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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (60433)	8/22/2006 2:34:35 PM
From: Les H	Read Replies (1) \| Respond to of 306849

Investors Coming Back to Haunt Florida Builders Builders in Florida who grew accustomed during the industry’s recent boom times to selling out their developments even before a shovel went into the ground are noticing a stark shift in the marketplace and could find themselves in trouble if they don’t take steps to manage investors who are nearing closing day with neither the intention nor the means to close on those sales. ... A Problem With Pre-Sales But two things happened on the way to the payoff: last year’s hurricane season brought an end to the bullish psychology driving up prices and buyers no longer feel impelled to rush to a sales office on the day that the for-sale signs go up. And, compounding that piece of bad news, builders’ costs went up 25%-30% after Katrina, Rita and Wilma blew through, to levels exceeding pre-sales prices. For instance, he said, in West Palm Beach, where 300 to 500 condominium units are coming off the boards every day, the pre-sales price was averaging $175 to $200 a square foot. Today, the cost of completing those units is coming in at least at $200 a square foot and many developers are realizing they may have paid too much for land. Under that set of circumstances, “you need to be mining the backlog now,” Kanjian said, and “you need to be finding out what investors are doing. They didn’t put options in, so their homes aren’t going to be the easiest to sell, although they may be the least expensive. Even if the investor wants to flip it, there aren’t a lot of buyers,” because people are waiting for prices to drop, Kanjian said, even if it isn’t possible to build for the prices they want to pay. nbnnews.com