Housing Indexes Underscore Sluggish South Florida Housing Market
Single-family home prices nationwide fell in January compared with a year ago, the worst showing in at least six years.
In the S&P/Case-Shiller housing index showed that in the Miami metro area, which includes Broward and Palm Beach County, prices grew by more than 4 percent annually but declined slightly from December to January.
“Even in Miami, the rate of growth is decelerating,” said Maureen Maitland, a vice president of Standard & Poor’s. “There’s no longer the guaranteed return on investment people were expecting two or three years ago.”
Existing-home sales show that prices have been flat or falling in Broward County and Palm Beach County since last summer.
Sluggish home prices make it harder for financially strapped homeowners to borrow against their houses, making it difficult for them to qualify for Florida mortgage refinancing on their home loans.
Many in South Florida have fallen behind on their monthly house payments as the Florida mortgage rates on adjustable-rate loans increase.
Also underscoring the sluggish housing market Tuesday was a dismal first-quarter earnings report from Miami-based Lennar Corp., one of the nation’s largest home builders.
The home builder said profit plunged 73 percent in the quarter ended February 28. Net income fell to $68.6 million, or 43 cents a share, from $258.1 million, or $1.58 a share, a year earlier.
Lennar’s quarterly revenue declined 14 percent to $2.79 billion, compared with $3.24 billion a year ago. New home orders fell 27 percent year-over-year, to 7,132, while the cancellation rate was 29 percent.
The home builder said its earnings were hurt by the recent troubles of subprime Florida mortgages, issued to borrowers with bad credit.
“The reality is that market conditions are still challenging at best, and in some markets, continuing to deteriorate,” Stuart Miller, Lennar’s chief executive, said on a conference call.
The company said it does not expect to meet its 2007 earnings guidance and is “not comfortable” providing a new earnings goal. What’s more, Lennar has yet to fully feel the consequences of tighter lending standards.
“Our sense is that the tougher lending environment would have only started at the end of the quarter so that the impact will be more significant next quarter,” Banc of America analyst Daniel Oppenheim said.
The S&P and Lennar reports follow the U.S. Commerce Department’s announcement Monday that new home sales fell 3.9 percent last month to a seasonally adjusted annual rate of 848,000.
New-home sales also dropped in January, and the back-to-back declines seem to suggest the South Florida real estate slump could linger into 2008.
“I don’t see anything compelling to make it otherwise,” said David Levin, a Delray Beach-based housing analyst.
SOURCE: Fort Lauderdale Sun-Sentinel
