Building Permits in Lee County still Surging!

Once again, building permit volume in Lee County and Cape Coral surged in August, breaking new records. How long can this building explosion continue? It would seem that this pace will be difficult to maintain with the scarcity of labor and building materials and their rising costs, as well as soaring land values and interest rates beginning to climb. Historical permitting trends would lead us to believe that the permit boom is close to hitting its crest.But, to my surprise, Southwest Florida is experiencing some new and interesting trends regarding building permits. Demand remains strong because of changing demographics. Lee County is seeing a surge in second home buying being fueled by not only baby boomers but also a tremendous transfer of generational wealth (inheritance) and, currently, fewer places for the recipients of this newfound wealth to invest their money.Primary home buyers are also still flocking into Lee County. But it is a more affluent buyer profile than we have seen in the past, and the buyers are able to absorb the higher price points. This is due to several factors. First, the obvious wave of baby boomers with higher incomes and increased wealth. Second, the traditional Midwest and Northeast buyers are now joined by buyers from as far away as California and as close as Naples and the east coast of Florida. They are seeking a cash-out of more expensive housing in their current markets while real estate is hot, and a buy in this market at a lower price point while still maintaining a good quality of life.
Investment money continues to fuel our permit volume as well. Even with higher costs and interest rates making it more difficult for a potential tenant's rent to cover the monthly expense of the landlord, investors are banking on value appreciation instead of cash flow.Lee County has reached a critical mass population threshold, which perpetuates additional growth. With this critical mass in a desirable secondary market such as Lee County, we are now on the radar screen of major retailers and other businesses looking to move into the marketplace. This, in turn, attracts capital to our real estate market in the form of new residents and investors.
Global instability continues to attract new residents seeking a safer and higher quality of life in Southwest Florida. This also offers real estate investors a perceived safe haven for their investment capital in a growth market.While all the above is known, the unknowns are: How long can we break permit records with labor and material shortages accompanied by price escalation, a dwindling supply of undeveloped land and a rising interest rate environment? Will the investor market change as economic factors force a cooling off?The wave of wealthier primary and second home buyers has a lot of steam left. But we face a challenge of attracting a work force to service the population growth, when half of that work force can no longer afford to purchase a home in Lee County.