>> Florida’s housing crisis will be long-lasting as condos and homes hastily built during the real estate bubble begin to deteriorate. Poorly designed and cheaply constructed, the buildings are susceptible to mold and water intrusion that are expensive to repair. Legal disputes about liability will further delay repairs while the properties continue to suffer neglect, making repairs even more expensive. Many will eventually become derelicts, shrinking the property tax base. Revenue strapped municipalities will encourage quick development of new projects by relaxing codes and reducing fees, restarting the familiar boom and bust cycle of Florida’s economy. -- New Geography: Condo Culture -- How Florida became Floridastan (Richard Reep), 22May2011 >> Florida’s comparatively cheap real estate will attract some retiring Boomers wiped-out by the Great Recession. With meagre savings (many have less than $50,000 in their accounts), loss of home equity and uncertainty about future Social Security benefits, the current wave of retirees will look for cheap places to live. Florida will offer bargain prices, but with the vast inventory of unsold properties, buyers will see little prospect of near-term appreciation -- especially since prices have yet to stabilize. One list of “ideal retirement communities” in the U.S. includes only one Florida location (Sarasota) because of the bleak real estate market. -- Wall Street Journal: The case for Sunbelt real estate (Brett Arrends), 04Feb2011; Morningstar: FInding an ideal retirement community (John F. Wasik), 04Feb2011 >> Florida’s residential real estate will attract investors searching for havens from “debasement inflation”. As prices rise without growth in the U.S. and other developed economies, governments will begin to print money when they cannot continue to borrow, spawning a bubble in long-term bonds. The next stage in the crisis will be the collapse of currencies. “There will be a crisis in confidence in developed market currencies,” predicts hedge fund manager William Browder. “You want to own hard assets”, he advises, including U.S. residential real estate which is 50 percent off its peak and will become an important inflation hedge. Hard-hit Florida will be an especially good investment. -- New York Times: Forecasting rising prices with no growth, then a collapse of currencies. (Anita Baghavan), 19Nov2010; Morningstar: Even in a slow economy, inflation can still strike in U.S. (Bob Johnson), 17Nov2010 >> Housing market will see burgeoning interest in smaller, energy-efficient homes in walkable neighborhoods with good public transportation. The demand will be particularly strong among Boomers who have tired of suburban living and their children who want to live where there are the best job opportunities and a variety of urban diversions. Families will have significantly more disposable income if they own only one car, rather than the two that are necessary in car-centric suburbs. (Dropping one car will enable the typical family to qualify for a $100,000 larger mortgage.) An energy-efficient home will also relieve some of the pressure on strained household budgets. Shift to energy-efficient home and building technologies will revive sales in industries that depend on a pick up in residential construction. -- Washington Monthly: The next real estate boom (How housing (yes, housing) can turn the economy around. (Patrick C. Doherty and Christopher Leinberger), Nov-Dec 2010 >> Florida builders not burdened by debt will be able to make a profit with small, economical projects. Unencumbered by debts, builders can adapt quickly to changes in the marketplace – especially if they can self-finance ventures and reduce the expense of subcontracting. While there will be little demand for houses selling for more than $300 thousand, the market at the low-end will grow, enabling builders to gradually raise prices. -- Sarasota Herald Tribune: Home building inSouthwest Florida is on the mend (Michael Braga), 11July10 >> Builders who are
debt-free and have the cash to invest in new projects will be able to take
advantage of a down market and purchase land for new ventures at steep
discounts. New home builders are experts at land development and will use their
cash-on-hand to build more right-sized homes at a lower cost (and better
margin) that fit demand and make a profit. Seeking Alpha; Builders will build again (Y
Charts), 28July2010 |
Construction and Real Estate |
