Lower Demand, Anemic Housing Market Mean Major Sales Decline For Top Florida Developer
A deflating Florida housing market statewide is, inevitably, taking its toll on one of the biggest developers around.
The St. Joe Co., developer of Tallahassee’s SouthWood community and the state’s biggest private landowner, announced Tuesday that its net income for the second quarter was $19 million, or almost half of what it was during the same quarter in 2005.
Earlier this year, the real estate developer reported slowing sales in its resort communities, but its sales are now declining in its primary-home communities as well, execs say.
“The decrease is primarily the result of the real-estate market slowdown we have experienced,” said Britt Greene, President of St. Joe Towns and Resorts and St. Joe Commercial.
St. Joe representatives added, however, that the company is positioned to take advantage when the market rebounds. Experts predict that while Florida home loans have risen more than 1 percent since June 2005 — a major factor in the lessening demand for the state’s housing — rates are unlikely to eclipse 7 percent this year. Increased borrowing costs and rising insurance premiums have tempered sales considerably across Florida.
Overvalued segments of the Florida real estate market still have to come back down to Earth for sales to bounce back, but St. Joe is confident they will, and soon. With its headquarters in Jacksonville, the company owns 825,000 acres, much of it in Northwest Florida, and is currently seeking approval to build more than 44,000 new homes.
The Florida Association of Realtors reported this week that home sales last quarter dropped 29 percent across the Sunshine State. Home sales in the Tallahassee area, in the northern part of Florida (which is not nearly as overheated as the South, pricing-wise), dropped 7 percent during the same time period.
In some St. Joe developments including SouthWood, permit delays and establishing lots affected the availability of home sites. St. Joe closed on 47 houses and home sites in SouthWood in the quarter ending June 30, while during the same quarter of ‘05, St. Joe closed on 80 houses and sites.
The company’s sales last month also were boosted by the sale for $10.6 million of 2,590 acres in Leon County to The Nature Conservancy for a state park along the St. Marks River. St. Joe also continues to support the controversial, planned relocation of the airport in Panama City to adjacent, company-owned land in Bay County.
Peter S. Rummell, St. Joe Chairman, President and CEO, said his company officials couldn’t get builders to talk with them five years ago. Now St. Joe is developing relationships with many of the state’s builders.
“They bring market muscle and buying power and expertise that, frankly, in some areas we don’t have,” he said. “If they can do it more efficiently than we can, that makes sense.”
