Florida Land Values Diminish as Real Estate Market Slows Down
As previously reported, home prices have been falling. Therefore, it’s an ideal time to seek out a Florida home loan in many areas. The same positive outlook cannot be applied to real estate developers, however, as land values have also plummeted.
This drop in prices for townhouse developments is the latest sign of changes in the Florida housing market.
According to Reese Stigliano, a principal with Commercial Property Realty Advisors in Fort Lauderdale, costs for townhouse land with development entitlements in place have dropped by one-third to one-half.
A shift in Florida real estate
The phenomenon is part of a major shift in the real estate market from the prosperous days of the last five years that have seen a spurt in multi-family projects. The drop in raw land prices comes amid conversion reversions - would-be condo projects going back to rentals. The unfolding of this market phase is also expected to bring income buyers back to the multi-family marketplace because rents are on the rise.
Jim Flood, regional president of HomeBanc Mortgage Corp. in Deerfield Beach, expects South Florida property values to level off following the market adjustment of the last four months.
“Last year, 80 percent of our listings sold within 60 days; this year it’s 63 percent,” said Ardene Clark, residential regional VP for Coldwell Banker in Broward County.
In the third week of March, Clark’s agents sold more properties than new listings coming in, the first time that’s happened in five months. It’s a sign that more Florida home loans are being applied for and approved at least.
Flood said Florida home loan innovations include a new generation of interest-only loans that have longer adjustment periods of five and seven years.
“They provide the security of a low, fixed payment for an extended period of time,” he said.
Scaling back on Florida condo conversions
An acquisitions analyst at a local real estate firm (who asked not to be named) sees a growing trend of conversion reversions. He pointed out two communities bought as conversions in Tamarac that have stayed or reverted to rentals - the 292-unit Jasmine of Tamarac and the 164-unit University Club. They’re example of revised plans for Florida real estate developers.
The condo conversion market has been a financial spectacle during the past few years. One major player, Apartment Realty Advisors, did 51 transactions in the Florida multi-family sector for $2.7 billion in 2005, up from $1.4 billion in 2004.
For 2006, Apartment Realty Advisors sees income buyers, such as REITs and pension funds, playing a larger role in the South Florida multi-family market, as converters move to more affordable markets in central, western and northern Florida.
As the building market slows, sellers will be more apt to offer buyers a deal on their Florida home loan. There’s a need to bring down the rising inventory of houses in the state.
