The Housing Bubble

The Herald Tribune reports from Florida. “The Sky Sotheby’s/J.P. King real estate auction, offering one of the largest luxury home portfolios ever presented in a single swoop, drew an overflow crowd of 300 people. What the event showed even those in Southwest Florida’s all-important real estate industry who decided to bypass the gathering was that people are willing to buy, but definitely not at top dollar.”

“Some properties only generated half of their listed prices, while others commanded up to 80 percent.”

“Well-known Sarasota investor Marvin Kaplan bought a four-bedroom, three-bath house on Parmeron Lane in Gladstone Park for $300,000. The builder had about $590,000 in the home, meaning Kaplan got it for about 49 percent off. Kaplan offered to buy three more at the same price but the owner turned him down.”

“Someone got a tremendous $125,000 bargain on the absolute sale of a vacant lot near Sarasota Memorial Hospital. The property last sold for $415,000 in 2005.”

“Earl Niemoth summed up what might be the consensus among a real estate industry still struggling with slow sales and burgeoning inventory. ‘The bottom line is that they moved some property today,’ he said.”

The Orlando Sentinel. “Builders in the new Sawgrass subdivision south of Orlando are adding this weekend to what is already the fastest-growing segment of the housing market in Central Florida: model homes.”

“Builders have significantly cut the number of homes, condominiums and town houses they’re putting up in the region, as demand has slumped. But model homes are making a brisk comeback.”

“‘Before, all we needed to do was put up a sign, a ‘Coming Soon’ sign, and we’d get 400 people lined up. Now you really have to build and decorate model homes,’ said David Byrnes, Orlando division president of Beazer Homes.”

“According to Metrostudy, builders in the six-county area have boosted the total number of model homes by more than 50 percent in less than a year. The number of subdivision models in those counties, Orange, Seminole, Osceola, Lake, Volusia and Polk, mushroomed from 630 at the end of last June to more than 950 by the end of March, with much of the increase coming in the first quarter of the year.”

“‘It’s a reflection of the lack of sales activity,’ said Anthony Crocco, director of Metrostudy’s Central Florida and Northeast divisions.”

From Reuters. “The St. Joe Co. on Friday said it was temporarily suspending sales at its SevenShores luxury condominium development in Bradenton, Fla., while it updates its market research.”

“‘The slowing market has provided an opportunity to measure and analyze current demand so that we can better align our future product offerings before moving forward with sales,’ Nick Cassala, the company’s president of Northeast/Central Florida, said in a statement.”

The Wall Street Journal. “If the housing-market shakeout has an epicenter, it probably lies in Florida. Goldman Sachs economists note that speculative buyers in houses and, especially, condos fed a building boom that pushed Florida’s housing stock up far more quickly than the state’s population grew.”

“Speculators who have held back on selling now bear heavy costs. According to the U.S. Commerce Department, the number of vacant homes for sale in Florida doubled last year to 4.3 percent of the state’s total housing stock. That’s the highest vacancy rate in the country.”

“Home builders, hard hit everywhere, are getting hit hardest in Florida. Building permits for new-home construction were 51 percent below their year-ago level in the first quarter, according to the Commerce Department.”

“Florida’s housing woes likely will cause a statewide economic recession, according to New York investment firm Goldman Sachs.”

“Florida sales of single-family existing homes were down 26 percent in the first quarter of 2007 compared with the same period in 2006, according to the Florida Association of Realtors. Of 20 Metropolitan Statistical Areas, 19 of 20 were down in sales. Median sales prices were down 3 percent statewide.”

The TC Palm. “There were 3,500 more people on the Treasure Coast seeking work in April than a year earlier, with many of the jobs lost in construction, utilities and transportation.”

“Robert Sak, a Fort Pierce-based independent building inspector, said the numbers appear to match the market. ‘Prior to the slump, I had four to five inspections per day,’ said Sak, who inspects homes across the Treasure Coast. ‘Now I am doing one a day.’”

“‘Any business that depends on housing is going to be affected by this,’ said custom homebuilder Richard Hope in Vero Beach. ‘Furniture stores and landscaping businesses have been hurt pretty badly by all this.’”

“Merle Dimbath, Treasure Coast economist, said the report does not reflect the region’s true unemployment figures. ‘There’s a lot of people who are underemployed because their hours have been cut back from 40 to 50 hours a week to 12 to 18 hours a week,’ Dimbath said. ‘My suspicion is, a lot of people attached to the housing market are self- employed and file a 1099, so they won’t show up in this report.’”

“Susan Billero, owner of Billero & Billero Properties, said because developers are building less, there is little work available for construction workers. Additionally, less demand for homes means less traffic at Realtor offices. ‘A lot of (Realtor) offices were letting people go,’ Billero said.”

The Sun Sentinel. “The housing slump is chipping away at South Florida’s sturdy job market. Construction and real estate companies with bloated payrolls during the boom years now are cutting back, and experts predict those firms will shed more jobs in the coming months.”

“In April, Broward and Palm Beach counties lost almost 12,000 jobs, and statewide the building and real estate sectors led the payroll cuts, according to figures released Friday.”

“‘I just needed a break,’ longtime agent Myrna Bier of Boca Raton said. She recently left Lang Realty frustrated with the industry downturn and the hoard of people who jumped into the profession when housing was hot.”

“‘Anybody can go to school and get a license [to sell real estate]. There are a lot of amateurs out there who don’t know what they’re doing,’ she said.”

“Meanwhile, Broward County lost 6,362 jobs last month, compared with March.”

“There could be more job losses to come. ‘So far, we haven’t really seen the effects of a construction collapse,’ David Denslow of the University of Florida Bureau of Business and Economic Research, said. But he’s expecting more declines, following slowdowns in the housing market and the nation’s economy at the start of the year.”

The News Press. “Seasonal hiring declines and the area’s slowed construction industry pushed Lee County’s unemployment rate up slightly in April.”

“Builders in unincorporated Lee County, Bonita Springs and Fort Myers Beach pulled 264 permits last month for single-family homes, 69 percent fewer than the same month a year ago.”

“While the slowdown has had a direct impact on construction hiring, it also has slowed hiring in financial activities and the professional and business services sectors.”

“Real estate agent Virginia Andrade said the slow market means she is looking for another job to supplement her income. ‘I had a full-time job and I left it a few months ago to do real estate full time,’ said Andrade. ‘And now, things have slowed down so I am looking around and preparing my resume.’”

From WJHG 7. “New data released today at the Tax and Budget Reform Commission shows fewer families with children are moving to Florida. And, more families with kids are leaving the state. The high cost of housing is getting the most blame.”

“Forecasters thought 48 thousand new children would enroll in Florida schools this year. October figures show just 477 did. By now, many more are expected to have left the state, making this the first time in modern history fewer kids are in school here from one year to the next.”