Headlines – Week of August 12, 2012
August 24, 2012
Excess Condos Drying Up in Florida
The Miami Herald recently reported that 45 new condo towers are in various stages of development for the Southeast Florida area, including about 1200 new units in the beachtown of Sunny Isles Beach, just north of Miami Beach.
Even more amazing, according to another report from Miami Condo Investments, three Miami projects that launched earlier this year are already 97 percent sold out. Two of the three projects have not even broken grounded yet.
In 2006, Florida condo prices hit record highs and people waited in line to buy pre-construction opportunities that were being sold out of aluminum trailers. By 2010, many of those same buyers had walked away from their dreams losing thousands of dollars, and on one else was waiting in line.
After the boom, prices plummeted about 50% by 2011. New buildings that were completed in 2007 and 2008 sat empty and buyers were nowhere to be seen. Developers filed bankruptcy all over the state and slashed prices to try to sell the excess inventory. Experts said it would take years to liquidate the condo-bust nightmare.
Real estate in some parts of Florida is actually flourishing again. The Gold Coast area from Palm Beach to South Beach has seen a big increase in sales since early 2011. Many of these condos are being sold to Canadian buyers.
Most U.S housing experts agree that Florida is in the early stages of a huge rebound. Almost 95% of the 49,000 new condos that were constructed in South Florida’s seven biggest coastal markets during the boom are now sold and the inventory of new beachfront condos priced under $1 million is down to a handful. According to the Miami Herald, the housing market in much of South Florida is almost back to the peak boom years of 2005 and 2006.
Many believe that Florida home prices are probably going to jump over the next decade since there has been very little construction in the state since the bust and nothing substantial will be coming to the market for at least a few years, when most of the baby boomers will be in their retirement phase.
Some real estate people believe prices in the most popular coastal areas could be twice as much as today’s market. According to a recent report from Fiserv, most metro areas in Florida should see annualized appreciation of 8% to 10% in home prices over the next five years.
Second Home Statistics
The National Association of Realtors (NAR) recently stated that international buyers purchased US$82.5 billion worth of property in the U.S. for the year ending March 31, 2012, compared to US$66 billion a year earlier. The latest numbers from the NAR show that foreign buyers are having an impact in the United States. Increasingly the buyers are Canadian and represent about a quarter of all buyers.
Based on the tales of real estate professionals and financial planners, multiple home ownership is becoming more common as the wealthy spread out beyond just owning a cottage to having a U.S. address.
Many real estate experts believe that if you are only using something 10% or 20% of the time it doesn’t make financial sense to own a second (or third) home unless the owner is renting out the property.
Southwest Florida’s Economy Outpacing State’s
According to The Econocast index Southwest Florida’s economy outpaced the state in the first quarter.
The data calculated an array of economic statistics, from housing starts to unemployment claims. The report showed that Charlotte County’s economy growing at triple the statewide rate and the Sarasota-Bradenton economy doubling the state pace.
Still, the state economy and those of the 20 metropolitan areas that are tracked in the index created by Orlando-based Fishkind & Associates Inc. are far below where they were at the height of the building boom. Despite the improvements, the index stands now at roughly where it was 11 years ago.
Statewide, the index was up 1.51 percent in the first quarter and 4.8 percent from where it stood at the end of the first quarter of 2011.
The statewide improvements were tied to an accelerating decline in new unemployment claims, a 38 percent jump in housing starts, a mild increase in median housing prices and a jump in new construction, tied mainly to the building of apartments, Fishkind Associates reported.
The only component of the index to fall was the number of single-family homes sold in the quarter, which was down roughly 1 percent from the end of 2011.
While Charlotte County’s economy showed the biggest improvement in the quarter, the community had the farthest to climb. With the first quarter improvement, Charlotte lost its place at the bottom of the index’s list, replaced by Daytona Beach.
After Charlotte, the Palm Coast-Flagler County metro area had the strongest quarter, with a 3.91 percent improvement. The Naples-Marco Island metro area was next at 3.31 percent, with Sarasota Bradenton fourth with 3.10 percent.
Posted by Scott R. Lodde