Your Parents’ Florida…All Over Again

    My grandparents, Max and Jenny, had one big dream when Max’s days as the owner of a parking garage in the Bronx, NY, were over:  Move to Florida.  In the early 1950s, they did just that, buying a small Miami home for a couple of thousand dollars.  They lived in that house for the next three decades. (At age five, I caught my first fish in a stream in the backyard, an eel actually.)  Pioneers, in a sense, Max and Jenny were followed to the Sunshine State by millions of other northerners seeking warm winters, low taxes and the early-bird specials at the local smorgasbord, which became one symbol of a low-cost retirement lifestyle.  
    Never mind that comedians tabbed Florida as “God’s Waiting Room.” The next generation, my parents included, looked to Florida as a place to avoid the harsh winters of the north, setting up camp in November each year and heading north before the high-temperature, high-humidity southern summers.  The Interstate road systems only made the back and forth easier.  This generation had the resources to live in two places, and many of them preserved those resources by living in Florida for six months and a day in order to qualify as residents of the no-income-tax state.

Near-death experience for “God’s Waiting Room”
     As the next generation –- many of you and me -- began to reach pre-retirement and retirement years, it became our turn to look southward for vacation and permanent homes.  But as the new century began, Florida faced growing competition from the coastal and mountainous Carolinas and a conspiracy of negatives that included damaging hurricanes (and high insurance rates), a rapidly changing demographic pattern and infrastructure issues (clogged highways, sinkholes, aging water systems) that started to prick at the Florida balloon.  Real estate speculation only exacerbated the problem.
    In 2008, after the Wall Street crash, the roaring construction industry in Florida ground to a halt and thousands of workers fled north in a desperate attempt to find work -– any work.  Florida suffered its first net population loss in 50 years, and the state’s future prospects looked bleak.  
    But sunshine is indeed a great disinfectant.  The reverse migration was only temporary, thanks to an incrementally improving national economy and the forces of the huge baby boomer demographic.  Today, based on official reports and my own observations during a two-week trip to the Gulf Coast areas from Sarasota to Naples, the “snowbirds” are back, new golf homes are going up en masse and prices, though recovering, are still dramatically lower than their peak in 2006, after which some golf community homeowners in top developments saw their market values erode by as much as 75%.  
    When supply and demand start to meet each other, the formula for price increases is in place.  The residential construction business is back with a vengeance along the Gulf Coast of Florida, even as Miami and Orlando continue to suffer the overhang of too much inventory and speculation.  A case can be made that those with an eye on the more attractive areas of Florida as a part- or full-time residence might want to plan a real estate visit soon.  (We are happy to help with ideas and arrangements; please contact us.)

The State of golf
   There are more golf courses in the state of Florida than any other, and by a good margin. As of last year, Florida could boast a total of 1,261 18-hole equivalent golf courses, with the much bigger California second at 1,007.  Texas was the only other southern state in the top five, with 906 golf courses.
   The Florida golf boom, of course, was driven by golf community development.  Even without the housing crisis and the migration halt beginning in 2007, Florida had way more golf courses than was sustainable economically.  It still does.  Florida is a buyer’s market for golf.  Membership initiation fees in most clubs are way down from their historic highs, by as much as 50%.  I played golf last week at a few private courses in notoriously expensive Naples, including the attractive Imperial Golf Club, where joining fees are just $8,000 for 36 holes of golf.  The club has raised dues in only one of the last four years (annual dues are less than $7,500 for a couple.)  Imperial's prices are reflective of many of their private club competitors.    
    But price cuts alone cannot distinguish clubs from each other; some are resorting to creative arrangements in behalf of their members.  In recognition that many of their members own homes north and south, some Florida clubs have forged relationships with northern golf clubs for reciprocal arrangements for their members.  The aforementioned Imperial Golf Club, for example, touts a “North/South Alliance” with more than a dozen clubs above the Mason/Dixon line, including those in Rutland, VT, Milwaukee, and Cincinnati.  Imperial members receive dining and golf privileges at these northern clubs when they are back north during the summer and, of course, Imperial returns the favor to the northern clubs’ members during winter.
     Some private club strategies have nothing to do with money.  Subtly, private golf courses in Florida have designed their layouts to accommodate their aging populations and keep them playing well into their golden years.  I played a few golf courses during the week where the average age of the club members was north of 65.  Developers were conscious that their residents and members would eventually get to an age at which straight, 200+ yard drives were a distant memory.  Therefore, most of the private golf courses near the Gulf Coast in Florida will not exhaust the average golfer.  The fairways are generous, the greens generally large and the lakes and ponds, though plentiful, mostly aesthetic accoutrements on all but the most challenging layouts.  Although a single-digit handicapper might have to recede to the back tees to find some of these layouts challenging, former single-digit handicappers who can still chip and putt like a youngster will find they might still have a shot at a score in the 80s… in their 80s.

Six months and a day
    Florida levies no tax on its citizens’ income, whether it derives from work or pension payments.  Of course, income tax is not the only tax we pay, but even considering all the other tax burdens, Florida ranks as the fourth best overall state for taxation, although its property tax rates generally rank in the middle of the pack for all states.
     We know folks who circle specific dates on their calendars for when they will leave their northern home and head south to their Florida home in order to spend 183 days, or half the year and a day, in Florida.  As official residents of the Sunshine State, they qualify for the more favorable tax treatment. To some of us, hustling down south on a date specific might seem an awful bother to save a few dollars, but it all depends on your income.  Take a couple living half the year in Stamford, CT, one of the most expensive metro areas in the nation.  If they lived in, say, Sarasota year round, their cost of living would drop by 35%.  Most of that is because housing is so much cheaper, but taxation accounts for some of it as well.  Connecticut is the fourth highest tax-burdened state, making Florida’s position at 47th look awfully good.

Boom, Bust, Boom
    Florida offers shelter to fit every budget and every lifestyle consideration.  During my two weeks along the Gulf Coast, I walked through brand new condos in the $100s and teed off alongside sports commentator Dick Vitale’s 25,000 square foot estate, which probably cost around $5 million.  In between, the choices are virtually limitless at all price points.  According to our Realtor in Naples, Jeff Feldman, local prices dropped more than 50% during the 2008 crisis, reaching the levels of the mid to late 1990s.  Now, he says, prices have recovered to about 2002/03 levels, or about 35% off peak.
     “It could be 20 years before we get back to where we were,” he says, “but in the meantime, we are seeing a steady recovery in prices.”
     The extent of the price recovery may be governed by supply.  Builders who were chomping at the bit to start to push dirt around on the thousands of acres to the east of Interstate 75 have begun to do so in earnest.  I spent the week in a condo at Heritage Bay, a Lennar development with 27 holes of golf that is 20 minutes from the Gulf and seemed in full construction mode.  Condos are priced at Heritage Bay starting in the $100s and single-family homes, some with views of lake and golf, begin in the $400s.  Full golf membership, including all the typical amenities like pool, fitness and tennis, as well as access to a huge clubhouse, is included in the price of all homes at Heritage Bay.
    Check out the listings in the 10 communities in Naples and the Sarasota/Bradenton area that we have posted at GolfHomesListed.  They only begin to scratch the surface of what’s available through our real estate professionals there, Jeff Feldman and Dennis Boyle, respectively.

Final Words about Florida in the summer

    Yes, it’s hot, but for those who can stand the relentless heat and humidity of Florida summers, the benefits can be extreme.  The courses are wide open for walk-up play; I played a three-hour round over 18 holes last week, and our starting time was the popular 8 a.m., before the hottest part of the day.  Almost all the private clubs have reciprocal arrangements with virtually all the other clubs in the Naples and Sarasota/Bradenton areas from May to November, providing the itinerant golfer with endless options (and no traffic).  But if you are not a private club member, you and your dramatically reduced green fee payment will be welcomed with open arms at any of the dozens of fine public and semi-private courses in Naples and Sarasota.  And, psst, a few of the private clubs might take your money as well.