Treasure Coast of Florida

TREASURE COAST HOUSING MARKET UPDATE

Recently I attended a seminar where a local economist presented facts about what is going on in the housing market on the Treasure Coast of Florida. The facts were interesting and somewhat sobering. We all know that the "boom" and craziness of housing prices is a thing of the past (at least for the foreseeable future). We have priced ourselves out of the affordability market. A majority of the people who live here and work here cannot afford the houses once the taxes and insurance are added on to the payment. You all know of course that our state legislators are working on those issues. Cheap money (aka subprime lending) along with the investors and speculators (flippers) really helped drive up the prices of homes.

The tri-county area (Indian River, St Lucie and Martin Counties) has seen a decrease of 43% in building in the past year. The inventory of vacant homes has increased 390% since the second quarter of 2005. You know that is evident just by driving down any street. Also, in our tri-county area there is a 44.7 month supply of vacant developed lots, which is expected to remain excessive for the next 24 months.

Indian River County currently has a 13.6 month supply of homes under construction and homes currently on the market for sale. The bulk of the homes being built there are in the $300,000-$500,000 range. However, the number of units under construction has fallen to 2003 levels and so total inventory has declined over the past three quarters.

In St Lucie County, as of the 2nd quarter of 2007, there was an inventory of 1,368 vacant homes - that is a 9.5 month supply. Add to that the homes currently under construction and there is a 15.3 month supply of NEW homes for sale. Now add to that all the houses, condos and townhouses for sale (new and not new) and you have a 20.8 month supply of housing inventory in St Lucie County. Per the economist, we should reach equilibrium some time in late 2008 - meaning that the number of properties for sale will come much closer to the number of buyers out there looking to purchase. In 2007 40% of homes for sale are priced between $300,000-$400,000 - which is out of range for 60% of the local market of buyers. In 2005 St Lucie County was one of the fastest growing counties in the United States - and now, we have one of the largest inventory hangovers.

Martin County which seems to have a more "controlled growth" mentality has a smaller amount of inventory available. Building starts are down. It is surmised that Martin County will possibly reach equilibrium late in 2007.

In the tri-county area there is a 35.1 month supply of vacant lots for sale. Two of the newer subdivisions in St Lucie County have many vacant lots, for example, in Tradition there are 717 lots available to build on. In Tesoro there are 468.

Foreclosures are on the rise, as are "short sales". Foreclosures are expected to even go higher by mid-2008 as adjustable rate mortgages reset (their rates). So what will it take to get back to "normal" (whatever normal is)? The rising home prices far outpaced the increases in income which affected the affordability of the homes. Prices in most markets will have to decline - some even significantly in order to restart the market. It is painful, won't be pleasant and won't be pretty, but this correction must occur to get the housing market back on track.

The economist who provided much of the facts in this article is Mr. william Pittenger, Senior Vice President, Chief Real Estate Economist and Risk Advisor for Seacoast Nation Bank. He said something that I thought was right on and which I would like to quote for you now: "Value is not an inherent quality. It is directly linked to the supply and demand relationship in the marketplace. As a result, land value (or houses(my words)), like the value of other commodities, can be subject to wild price swings." The housing market will improve, will come back, but it will take time.

Labels: economy, foreclosure, housing market, short sale

posted by St Lucie Homes on the Treasure Coast @ 9/25/2007 01:24:00 PM