NAPLES, Fla., Dec. 21 /PRNewswire/ -- While there are signs the runaway real estate market is slowing down across the country, three out of four wealthy Floridians remain optimistic their homes will continue to appreciate in value, according to survey findings released today by The PNC Financial Services Group, Inc. .
The level of optimism among the wealthy in the Sunshine State is much higher compared to their peers in the rest of the United States, PNC's survey found. Nearly three quarters (73 percent) of South Floridians expect to see double-digit increases in the value of their primary homes over the next five years, with half anticipating an increase of 20 percent or more. By comparison, just over one in four of the wealthy outside the area expects a 20 percent hike in value.
"Florida's residential real estate market is more complex with its heavy influence from three sources of buyers and sellers -- domestic, Latin America and Europe," said Nicholas Buss, Ph.D., senior vice president and PNC's real estate economist. "As a result, there are factors beyond U.S. interest rates and other domestic issues, such as geopolitical matters and the strength of the U.S. dollar overseas that are outside the wealthy consumer's control and, thus, less likely to restrain their continued optimism."
He added: "Over time, market conditions and global factors will tell us whether or not the wealthy in Florida have been lulled into a false sense of security."
Survey Highlights
Results of the nationwide survey, including a sample of more than 200 wealthy South Floridians, were released today by PNC, which has wealth management offices in Naples and Vero Beach, as the first in a series of reports to identify attitudes about wealth among high net worth individuals, how it affects their lives and their needs in managing wealth.
"We believe that South Florida real estate remains a good investment," said Robert Saltarelli, regional president of PNC Advisors in Naples. "Depending upon the individual client's income and liquidity needs, we believe that a portfolio with 20-25 percent invested in real estate in this region is appropriate and should continue to deliver solid returns."
Highlights of the real estate findings in Florida include:
- Nearly three quarters of Floridians surveyed said they expect to see
double-digit increases in the value of their primary homes over the next
five years.
- Just one in 20 wealthy South Floridians (5 percent) expects any decline
in the value of their primary homes over the next five years.
- Just one in five South Floridians say they got rich through real estate,
but those who did are twice as likely to expect their real estate values
to continue to increase. Nearly nine in 10 (89 percent) who say
residential real estate is a major source of their wealth are expecting
double-digit increases over the next five years, and 81 percent are
expecting an increase of 20 percent or more, compared with 42 percent
nationally.
- Four in 10 (39 percent) South Floridians surveyed said that a major
decline in housing prices would pose no threat to their family's wealth.
One in five (19 percent) said it would pose a threat.
- Sixty percent of those surveyed strongly or somewhat disagreed said that
even if housing prices were to decline by as much as 20 percent within
the next two to four years, they would be concerned about the long-term
effect on their overall wealth. An equal number (60 percent) strongly
or somewhat disagreed that they would delay major purchases, and only
one in five strongly or somewhat agreed that there would be a need to
make lifestyle changes to reduce household expenses.
Homes Away from Home
Of the 38 percent of wealthy South Floridians who own a second vacation home or condo, more than half (53 percent) said they made their last purchase more than five years ago, though 47 percent purchased more recently. Nearly two-thirds (62 percent) note they purchased their second home or condo simply for their ongoing personal use. Only 20 percent said they bought property as an investment. Another 19 percent indicate they own residential rental property, such as an apartment or condo for rent.
Thirty-five percent of those Floridians who said residential real estate is a major source of their financial assets, own rental properties -- slightly more than twice residential rental ownership of people who don't list real estate as a source of their wealth (15 percent).
Survey Methodology
These real estate results are the first in a series of findings from The PNC Financial Services Group's wealth and values survey. The survey was conducted by Harris Interactive online this fall among 1,485 adults (age 18 or over), including a statewide cross section of 205 adults (age 18 or over) in South Florida with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (if employed) or at least $1 million of investable assets (if retired). Figures for age, sex, race, education, region, income, asset level and propensity to be online were weighted where necessary to bring them into line with the actual proportions in the population. Overall results for the national sample of 1,485 respondents have a sampling error of +/- 2.5 percentage points, and sampling error for results from regional sub-samples and asset groups is higher and varies. For the South Florida sample of 205, the sampling error is +/- 7 percentage points.
The wealth and values survey was designed and managed by HNW, Inc. (http://www.hnw.com/), a leading provider of wealth marketing software and solutions to financial services companies and intermediaries seeking to capture and serve the high net worth market.
Harris Interactive Inc. (http://www.harrisinteractive.com/), based in Rochester, N.Y., is the 13th largest and the fastest-growing market research firm in the world, most widely known for The Harris Poll(R) and for its pioneering leadership in the online market research industry. Long recognized by its clients for delivering insights that enable confident business decisions, the Company blends the science of innovative research with the art of strategic consulting to deliver knowledge that leads to measurable and enduring value.
The PNC Financial Services Group, Inc. is one of the nation's largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.
This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. The PNC Financial Services Group, Inc. makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. The PNC Financial Services Group, Inc. cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk.
