Market Still Sizzles in Daytona Beach

With home prices through the roof and the climate even hotter than the weather, observers have been predicting a real estate cool down in Volusia and Flagler counties for some time. After all, how many seven-figure luxury condominiums can a small area really support? The Wall Street Journal mentioned Daytona Beach (right) — along with Las Vegas, Phoenix, Fresno, Calif., and Orlando — in an article about rising housing inventories last week. The above markets were cited as the most vulnerable to price weakness if investors’ appetites wane.

Yet many local developers and Realtors remain downright bullish about the future, writes Donna Callea of the Daytona Beach News-Journal, even as the inventory of houses and condos keeps rising. Doug Cook, whose company, Cook Development, is currently working on five planned luxury oceanfront condominiums in Daytona Beach Shores, calls talk of the bubble bursting hogwash.

“The demand is still very strong. We normally sell out our buildings before they break ground . . . This area is still a bargain.”

Cook’s units sell from $500,000 to $2 million. Since 65 percent of his customers are buyers who pay cash for second homes, he is not worried that rising interest rates on Florida home loans will quell demand.

“We do not do business with most speculators . . . I weed out people who can’t close,” said the developer, referring to “flippers.” It is an increasingly common practice for people to put down payments of 10 percent into a unit during construction with the sole intention of reselling at a big profit before investing any additional funds.

Karin Udolf, a local RE/MAX agent who specializes in luxury condos, agrees with Cook’s assessment.

“There’s not going to be a cooling down. [The market] is hotter than ever. I believe we will be in a great position for many years to come. Central Florida real estate is at the beginning of being discovered. I invest all my money in real estate,” she said.

Some analysts still say the housing boom nationwide shows signs of lessening, and that it’s becoming a buyer’s rather than a seller’s market. Properties are staying on the market longer, and is greater inventory from which to choose. Gloria Weimer, president of the New Smyrna Beach Board of Realtors, acknowledges that she has seen a slowdown, but not a decrease in values. Activity tapering off this time of year is hardly unusual, she added.

“The market here for upscale property is being fueled by well-off baby boomers from other parts of the country who can afford two or three homes or investment properties, and they’re going to keep coming,” Weimer predicted. “We’re just catching up with the rest of Florida.”

Wayne Archer, an associate professor at the Center for Real Estate Studies at the University of Florida in Gainesville, points out that real estate has always been cyclical. People are as committed as ever to migration to Florida, and with the exception of a huge economic downturn or markedly sharp increase in Florida home loan rates, the demand for high-end housing here should remain solid.

Although inventories are up, sales remain strong in the Daytona Beach vicinity. Higher home prices have even priced some working people of modest means out of the market. The median price of a resale is now more than $220,000 in the Volusia-Flagler area, which local real estate agents predict will slow the market until incomes start catching up to prices. As we are also seeing with Orlando real estate, buyers are finally seeing openings.

While views differ on the immediate impact of rising rates and inventory, analysts all agree that investment in the area’s real estate still makes good financial sense. The population of the area is predicted to double within the next 20 years, and as we know, real estate is all about supply and demand. With Florida home loan rates still low, and prices levelling off, this could be the best time in years to get in the game.