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."
