South Florida's homebuilding industry was among a handful of
ground-zero targets hit hardest by 2008's construction market
meltdown. The latest real estate statistics continue to show
slumping home prices, especially compared to the boom years of
2004 and 2005. But a few positive signs in recent weeks may
indicate that the region is poised for a recovery. South
Florida is seeing a rebound in sales and a decline in builder
inventory, reports the Palm Beach Post
("
Home sales up 36 percent in Palm Beach County, 46 percent on
Treasure Coast," by Kimberley Miller).
The rebound in sales was spurred at least in part by the
pending expiration of an $8,000 tax credit for first-time
homebuyers. But the Congress' November vote to extend that
credit and tack on a $6,500 credit for trade-up or trade-down
buyers will likely add more momentum to the market resurgence,
in Florida as well as nationally. Even wealthier homebuyers
whose incomes may exceed the cap on tax credit eligibility are
likely to find South Florida's steeply discounted home prices
attractive — as the Palm Beach Post notes, Palm Beach
County's median sales price for this October of $243,900
compares with an October 2005 median of $416,500, while the
Treasure Coast's October 2009 median of $110,400 compares with
a 2005 price of $263,500.
Low prices, of course, are a mixed blessing for homebuilders
because, while they attract buyers, they also squeeze builder
margins severely. Florida conditions, however, are good enough
to stimulate some builders to get back into construction,
reports the Post
("
A cautious turnaround: Builders running low on new home
inventory," by Kimberley Miller). "For the first time since
the real estate bust, a recent study showed that construction
of new single-family detached homes in Palm Beach County
subdivisions is outpacing the number of homes people are moving
into. In other words, builders have finally run low on
inventory," the Post observes.
At least one major Florida production builder is reporting
good news. GL Homes, the
second largest builder in the state, says traffic in sales
offices is up by 70% — and home sales are up too.
"We've sold close to 1,000 homes this year," says Division
President for GL Homes, Jill DiDonna, "which is a tremendous
increase from where we were in 2007 and 2008. So yeah, we're
selling, we're building -- we're definitely starting to see
signs of a turnaround in Florida. Now, I can't say if that's
true for all builders, but in the areas that we're building in,
it seems that it's really picked up year over year."
GL's labor and materials costs have come down, DiDonna
reports, and the company's efforts to pare down and simplify
its house designs have helped GL offer houses at lower price
points. And DiDonna says GL is not trying to compete head to
head against the flood of bank-owned or short-sale properties
that are weighing down the Florida market. "A lot of those
properties have issues," she points out. "New homes are always
going to command a premium over distressed properties. That is
what we're finding, in the areas where we build: People want to
buy new. And buyers today are very motivated. There is a lot
going on. If you can buy, it is a very good time to buy.
Besides the decreases in pricing, which have happened in almost
every market across the country, the rates on mortgages are
really tremendous; the homebuyer tax credit is now being
extended and expanded; all those factors are providing a real
rejuvenation in the marketplace."
Will it last? Hard to know for sure, says DiDonna. But she
says, "It doesn't seem like something that's fleeting, because
it's been a year-round sustained increase in business. Sure,
the business is different, the profits are different, the
buyers are a bit different, but in the end, when you're looking
at every month of 2009 being better than every month in 2008,
you kind of feel like things are starting to turn."