Entries Tagged 'Gulf Coast' ↓

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As housing prices drop folks are coming out of the woodwork looking for bargains. If you are looking in fringe subdivisions far outside of major metropolitan areas they are all over the place. But if you are looking to get a bargain on prime beachfront property that will be very hard to do.

Lets face it, supply of beachfront property is way below the demand and will continue that way as the Baby Boomers retire and expect to have their birthright retirement on the beach. So if you were thinking that the prices for homes overlooking Cape Cod are going to drop dramatically, forget about it. The only place prices are weaker according to Money Magazine are in Florida and Hawaii in the United States and even then you will still pay a pretty penny to get direct access to the beach.

Ross says she sees “great value” right nowin Hawaii, where prices have fallen some 10%. Keith is finding deals in the Caribbean archipelago of Turks and Caicos - particularly the Grace Beach section, where developers overbuilt during the boom.

One market where both Ross and Keith see buying opportunities galore is Florida. The best Florida bargains are in condominiums. Kerry McNulty, a real estate agent in the Panhandle resort town of Destin, says Panhandle prices have fallen 25% to 30% since 2005. A two-bedroom beachfront condo that might have sold for $600,000 in 2005 can now be had for $425,000, he says.  via Money Magazine

The recovery efforts for the gulf coast region after the devestation by Hurricane Katrina are being hampered by the lack of low cost housing units available. Most of those who lived in lower end housing in the gulf region have found it hard to rebuild and easier to relocate to another part of the country.

The House of Representatives are looking to extend housing subsidies to encourage the development of low cost housing in the gulf region to entice builders to rebuild low end housing. Now the trick will be to see if those people will move back.

I know that in Atlanta, we absorbed many families displaced by the hurricanes and most of them have now integrated into the community and have no plans to move back anytime soon. The lack of economic opportunities compared to a vibrant city like Atlanta make the return much harder to do.

The tax provisions are scheduled to expire at the end of 2008, a date that Reps. John Lewis, D-Ga., and Jim Ramstad, R-Minn., said won’t provide enough time to develop the housing needed to replace the tens of thousands of units destroyed or severely damaged by Hurricanes Katrina and Rita in 2005.

“We need to make some tax-law adjustments in order to start the hammers pounding and get the bricks and mortar laid,” said Lewis, chairman of the Subcommittee on Oversight for the Ways and Means Committee.

The shortage of low- and moderate-income housing threatens the recovery of New Orleans and other Gulf Coast communities, said Ramstad, the panel’s ranking Republican. “This is simply unacceptable. This is wrong and must be corrected as soon as possible,” he said. via the Times Picayune.

Who can blame them.

The aftermath of Katrina on the Lousiana coast is still being felt with thousands of homeowners deciding not to rebuild in the towns and parishes along the coast. The devestation has been so great that whole towns are just not even coming back. The federal government has offered extensive funding to get residents to rebuild, but many are deciding to take the insurance money and sell the land back to the state instead of rebuilding and restarting their lives in towns that may be gone for good.

The AP looked at applications to the federally funded Louisiana Road Home program, which dispenses up to $150,000 per homeowner to rebuild or sell out to the state. Nearly 98,000 people have applied so far. Two-thirds of all applicants said they want to rebuild their damaged properties, while more than a quarter have indicated they want out or can’t decide what to do.

But in dozens of towns and neighborhoods, particularly those closest to the coast, the percentages of homeowners on the fence or on the way out are higher than average, with as many as two out of three homeowners not committed to rebuilding. The areas, 31 ZIP codes in all, include several heavily damaged New Orleans neighborhoods such as Lakeview and the Ninth Ward.

Michael Kurth, a McNeese State University economics professor who has done research for the Louisiana Recovery Authority, said he is not surprised. “With the scale of destruction that occurred in those coastal areas, it wasn’t a matter of `Let’s return in a month or in two months,’” Kurth said. “In a lot of cases, you couldn’t go back to what was there before. It’s just not there.” via FOXNews.com

While overall, the southeastern United States economy was vibrant, the residential real estate market showed the greatest weakness. Most of the region had a higher inventory of available properties, but Florida was in the deepest trouble. The speculation bubble has left too much inventory to be quickly absorbed by the local market.

While this is nothing new to regular readers, it is also nice to see that the overall economy is still going strong despite the housing slowdown. When the surplus housing is absorbed, the economy will be in a position to take off.

Florida reported the largest declines in sales and new home construction, the Atlanta Fed said in its Jan. 17 Beige Book report, a summary of economic conditions in six states, including Alabama, Florida, Georgia, and parts of Louisiana, Mississippi and Tennessee.

Home sales were more mixed elsewhere in the district, although inventories of homes for sale remained high across much of the region. Most Florida real estate agents reported price reductions on existing homes for sale, while there were scattered reports of price declines in other parts of the district as well, the report said.

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A study out of the University of Florida paints a picture that concurs with what we have been saying about the states real estate economy. Essentially the report indicates that the condo market is very overbuilt, the single family housing units have slowed but prices have remained fairly stable, and multifamily and commercial real estate are either holding their own or trending positively.

This is no surprise as Florida spent 2003–2005 feeding the speculators who were flipping condos primarily and single family home otherwise. Apartments and new construction were all converted to condo’s to feed this demand, with the resultant oversupply when the market turned. Now that the speculators have left there is a surplus inventory that will have to be absorbed, while there is a shortage of rental apartments and commercial properties as all of the construction was in condo’s.

“Condominium markets are clearly struggling and single-family markets are softening, although, contrary to some news reports, we don’t see evidence of prices tumbling,” Archer said. “But the picture is pretty healthy when you look at everything else. One important indicator of the real estate market is occupancy rates, and these appear to be stable or increasing in most markets, including apartments, office buildings, retail space, and industrial warehouse and distribution space.”
More than 70 percent of those surveyed said now is a bad time to build condos, and 46 percent said the same thing about single-family housing, but for 10 other property types the respondents were predominantly neutral or even positive, he said.
The foundation for the upbeat view about business property is the relative health and growth of Florida’s economy, Archer said.
“Employment is very good and the fundamentals that drive rental income and occupancy are still very strong,” he said. “In addition, interest rates have remained perhaps a little more stable than some people expected via the University of Florida News

While New Orleans has had a horrible year, if you are a real estate agent the market has been churning since the waters receded after Hurricane Katrina. Homes are being sold at a faster rate than the year before and what is surprising people the most, at a higher price than before  the storm.

The higher prices are largely due to an increase in value in suburban areas, many of which were not heavily flooded, or in dry areas of New Orleans. But flooded houses in the city are being bought as well, often at deep discounts of as much as $50 a square foot less than they would have sold for before the hurricane.
“We have a stronger housing market than before,” said Wade R. Ragas, professor emeritus of finance at the University of New Orleans and the president of a local consulting firm, Real Property Associates. “The strongest buying activity is, in general, closest to where it did not flood or where there was under 2 feet of water.”
Across the nine-parish region that includes New Orleans, 7,506 single-family homes were sold between January and the end of June, compared with 6,449 in the same period last year, according to statistics from real-estate groups. The average price so far this year is $221,244, compared with $193,097 in the same period last year.
The renewed interest in buying and selling and renovating has confounded some people who thought the housing market would be crippled for years. But it is just one of many counterintuitive contrasts that are defining the area and making easy predictions unreliable. via The Seattle Times:

It looks like the New Orleans real estate market is booming as people are making decisions on the homes that were destroyed or damaged in Katrina. The speculators are moving in and inventory is changing hands a  a rapid pace.

For the first quarter of the year, sales of single-family homes in the greater New Orleans area zoomed to $826 million, a jump of 60 percent over the first quarter of 2005, when sales totaled $517 million, according to New Orleans Metropolitan Association of Realtors; 3,829 residential units were sold, 960 more than the same period in 2005.
Experts say there’s nothing to be surprised about: One of the ironies of natural disasters is they’re often good for real estate. It’s a pattern real estate professionals witnessed in Florida after Hurricane Andrew and in Los Angeles in the aftermath of the Northridge earthquake.
“To use a terrible analogy, it’s like watching ‘Gone with the Wind’ for the fifth time,” said Arthur Sterbcow, president of Latter & Blum Inc., the 90-year-old real estate firm based in New Orleans. “It’s completely predictable. The market reacts the same way each time. It’s like watching a football game and having the play book in your hands.” via Chron.com

The housing market in Florida is slumping as the speculative element  is getting out and buyers remain wary as they wait to see what will happen. Tampa Bay saw a 29 percent decrease in volume with a 1 percent price increase. This tells me that sellers are holding firm on pricing while buyers are showing patience. The marketplace will stagnate or decline until a foundation is set.

While some are very upset, this is just the markets at work and make capitalism such a great economic system. We will have periods of passion and despair in short term periods, but over the long term, the  market will find a consistent trend.

This mirrors the statewide trend, which saw a 20 percent drop in homes sold, to 13,539 from 16,916 in February 2005. Rising inventory levels and still-low mortgage rates are contributing to better balance the marketplace, FAR said in a release.
Realtors from across the state report that the supply of homes available for sale in their markets is improving, offering buyers more housing opportunities. The statewide median price for single-family existing homes last month was $244,200, up 24 percent from the February 2005’s statewide median of $197,700. In Tampa Bay, home prices inched up 1 percent, to $222,200 in February, from $216,700 in January. But that represents a 27 percent increase over the same period last year via Tampa Bay Business Journal.

Almost 12 percent of mortgages in Katrina’s impact zone are more than 90 days behind in their mortgage payments a new study shows. This is 10 percent more than the rate before Katrina came through and devastated the region.

Not surprisingly, the highest level of mortgages behind in their payments is the sub prime market. The rate for the sub prime market is 24.3 percent, while FHA loans are at a default rate of over 21 percent.

It is the highest level of mortgage delinquency recorded in any region since 1972, when the trade group began its quarterly survey of lenders. The foreclosure rate is lower than the national average because many lenders have voluntarily agreed not to begin proceedings to claim the properties while borrowers get back on their feet. However, recovery appears to be taking longer than many had anticipated.
“The numbers are still very high four months after the storm,” said Jay Brinkman, vice president of research and economics for the Mortgage Bankers Association. He said the only comparison that comes close is with Alaska in the early 1980s, during the oil bust. “It’s a once-in-a-century thing, at least I hope,” he said. Before the storm, only about 1.33 percent of mortgages in Louisiana and 1.77 percent in Mississippi were seriously delinquent. via the Washington Post.

In another interesting and weird twist down in New Orleans and Louisiana politics, Governor Kathleen Blanco is concerned over the package for the 4.2 billion dollar rebuilding package proposed by President Bush. In typical Blanco form, it was the package that she and the Louisiana Recovery Board approved and applauded earlier. Now it is not enough or too restricting.

In Washington for the National Governor’s Association meeting, Blanco said she is worried that the restricting the housing money to “mitigation” uses could turn the worst flood-damaged sections of the city into green space, off limits to residential or commercial development.
“If (the proposal) stays like it is, it will be New Orleans National Park,” Blanco said. “It will be a problem for us unless they change the language.”
The housing money, included in a $19.8 billion supplemental spending package unveiled by the Bush administration two weeks ago, specifies that the money be subject to section 404 of the Robert Stafford Disaster Relief and Emergency Assistance Act.
Under the act, the state could spend the money to raise homes or fortify them against future flooding. The homes also could be purchased outright. But if they are, they cannot be placed back into commerce, only used as green space or wetlands.
The Bush proposal was originally hailed by Blanco and her Louisiana Recovery Authority, which helped negotiate the deal. It appeared to break an impasse over how Louisiana would cope with its post-Katrina housing shortage as it attempts to draw residents back to the region. via The Times Picayune.