The Forecast: Continued HOT

As 2005 dawns, Northeast Florida's housing industry remains the backbone of the local economy. And, barring unforeseen circumstances, the torrid pace of home sales should continue into this year and beyond, say experts.

"Home sales are strong because interest rates are near historic lows and mortgage credit is more widely available today that at any time in recent memory," says Mark Vitner, senior economist with Wachovia Securities in Charlotte, N.C. "And home prices are rising simply because demand has been exceeding supply."

Vitner, who spent 10 years in Jacksonville as an economist for Barnett Bank, says some slowing is inevitable as interest rates rise and builders pick up the pace. But slower growth is not the same as a downturn, Vitner says, adding that a modest cooling off could ease upward pressure on pricing and ultimately benefit middle-income buyers.

"Price increases should simply moderate, not evaporate," Vitner notes. "Northeast Florida should continue to see solid gains in coming years."

Felix Livingston, a professor of economics and business at Flagler College in St. Augustine, says the region's primary defense against a downturn is its intrinsic appeal to relocators. "People seem to like living here," says Livingston, "and as long as nothing lessens the demand and interest rates don't move up too much, I see no reason for the boom not to continue."

Stanley Geberer, an analyst with Orlando-based Fishkind & Associates, agrees. "The Northeast Florida residential market has been booming, and we see the same for 2005, perhaps even improving a little," says Geberer. "We think growth and development will continue at very high levels at least through 2005."

Scott Mainwaring, president and chief executive of Vystar Financial Group in Jacksonville, says the region's business-friendly environment will also bolster housing growth. "Maybe we haven't had too many 1,000-employee companies move here recently, but we've had a lot of 50- and-100-employee companies relocate or expand," says Mainwaring. "A lot of those people are buying new homes."

Of course, a spike in mortgage interest rates could bring housing's bull market to a rapid close. But few analysts foresee rates rising enough to really hurt sales.

David Lereah, chief economist for the National Association of Realtors, told attendees at the organization's recent national convention that fixed-rate, 30-year loans are expected to average about 6.5 percent in 2005, up from just under 6 percent in 2004. "We're not near the end of this growth cycle," Lereah recently told a luncheon audience in Orlando.

So with those optimistic forecasts as a backdrop, Jacksonville Homebuyer recently convened a roundtable of local industry leaders among builders, realtors and developers. We asked each participant to gaze into a crystal ball and offer a personalized projection for the year to come, and to reflect on the record-setting year they've just completed.

Interviews and statistics compiled by Jane Bennett