Why Are They Building More Houses? (Orlando, Conway: sale, real estate, apartments)

[oresident]

I read an article today saying that housing starts had dropped some supposedly huge amount, like 25%.

But I don't get it. Why only 25%? With so much overinventory, why don't they stop completely? Isn't all that new building (still 75% of last year, when everything bombed) just further destroying the housing market? I mean are these guys digging their own graves or am I missing something? What is the point of building a new home right now?

Or are things somehow not as bad as the press makes it sound?

ores

[markhunt]

I can say that where I live in Auburndale (20 minutes west on I-4 from the Orlando Attractions), that are at least 8 new subdivisions currently going up in which I see new homes priced from 140K up to 700K (excluding Toll Brothers, the average seems to be around 200k). I travel through these subdivisions at least once every 2 weeks to see if the builders sold new homes. And everytime I drive through I see at least 1 new "Sold" sign in each community. Even the expensive Toll-Brothers luxury homes on Lake Juliana.

I think it all depends on what the area is and how the houses are priced.

On the flip side, I work near OIA and I see a new community going up on Conway road across the street from some income restricted apartments, and the homes have a sign in the from that says "From the Low 400's. I keep wondering to myself who and why would anyone want to pay 400K to live in this area? So far I don't think they have sold any homes, but I always look to see.

[nickindependence]

It is amazing to see isnt it. Im a Realtor in the area and my wife is a title agent for one of the big builders and in terms of the Kissmmee area there are still alot of Brits coming over and buying and alot of builder inventory is being eaten up that way. The other reason is by banging out so many homes, all they care about is the bottom line and units sold. If you go looking to buy a home at the end of the month and even at the builder end of quater, they want to meet their quota so they slash vasts amounts off their prices, but you need to know which builder do this of course. Ive been in closings and just to get a sale they will slash an extra $25000 there and then.
Other builders however, are still building but nowhere near the amount they were before and in one area i know they are only building when a contact is on the house. It is common to see that house vacant after because they backed out but in alot of these cases the buyer lost their deposit.

[right-here-i-say]

Basically, if you can build a brand new house and sell it cheaper than existing homes at a profit, then why not?

That is one thing I was thinking about when the prices were going up on a daily basis. Why would somebody pay $350K for a home that costs $200K to build? Is the land worth $150K? Maybe in some places, but not in most of these overnight subdivisions where built.

So as an example, now, those people who paid $350K, their house can sell for $275K. But the builders can still build it for $200K. This is why Realtors always say "Location Location Location." If there is room to build, your home value will always depend on the cost of land and the cost to build. If there is no more room to build and you are in a great school district or you are on the ocean, that is where "Location Location Location" really comes into play.

[rholborn]

These suggestions are courtesy of Joe Klock, longtime South Florida REALTOR and consultant. They are worth reading!

THINKING POINTS FOR BUYERS

- The doom and gloom you're hearing about in the mass media should not affect your decision to act if you are ready, willing, able and eager to do so.
- Prices may still go lower, but as soon as they hit bottom, they will rebound with a vengeance, quickly wiping out any advantage you might gain by waiting.
- Right now, you have an unusually wide selection of properties to choose from, including those owned by people highly motivated to sell immediately.
- With so many potential buyers holding off, you have a much smaller number of people competing with you for the available properties.
- When the turnaround comes, those "waiters" will be your competitors, making your offer less attractive to those selling their homes.
- Financing is still available at historically low interest rates, but is sure to escalate when activity resumes at more normal levels.
- Even if you SHOULD pay a little more than you would if you actually hit the "bottom" of the market, normal appreciation would make the difference irrelevant within a few short years.
- If you as an individual ARE ready willing, able and eager to make a move, the time for action is NOW!

[**NoodLes**]

Originally Posted by rholborn

These suggestions are courtesy of Joe Klock, longtime South Florida REALTOR and consultant. They are worth reading!

THINKING POINTS FOR BUYERS

- The doom and gloom you're hearing about in the mass media should not affect your decision to act if you are ready, willing, able and eager to do so.
- Prices may still go lower, but as soon as they hit bottom, they will rebound with a vengeance, quickly wiping out any advantage you might gain by waiting.
- Right now, you have an unusually wide selection of properties to choose from, including those owned by people highly motivated to sell immediately.
- With so many potential buyers holding off, you have a much smaller number of people competing with you for the available properties.
- When the turnaround comes, those "waiters" will be your competitors, making your offer less attractive to those selling their homes.
- Financing is still available at historically low interest rates, but is sure to escalate when activity resumes at more normal levels.
- Even if you SHOULD pay a little more than you would if you actually hit the "bottom" of the market, normal appreciation would make the difference irrelevant within a few short years.
- If you as an individual ARE ready willing, able and eager to make a move, the time for action is NOW!

Those are some really great points there. When I was buying my property I looked at MY finances and what worked out best for myself. I didn't even realize what the market was doing. In the end it was cheaper for me to own than to rent while building equity at the same time. You never know what the market will do, I think it goes on a case for case basis while keeping market conditions in the background.

[rholborn]

Thank you for the compliment Noodles, I thought it may help oreresident's question. Joe Klock also had some recent advice for sellers in this market too, but so it related to the question i thought i would include his comments for buyers.

[Magnulus]

The housing market isn't going to rebound "with a vengence". Don't be in a rush to buy. Buyers are going to have at least two years, at the very least, to look over properties.

I agree about Conway. Somebody is smoking crack to sell houses down there for 400,000 dollars. Alot of the outskirts of Orlando and Orange County are thoroughly unimpressive and there's no way any house there is worth over 200,000 dollars, unless it's a "luxury home". My brother knows some folks that live in East Orange County, they bought years ago before the boom at 90,000 dollars. Truth is the place they live is not a nice neighborhood at all- not much crime but the area is ugly, they are surrounded by Amscots and very few sidewalks, their street sucks (it isn't even paved). There's no way a house like that would be worth more than 100,000 dollars.

My guess is the builders are still building because some of them are hoping the market will still turn around. They've put everything in place to build, maybe they think it would be a waste to stop building now. If they can undercut existing homes, maybe they'll have an edge, too.

[xtranaut]

THE FIELD OF DREAMS IS JUST ANOTHER SUBDIVISION!

There are a lot of economic factors at work with this mortgage and Real Estate crisis. Fllorida suffered from a lot of speculators and flippers too but, in general, most who are ready to retire, ignore all this if they have a healthy retirement income and some cash from their northern home.

This is what the builders and banks count on - because there is equity assurance in the risk quotient.

When you retire and move your life to the land of leisure, you aren't really that concerned about appreication. You want an afforable, comfortable place to live out your years but for those who mustconsider buying a first time home or being transferred, I would take all factors into account that lead ultimately to the best return when I had to sell.

Like the old addage..."buy low - sell high". Sometimes that means investing modestly or looking for someone elses misfortune. It takes considerable research.

Just be aware. Right now Realtors are hungry and some are starting to act like shady car salesmen. Do your own investigating.

The bottom line is that the building continues because people continue to move to Florida --- and I aint working for the Chamber so I will tell you, to me, that is the most unattractive thing about Florida. It's losing it's charm and looking more like a cardboard cutout.