Why East Central Florida?

There are several questions that are frequently asked of Real Estate Professionals by Real Estate Developers and Investors who are looking for their next site. They ask “Why should I choose The Daytona Beach or Flagler/Palm Coast area for my next development?” As we’ll see, the answer is an important one for more than just investors.

Whether you are living in the area today, already own property or are thinking of buying or selling property in the area, it is very important to understand what drives our real estate market. The first thing to recognize is where our buyers are coming from. The primary source of buyers in our area is people who are coming to us for retirement, investment, or vacation purposes. Sometimes, new buyers are looking for all three. A Baby Boomer who is looking at future retirement and is planning a little ahead often comes into the market with the goal of purchasing an investment and vacation home which will eventually become a retirement home. Let’s face it, the Baby Boomers are getting closer to retirement and they will want to retire to someplace that feels like a little slice of heaven. For a long time, Florida has been the choice of the retirees. Further, the Baby Boomers are not a small group (see Figure A); the demand on the housing market throughout Florida will be stretched for a long time to come.

Figure A

Another group of investors include people who have already made investments throughout Florida, particularly South Florida, and would like to take advantages of gains in those markets while reinvesting their capital into another fast growing market. This last group was the subject of the ABC network’s recent 20/20 television show which featured discussion with investors who had purchased several high-end condominium and single family residents through Adams, Cameron & Co. with the goal of eventually selling them at a gain.

So then, we can see the flow of money headed towards the Florida markets but why choose the Greater Daytona Beach Market Area? First let’s consider the criteria that make up a desirable vacation and retirement home. Most people would list water access towards the top of that list. Closely following would be a small town feeling. And lastly, proximity to a city will be of some importance for shopping and travel. Given that, we can identify a number of market areas with suitable population sizes and compare statistics. A “market area” is typically much larger than a single city and can include all of the areas that would typically flock to a single location for larger purchases. For purposes of classification, the Daytona Beach Market Area consists of all of East Volusia County plus Palm Coast and the Flagler County market. Given that, the following population count of coastal cities is a good place to start:

Figure B

You’ll notice that these cities represent a sampling of those with similar characteristics to those that we defined as making up a desirable vacation and retirement community. Each of the markets has a population close to the 400,000 range meaning that it is not too large but also not overly small. They are also coastal communities and have some proximity to larger cities.

Among all of these areas, Daytona Beach represents the lowest price on average for housing as of the 2004 numbers from the Florida Association of Realtors (Figure C). Clearly there is an advantage immediately for someone who has a desire to invest in a  vacation home, a retirement home, or an investment opportunity. While there is a clear opportunity for the Baby Boomers, this data also shows us why the investment dollars from South Florida are moving north. While an investment of a million dollars can purchase, on average, three to four homes in the South West side of the state, or five homes in the South East side of the state, investment in the Daytona Beach Area would net six homes plus change. 

Figure C

Of course the obvious question is one of return on investment. When putting money into any investment property the goal is clearly to see the largest return. This is a fundamental truth regardless of whether money is invested in real estate, bonds, CDs, the stock market, or in any other mechanism. The important thing to review is the growth in average sales price. Between 2002 and 2004, the average sales price in the Daytona Beach Market Area grew by 42%! That is compared to an average of 35% among the other, similar communities. Neither one of these returns is anything to sneeze at but the difference is substantial.

For comparison’s sake, the growth of the Dow Jones Industrial Average between Jan of 2002 and Dec of 2004 was just 5.38%. Likewise the NASDAQ over the same period grew just 3.59%.

In other words, an investment in Florida Real Estate is an excellent opportunity and an investment in the Daytona Beach Market area is well outpacing the competition. So, to answer our initial question “Why the Daytona Beach Area?,” we need look no further than the numbers. Before we even address all of the answers which involve the sun, the surf, the golf, the arts, the boating, and the other activities, we have an answer that shows how smart all of our current residents are. Beyond our great little area on the beach, we have a fantastic investment location. For more information about investing (or playing) in The Greater Daytona Beach Area or Flagler / Palm Coast call your Adams, Cameron & Co. Realtor now or visit www.daytonare.com.

About the author – John Adams is a native of the Daytona Beach Area and is a third generation real estate broker. His education includes a Bachelor’s of Business Management degree from Florida State University and a Masters of Business Administration from The Kellogg School of Management at Northwestern University. His business experience includes several years with Arthur Andersen’s Business Consulting organization during which he handled engagements domestically and internationally. He was a cofounder in a marketing company which he grew from startup to $40 million dollars in revenue. He took his first company public on the NASDAQ stock exchange at the age of 29.