Northwest Florida: a Great Area to Invest in Real Estate

We have vacationed in Northwest Florida, Walton County in particular, for twenty years –- and love it! World-class beaches –- reasonable prices –- great restaurants –- beautiful beach homes to visit! So we are sold on the area –- but what about the financial realities of investing in Florida -- at this time?

The Florida panhandle has a vibrant and steady tourist economy, with low unemployment. The brand new Panama City International Airport, which is planned to open in March 2010, will make the region quickly accessible from everywhere in the country and Europe. The airport will provide a substantial boost to the area’s economy, and will enhance demand for real estate.

We believe Northwest Florida is an excellent place to invest in real estate, and that real estate values, though flat right now (January 2008) are likely to move sharply upward, particularly for oceanfront and Gulf view vacation homes. But that’s our opinion! Here are some other folks’ opinions on the area.

CNN Money.com (Feb. 12, 2007) selected Panama City, Florida as the #1 place to invest in real estate in the United States.

American Express says that Northwest Florida is one of its Top Ten tourist destinations in the United States. The Florida panhandle is second only to the Orlando area in Florida tourism. Northwest Florida beaches are world-class, pulling in over seven million tourists each year –- more than any other East Coast vacation area.

Real estate professionals in Walton County say that prices are lower than during the boom year of 2005. But they are expecting closings to increase, as more deals come on the market. Many vacation homes are priced below the cost of constructing a replacement. "If you are looking for an investment to hang on to for the next five years, the time to buy is today. We are still very undervalued compared to other parts of Florida."

The St. Joe Company (NYSE:JOE), whose headquarters are in Jacksonville, FL, is the largest landowner in Northwest Florida, owning over 718,000 acres of prime development land -– half of it within ten miles of the coast. St. Joe has been a major player in the Florida panhandle for many years, beginning as a timber company but realizing in recent decades that the value of its landholdings was much greater as investment property. So now St. Joe is in the vacation home development business, with major activity centered on Walton County.

According to St. Joe's Investor Relations Department the long term outlook for Northwest Florida real estate is quite upbeat.

Long-term financial and population trends continue to favor Florida, whose economy is fundamentally solid and diverse. The state's population is forecasted to increase by three-fourths (to 28.6 million) by 2030. Its population growth rate regularly outperforms that of the rest of the United States: over the past forty years, Florida's yearly rate of growth has outpaced the national average by 100%. By 2010 Florida will move past New York to become the country's third most populous state.

Florida's solid, diverse economy regularly outpaces the U.S. mean, with a strong tourism industry, lots of high-tech jobs and a rapidly growing high-tech manufacturing sector. A strong military presence with a number of active and expanding bases provides a stabilizing effect to the area's economy. Within Northwest Florida, Walton County has one of the lowest unemployment rates in Florida and the United States.

Florida is the commercial center of the Americas. Geographic location, as well as financial and political stability, places the State at the heart of trade and commerce throughout the region. Vacation residence sales to retiring persons remain robust, and Florida is a preferred spot for retirement relocation.

Northwest Florida’s beaches are the state’s second most popular tourist destination, behind only Orlando. Northwest Florida's beaches draw over seven million tourists each year, more than any other stretch of beach on the East Coast.

Beaches in Northwest Florida rate as some of the most spectacular in the country and the world. Beaches in Walton, Bay and Gulf Counties have been picked for the number one ranking by Dr. Stephen P. Leatherman, an expert on beach quality and author of America's Best Beaches.

The Florida panhandle enjoys a temperate climate, with mild winters, lots of sunshine and blue skies. The Florida panhandle is located in U.S. Climate Zone 8, the same climate zone as famed vacation areas such as Hilton Head (SC), Amelia Island (FL), Kiawah Island (SC) and St. Simons and Sea Island (GA). Florida’s beauty and diversity is well-known. Northwest Florida has a distinctive geography, culture and cuisine that is unique.

The Florida panhandle attracts approximately seven million visitors each year. According to Visit Florida, the state’s tourism and visitor agency, 33 percent of these tourists are from families with incomes over $75,000 and 16 percent are from families with annual incomes over $100,000.

The number of fashionable resort developments in Northwest Florida is increasing. At resorts like Seaside, Rosemary Beach, WaterColor and WaterSound Beach, beachfront lots have sold for $40,000 per linear beachfront foot to high net worth families who have chosen Northwest Florida.

The new Panama City airport now under construction is expected to be in operation by March 2010. It will be a large international airport, thus opening the area to easy access from the East and West coasts, the Midwest, Canada and Europe. Previously, access to the area by air was limited to regional airports.

Economists expect that the new airport is very likely to become a powerful economic development engine for the region. Throughout history airports have a strong track record for increasing economic development activity.

The new Panama City airport will be the first major airport constructed in the country in over 15 years. As a large-scale greenfield airport development, it offers new opportunities and unmatched flexibility for businesses dependent on aviation and logistics infrastructure.
There are strong analogs for the development of this airport in Huntsville, AL, Savannah, GA, Jacksonville, FL, Fort Myers, FL and Northwest Arkansas. All of these airports have stimulated significant adjacent development.

The State of Florida forecasts that over its first decade, the new airport would create 8,000 new jobs and at completion a total of 13,000 jobs. A parallel is the construction of the new Southwest Regional Airport in the Ft. Myers/Naples area in 1983, which had a large impact on real estate values. Since the opening of the airport in 1983, total residential real estate values in the region have increased an average of eleven percent per year.

Fortune Magazine (October 14, 2007) selected the St. Joe Company as one of the “Ten Best Stocks for 2008”, citing the long-term potential of the corporation and its vacation home development business situated in Northwest Florida. Here’s part of what they have to say: "When Florida real estate does rebound, investors will be kicking themselves for not recognizing today's $28 stock price for St. Joe Co (JOE) -- Florida's largest private landowner -- as a rare opportunity."

In the quickly shifting economic climate, it is important to research and ask questions before making any investment choice. Yet the truth is that Northwest Florida is a rarity, with a mild climate and gorgeous, mostly empty beaches. As you sit on the pristine, white sand with your feet in the emerald clear Gulf water, with pelicans and gulls wheeling overhead and dolphins cruising by – you can see that there are some very important intangibles here. The Emerald Coast is a very special place –- and they're not creating any more beach property!