brawling, City of the Big Shoulders!"  Maybe I wouldn't have admitted it back then, but when I was a kid, I had a "favorite poet," and it was Carl Sandburg... and he nailed Chicago with his rugged, yet beautiful prose.


Today, I'm here to enjoy New Years with family and to take them all to a local hill for their first taste of skiing.  Come on, Chicago, we're here from Florida...  Give us some big time "lake effect" snow!  

Skating at Millennium Park

So I pick up the Chicago Journal yesterday and a business page header reads:  "Real Estate Revival Revs Up!"  New condos being built and older condos and apartments being re-furbished into new, modern condos!  Music to my ears!  From a Supply & Demand perspective, that is a huge indicator that the bottom has been found.  A bit of a contrast to my experience in Palm Coast, Flagler Beach, and Flagler County, FL, where last month I sold a gorgeous Yacht Harbor Village condo on the Intracoastal Waterway, on a bank short sale, for $145,000 to a cash investor.  Oh, did I mention that the seller, a mortgage banker friend of mine from Virginia, paid $640,000 for it in 2007?  And then there was the Ocean Hammock - Hammock Beach lot I also sold last month for $65,000... that the seller paid $510,000 for in 2005.  Ouch!  However, and it's really a BIG however... There is movement...  Things are selling...  Investors are back!


As I read the papers and the blogs here... and watch the business & financial news on local TV, I'm psyched to see lots of signs of revival and strong economic development efforts.  Why?  because when large, Northern, urban regions start to rev up... it begins the spill-over to smaller markets.  Also, if we compare the 4Q2010 to the 4Q2011 in Flagler County, FL, our real estate sales numbers were up nearly 30% and prices were down nearly 10%.  Again, the view from Econ 101, says this is good stuff... very good stuff!

Flagler Economic Development Dilemma

Flagler Economic Opportunity
Advisory Council

   There is a lot of chatter in Flagler County now, regarding "Economic Development," especially in light of the recently disbanded Enterprise Flagler private-public venture.  The newly established Economic Opportunity Advisory Council (EOAC), and its soon-to-be hired Executive Director, will surely be scrutinized, analyzed, and editorialized, till the cows come home (the closing phrase rendered in deference to Flagler's rich agricultural history).

So, the first conversation overheard goes like this:  "Why are we making all the fuss about growth?  Flagler County is plenty big enough now."  "We moved here from New Jersey to get away from all the traffic, noise, crime, and crowding... Now Palm Coast wants to become like Newark!"  "When we moved here, Flagler Beach was empty on the 4th of July and Belle Terre was like a rural road.  Now they're even talking about making the Matanzas overpass an interchange!"  "And another thing... why are my taxes so high?  And don't get me started about the schools... My kids are grown and gone... the young people should be paying for this."

You probably guessed where the second is going:  "Hmmmph!  My property values keep going down."  "Why doesn't the county pay more attention to fixing the roads, building sidewalks, and replenishing the eroded sand at the beach?  With the exorbitant salaries we pay these politicians, you'd think they'd take a voluntary pay cut to help out!"  "A Carrabba's in Palm Coast would be nice... and a Texas Roadhouse... and a PF Chang's - like in Orlando at the Mall of the Millennium... and a regional mall... and it would be nice if they'd just finish building out Town Center.  Then we could lure more large, well paying, green businesses to Flagler.  And maybe a Nordstoms in the old Bealls and a Ritz Carlton at the beach?"


When these two folks (above) talk across the fence, they probably don't agree on many things.  Therein lies
"The Dilemma."  We want to have all of the benefits that growth brings, without... ummmmm... growth!
It's all those sticky issues like, "Who's gonna pay for this?" and "Jobs would be nice, but I don't want commercial development near my home... (Think NIMBY)"  Because this has been in the news lately, the editorial commentary (and I use that term very loosely) has been none too complimentary (almost comical, really).  Check The Palm Coast Observer, www.FlaglerLive.com, and the Daytona Beach News-Journal.  Various and many brave "Anonymous" souls have much to say on the Economic Development topic, such as the well-thought-out:  "These 8 bozos don't have a clue what they are doing!"  Which, by the way, was penned after the very first meeting, in which the members were being introduced to the county and to one another!  I'm thinking that takes a lot of insight!

The truth is that every municipality and county in the country has some form of "Economic Development" effort in place.  And they are all dealing with the global economic downturn.  To put it in nautical terms, if a boat is taking on water, it's wise to assign some crew members to bail.  A good friend of mine "up North" was hired last year to be the executive director of such a group.  I asked him to summarize the first year's effort, and he said:  "A fishbowl... Expectations much higher than can be reasonably met... With a budget too small to make many waves.  I'm the new coach and they want the Super Bowl now!"  


We all want things to be wonderful in Flagler, but we aren't ready for a General Motors Assembly Plant or a Microsoft Regional Headquarters.  We have an amazing quality of life here and it's our strong suit.  We also have a well organized political environment.  Yes, they squabble some.  And, yes, Palm Coast is the elephant in the room.  But for the most part it works as well as most.  It's important to consider that "economic development" is not just "jobs;" it's also "revenue generation."  Like a great football program, "wins" come from a fine coach, staff, offense, defense, special teams... boosters, and fans.  To get the jobs and the revenue, we need to work on refining our  current terrific quality of life.  Companies will come here, not so much because we have a "50,000 square foot industrial building with utilities, roads, and rail access" ready for them to occupy... But because management knows Flagler County is a great place to live!
In order to be successful, this effort needs to define "who" and "what" Flagler County is... and what it wants to become.  And like good parents encouraging their children, it's OK for Palm Coast, Bunnell, Flagler Beach, Marineland, Beverly Beach, The Hammock resort areas, and the agricultural Western County to be what they want to be... as long as the family gets along and encourages one another.  In all the Goal Setting models I've ever seen, the scenario starts with:  "Make sure your goals are challenging (lest they not inspire)... and achievable (lest they go undone)."  I'm hoping Flagler's new effort keeps this at the forefront.

Helping Buyers in Confusing Times

(These are helpful hints, from agents around the country, as culled from a recent piece in Trulia.com.  They make sense right here in Palm Coast, FL, as well.)

1) Give them the Facts

Facts and numbers are an agent’s best resource when it comes to buyer counseling.  Know your market - Cold!  Know all the differences among "normal sales, short sales, and foreclosures."  There are significant nuances that can be game changers.  Don't get caught short, without knowing everything a buyer needs to know, to make a good buying decision!

A top NJ agent says “Very often the amount [buyers would] pay for rent is more than forecasted depreciation [for homes].” It’s important that agent point out these facts.

Garret says, “Recent comps, a “cost of waiting” analysis for first time buyers, and news articles” can be helpful as well.

Recent data shows that in many areas buying outweighs renting by large margins. To show consumers how your area shapes up, check out Trulia’s Quarterly Rent vs. Buy Interactive Index or the U.S. Census Burea’s American Community Survey Brief.

2) Explain the Tax Advantages and Fiscal Benefits

“The financial and tax benefits of owning a home vs. renting are very clear,” according to the National Association of Realtors Field Guide to the Social Benefits of Homeownership.

Real estate taxes, mortgage interest, and certain home improvements can all mean significant savings (and potential refunds) for homeowners. Agents can help their potential clients understand these benefits.

To get up to speed on the basics, check out NAR’s Guide or check out this free quick guide from the American Institute of CPA’s on the Tax Advantages of Home Ownership.

3) Show them Interest Rate History

To help her clients take advantage of today’s opportunities, an agent in Colorado Springs, CO, says,  “I talk to [buyers] about the record low mortgage rates”.

To make your own custom snapshots of long term interest rates, check out the interactive Historical Treasury Ratepublished by the U.S. Treasury.

4) Ask the Real Question

Serious buyers make serious moves. “It all boils down to their motivation,” says an agent in Illinois.

“One of the best questions I learned is ‘If I find you a perfect house within the next 2 to 3 days is there anything that would stop you from buying it?’” he says.

His question is an important one for agents to consider. Understanding the level and reasoning behind a potential buyer’s motivation can be valuable in helping clients make the best real estate decision.

At the end of the day, the decision to make the leap into home ownerships rests in the client’s hands. A smart agent’s job is to make sure prospective owners have the right information to make their assessment and understand the unique opportunities today’s markets presents.